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KCB posts Sh9.8 profit in 2010

NAIROBI, Kenya, Feb 24 – Impressive performance in the banking sector continued on Thursday with the Kenya Commercial Bank posting Sh9.8 billion in its 2010 fully year financial results.

This marked a 56 percent increase in the bank’s profits up from Sh6.3 realized in 2009.

KCB Chairman Peter Muthoka attributed the results to a 36 percent increase in net interest income, which stood at Sh19.6 billion from Sh14.5 billion.

“We are excited by the performance of the bank, which shows potential for even further growth,” Mr Muthoka said.

KCB is regarded the largest bank by assets, with property under management standing at Sh251 billion.

During the period under review, operating income was 29 percent higher at Sh29.6 billion, while operating expenses were stable growing 18 percent to Sh18.7 billion. The bank was able to consolidate its branch expansion program, which the chairman was “paying dividends for the bank.”

KCB Group Chief Executive Officer Martin Oduor-Otieno said the bank’s balance sheet grew by 29 percent to Sh251.4 billion driven by high income and profit growth.

Loans and advances grew 21 percent to Sh148 billion while deposits grew by a similar margin to Sh197 billion.  

“We achieved a good mix of short and long term deposits from our large network keeping our cost of funds within market levels,” Mr Oduor-Otieno.

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The core capital to total deposit liabilities ratio went 21 percent against the Central Bank’s minimum requirement of eight percent while to risk weighted assets it increased to 23 percent (CBK 12 percent).

During 2010, the bank’s customer base doubled to 1.5 million, while the number of branch outlets stands at 218 across five countries in the region.

Mr Oduor-Otieno said following the rights issue, where it raised Sh12.5 billion, the banks core capital grew to Sh39.9 billion making it the most capitalized bank in the region.

He however said the major focus for the Bank in 2011 would be implementing a restructuring program, which it expects to improve efficiency and enhance shareholder value.

The program that is expected to run for up to two years, aims at reviewing the current corporate governance structures suitable for its regional operation.

“We are starting the year on a strong footing. We have set the foundation and the drive for more revenue on the base of a strong balance sheet is paying off so we are optimistic for 2011,” he said.

He however said the key concern is going to be around political risk and whether it is managed prudently.

“What we don’t want to see is the kind of political stand off that has been there over the last two weeks which would mean businesses would hold back not knowing whether to invest,” Mr Oduor-Otieno said.

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