KCB Group directors, shareholders and associates lent themselves Sh4.8 billion in the year to December 2016, according to its audited results and disclosures released today.
This is a 598 per cent increase from last year. In 2015, loans to directors were Sh689.6 million.
The loans accounted for close to 10 per cent of all the loans the bank disbursed in 2016. The bank disbursed Sh41 billion in loans, which means directors borrowing accounted for 9.5 per cent of loans disbursed.
The insider borrowing is also 10 percent of the deposits the bank collected from customers. In 2016, customers deposits increased by Sh39 billion to Sh448.2 billion.
However, the loans to directors, shareholders and associates are within Central Bank of Kenya’s guidelines, which limit borrowing to not more than 100 per cent of a bank’s core capital. KCB’s core capital is Sh94.6 billion.
Total insider lending amounted to Sh17 billion with loans and advances to employees rising marginally from from Sh11.6 billion to Sh12.7 billion.
The results indicated that bank navigated a tough economic environment by riding on a strong loan and deposit growth and improved operating efficiencies to post Sh29.1 billion in pre-tax profit for the full year.
Earnings before tax rose 10 per cent from Sh26.5 billion posted the same period last year, KCB Group CEO and MD, Joshua Oigara, said at an investor conference on Thursday, attributing the headway to the Bank’s continued and deliberate focus on growth, efficiency, and value creation for shareholders.
“Our strategic focus to consistently deliver on excellent customer
experience, drive credit growth and secure new business opportunities has
helped guarantee positive performance. We are committed to bolstering this
model to build a sustainable business for the future,” said Mr Oigara.
“We saw sustained business resilience in a relatively tough macro-economic
environment across the East African region. Markets like South Sudan,
Burundi and Uganda experienced business shocks, as was the case with
Kenya where an interest capping regime redefined the operating
environment,” said KCB Group Chairman Ngeny Biwott at the function.
“We have in place a responsive operating model which came into play
through the difficult times in the year. We are optimistic of an improved
macro-economic environment in 2017, even as Kenya and Rwanda go
through elections later in the year,” he said.
The contribution of the international business dropped to less than five per cent as a
result of the devaluation of the South Sudan Pound and accounting for the
hyperinflationary environment in the country resulting in an overall negative
impact on net monetary position.
Net interest income closed the year at Sh 47 billion up from Sh39.3
billion, a 20 per cent rise while forex income increased by 35 per cent to Sh5.5 billion
from Sh4.1 billion. Net fees and commissions were down 11 per cent to
Sh12.6 billion, partly attributable to currency devaluation in South Sudan
which eroded gains in volume achieved during the year.
KCB mobile banking platform acquired over 10 million customers either directly or through partnerships over the past five years. Currently, non-branch channel systems account for 77 per cent of total transactions.
The bank has disbursed over Sh16.5 billion in loans to over 7.8 million customers, instantly on their mobile phones.
Over 90 per cent of total loans processed in the year were performed on the mobile phone. In August, the Bank upgraded its core banking system, an investment that is expected to guarantee reliability and speed, effectively providing excellence in customer experience.
The bank’s balance sheet expanded seven per cent from Sh558 billion to Sh595.2 billion driven by an 11 per cent growth in net loans and advances from Sh346.0 billion to Sh385.7 billion.
The funding part of the balance sheet was supported by six per cent growth in customer deposits and a 14 per cent jump in long term debt. During the year, the bank raised US$75 million as Tier II debt to fund business growth. Shareholders funds grew by 19 per cent due to profit for the period the Scrip Dividend taken up by shareholders.