KCB expansion impacts on profit

July 30, 2009

, NAIROBI, Kenya, Jul 30 – Increased investment in Information and Technology, staff recruitment and new products roll-out has seen the Kenya Commercial Bank Group’s profitability impacted for the first six months of the year.

The bank’s Chairman Peter Muthoka told an investor briefing on Thursday that they recorded a modest four percent growth in their pre tax profits to Sh3.64 billion for the half year period as they were unable to recoup most of these expenses during that period.

“If you look at the actual operating profits, our business grew by 29 percent. However in comparison with the same period in 2008, we come short because we had significant recoveries last year which we have not been able to realise over the last six months,” he explained.

Total operating expenses increased by 27 percent to Sh7.2 billion while operating income grew by 28 percent to Sh11.4 billion.

Assets also went up by four percent to Sh177.8 billion compared to Sh171.4 billion over the same period last year which reaffirmed the KCB’s position as one of the largest banks in that respect. Its market capitalisation stands at Sh50 billion.

Despite the performance, however, the Chairman sought to assure investors that the bank’s fundamentals were still sound and that it would continue to expand its services in the region so as to increase its market share and shareholder value.

Mr Muthoka also added that the successful implementation of a new banking system would enable them to introduce technology-based services and products which would in turn enhance their efficiency.

“In spite of teething challenges that impacted negatively on our customer service, the system has now stabilised and our customer service offering is now much better,” he added.

One of the products which would be launched under this system is the revamped mobile banking service dubbed “KCB-Connect”, while the advent of the fibre optic cables would also enable them to improve their operations.

The bank has 182 outlets in the five countries it operates in with Kenya running 156 branches.

 The bank also has its shares cross-listed in the Rwandan, Tanzanian and Ugandan stock markets; a move that it says has helped to enhance its visibility in the region.

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