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Kenya Commercial Bank profit soars

NAIROBI, Kenya Feb 25 – The Kenya Commercial Bank Group has posted five percent increase in pretax profit for the 2009 financial year to stand at Sh6.3 billion.

Addressing investors on Thursday, KCB Group chief executive officer Martin Oduor-Otieno said the growth from Sh6 billion in 2008 was anchored on 23 percent increase in net income to Sh14.5 billion in 2009.

He added that debt recoveries and a fall in provisions for bad loans also played a key role to the bank’s overall performance.

“In 2008 we had some very high provisions, this year that has dropped by almost half which means the quality of our book continues to improve and of course we have made some recoveries,” Mr Oduor-Otieno said.

He however said operating expenses, which jumped 30 percent to Sh15.9 billion offset growth realised in operating income of Sh22.9 billion that capped further growth.

At the same time, total assets increased by two percent to Sh195 billion as customer deposits stood at Sh162 billion. Net loans and advances were up by 29 percent to Sh120.5 billion.

The provisions for bad and doubtful debts reduced by 57 percent from Sh3.7 billion in 2008 to Sh1.6 billion, while debts recovery efforts realised Sh856 million, compared with Sh2.3 billion, the previous year.

“The quality of our loan book showed good improvement due to the implementation of stringent risk management standards in our credit approval process,” he said.

KCB intends to raise Sh15 billion in debt and equity to fund expansion in the region. The CEO revealed the plans had been approved by the bank\’s board, but is still subject to regulatory and shareholder approval.

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“We will be working during the course of this year to raise some additional capital to fund growth because if we don’t do that the bank will remain static given the heavy agenda we have,” he said.

KCB is the region’s largest commercial bank with 203 branches with operations in Kenya, Tanzania, Uganda, Rwanda and Southern Sudan.

Mr Oduor-Otieno however said the bank had achieved the optimal number of branches in its East Africa operations. “Our eyes are still focused on Africa but we want to be strong in the region where we are operating at the moment before venturing deeper,” he said.

The board has maintained its dividend payout of Sh1 per ordinary share.

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