Banking

Faulu Microfinance Bank is aiming to expand its Small and Medium Enterprise (SME) customer base by introducing new enterprise solutions.

The bank’s Head of Business Growth, Joshua Kittony, has stated that their Biashara Customer Value proposition (CVP), Blended Retail CVP, and Digital CVP are designed to enhance the customer experience nationwide.

Kittony emphasized the importance of SMEs in driving economic growth and explained that Faulu has been organizing Customer Engagement forums to educate customers about their revamped solutions.

The goal is to empower customers with the necessary financial tools to succeed in their endeavors.

The Biashara CVP offers tailor-made solutions for traders, including pre-approved loan limits. This is particularly beneficial for those who deal in fast-moving goods. Additionally, the Biashara CVP acts as a platform for mobilizing deposits, enabling customers to build their credit financial profile before accessing facilities.

The Blended Retail CVP is targeted towards salaried customers who also own side businesses. This CVP aims to provide consolidated financial solutions for all their needs, including working capital loans, trade finance, SME loans, and asset finance. The goal is to facilitate the expansion and sustainability of these enterprises.

NCBA Group PLC, a leading financial institution, has announced its half-year financial results ending June 30th, 2023, showing a robust profit after tax of KES 9.3 billion.

This represents a significant increase of 20.3% compared to the KES 7.8 billion reported during the same period last year. The Group also reported a profit before tax of KES 12.4 billion, reflecting an 11% growth from KES 11.2 billion in H1 2022.

The impressive growth in profitability can be attributed to increased operating income and a decline in loan impairment charges. However, the Group’s operating expenses rose by 24.0% year on year due to inflationary pressures and continued investment in their ongoing 5-year strategy, set to conclude in 2024.

John Gachora, the Managing Director of NCBA Group, expressed his satisfaction with the strong operating results, attributing them to the consistent focus on the Group’s strategic priorities.

The Group’s excellent performance has allowed the Board of Directors to recommend an interim dividend declaration of KES 1.75 per share.

NCBA Group’s strategic priorities for the second half of the year remain unchanged. These include becoming a distinguished brand known for exceptional customer experience, expanding retail banking to enhance distribution, strengthening leadership in corporate banking and asset finance, driving digital transformation, and fostering a high-performance culture.

The Group’s regional subsidiaries in Tanzania, Rwanda, and Uganda played a significant role in the first half of the year’s performance. They collectively delivered a profit before tax of KES 1.4 billion, a remarkable improvement from the loss of KES 178 million reported in H1 2022. This turnaround was achieved through a recalibration of business models and right-sizing of operating models in these markets.

Gachora highlighted the continued growth of the core business in Kenya, with increased customer deposits in Retail and Corporate Banking. The Group has expanded its network by opening branches in Kenol, Murang’a, Chwele, Kahawa Sukari, and Eastleigh, with plans to open branches in Migori, Ruaka, and Wote in the near future. NCBA now boasts a network of 90 branches across 24 counties in Kenya.

NCBA recognizes the importance of its social responsibility and has invested in education, mentorship, and financial innovation initiatives, benefiting over 3,000 students from primary, tertiary, and university institutions.

The Group has also made significant contributions to reforestation, planting over 7 million trees in collaboration with government, private sector, and learning institutions. In addition, NCBA has invested over KES 50 million in golf sponsorships, promoting and democratizing the sport while uplifting communities.

Despite challenges such as rising inflation and forex pressure in the macro-environment, Gachora emphasized that NCBA Group’s dedicated team of over 3,000 professionals across the region remains committed to delivering financial solutions that help customers navigate the changing economic landscape.

He further noted that a resilient and strong banking sector performance will support credit availability for customers in both the private and public sectors, ultimately boosting investment and tax revenue for the nation.

I&M Group PLC has announced a strong performance in the first quarter (Q1) of 2023, with a 29% growth in operating income to KES 9.6 billion from KES 7.4 billion during the same period in 2022.

The Tier 1 Bank’s steady balance sheet and income metrics improvement were boosted by successful execution of its iMara 2.0 strategy, which focuses on customer centricity, business growth, operational efficiencies, and digital transformation.

For the Q1 2023 period, total assets surged by KES 41.4 billion to KES 472.6 billion, with a year-on-year increase of 18% in the loan portfolio to KES 257.7 billion. I&M Bank Kenya posted a 16% increase in profit before tax for the period under review, driven by a 28% growth in the operating income.

Sarit Raja Shah, Group Executive Director, I&M Group PLC, commented on the results saying, the first quarter posed its own challenges amidst rising inflation and the high cost of doing business.

“Our continued investments in the group-wide iMara 2.0 strategy that focuses on customer centricity and digital transformation as well as the ongoing strategic partnerships, have continued to give value to our customers and stakeholders.”

The CEO of I&M Bank Kenya, Gul Khan, highlighted the bank’s commitment to customer-centricity, stating that during the first quarter we enhanced our retail proposition by launching ‘Ni Sare Kabisa’ and ‘The Largest Unsecured Personal Loan of up to KES 10 million’ campaigns as a testament to our continued commitment to solving customer problems.

In addition, Khan noted that I&M Bank Kenya’s Net Promoter Score (NPS) closed at 54%, against the banking sector average of 38% in Kenya.

I&M Bank Kenya is also seeing significant growth in adopting digital services as part of its iMara strategy. The bank has seen 93% of customers initiating their transactions through digital channels.

To support millions of mobile money users in Kenya, the bank recently waived bank-to-mobile wallet charges amidst the challenging economic environment.

The Group’s regional subsidiaries played a significant role in the strong Q1 performance, contributing 17% to the Group’s overall profitability. I&M Bank Rwanda reported an 18% increase in profit before tax

KCB Bank has dethroned Equity as the largest lender in the country by asset size on the back of an aggressive expansion of foreign subsidiaries.

KCB’s total assets stood at Sh1.55 trillion in the year ending December, compared to Equity’s total assets of Sh1.44 trillion, regulatory filings show.

However, KCB trailed Equity in profitability in the period with KCB stating it did not include the full-year profits from its recently acquired subsidiary in DRC.

KCB said it absorbed a loss of Sh65 million out of the DRC business for the month of December.

Had KCB consequently consolidated a full year, it would have absorbed a profit of Sh3.2 billion from the Congo unit.

Shareholders of both banking giants will be keenly waiting to see the performance of both lenders when they release their first-quarter results in the near term.

Equity pipped its Kenyan rivals including KCB in the year ended December 2022 when its profit before tax led the Kenyan banking industry at Sh59.8 billion equivalent to Sh2.5 billion ahead of KCB’s Sh57.3 billion.

The disclosures by the two top banks in their annual reports paint a picture of a cutthroat race for control of the banking industry. This comes at a time when the two lenders have embarked on aggressive regional expansion in the last decade as both lenders jostle to grab as much cash to become the region’s banking kings.

KCB chief executive Paul Russo and his Equity counterpart James Mwangi have maintained that the wider eastern Africa region offers an immense opportunity for new growth and signaled plans to continue with their expansion.

According to the regulatory disclosures, KCB’s customer deposits stood at Sh1.14 trillion ahead of Equity’s Sh1.05 trillion. KCB Group and Equity Group are the only two Kenyan-based banks with more than a trillion shillings in customer deposits base.

The gap is even wider in net customer loans with KCB leading the pack with Sh863 billion, equivalent to Sh156 billion more than Equity’s Sh706 billion loan book.

KCB’s shareholder funds stood at Sh200 billion. Ahead of Equity’s Sh182 billion.

KCB also has the largest branch network in the region. The Bank reported a total of 603 branches in the region in 2022. Which is almost double the footprint Equity reported of 337 in 2021 at a time its Group CEO says branchless banking will be the new normal in the near future.

KCB is also the largest employer in the banking sector with over 11,000 employees across the region.

Excluding regional businesses, KCB has continued to solidify its market leadership in the Kenyan market.

KCB Bank Kenya total assets stood at Sh971 billion ahead of Equity’s Sh894 billion, revenue stood at Sh93 billion ahead of Equity’s Sh86 billion.

KCB Group has reported a net profit of KShs. 40.8 billion for the full year ending December 2022, a 19.5% increase from KShs. 34.2 billion were reported in 2021.

The bank’s revenues also grew by 19.6% to KShs. 129.9 billion, driven by higher funded and non-funded income streams.

KCB Group CEO, Paul Russo, attributed the bank’s strong performance to its business strategy that is anchored on customer obsession, sharper execution, and productive organizational culture.

He noted that the business benefited from a vibrant core banking business, the growth of new business lines, and accelerated digital transformation.

Despite a challenging operating environment, KCB Group maintained positive momentum throughout the year, building on its enhanced digital capabilities, impetus in its regional businesses, and successful integration of Trust Merchant Bank (TMB), the bank’s latest subsidiary in the Democratic Republic of Congo.

The bank’s total assets grew by 36.4% to KShs. 1.55 trillion, while customer loans increased by 27.8% to KShs. 863 billion, driven by additional lending in the Kenya business, increased lending in the international businesses, and the acquisition of TMB.

Customer deposits hit the trillion shillings mark, increasing by 35.6% to KShs. 1.135 trillion, mainly from TMB and organic growth in the existing businesses. Shareholders’ funds also grew by 18.9% from KShs. 173.5 billion to KShs. 206.3 billion on improved and accumulated profits for the year to date.

KCB Group’s capital base remained well within both internal and regulatory limits, with core capital as a proportion of total risk-weighted assets standing at 13.9% against the statutory minimum of 10.5%. Total capital to risk-weighted assets ratio was at 17.1% against a regulatory minimum of 14.5%.

On asset quality, the ratio of non-performing loans (NPL) stood at 17.3%, largely driven by downgrades from the KCB Kenya business. Gross NPLs stood at KShs. 161.2 billion. Although both the NPL ratio and stock show an increase compared to the previous year, there is a remarkable reduction from the peak numbers in June 2022.

Despite increased business activities and the impact of BPR and TMB acquisitions, KCB Group managed to keep costs under control. Costs were up 24.1% compared to last year, but this was largely due to increased business activities and the impact of acquisitions. Provisions increased marginally by 1.7% compared to the previous year, reflecting the appropriateness in IFRS9 staging done in prior years.

KCB Group’s Board has proposed a final dividend payout of KShs. 1.00 per share, subject to shareholder approval. This is in addition to an interim payout of KShs. 1.00 per share, which was paid out in January 2023. This brings the total dividend payout for the year to KShs. 6.4 billion.

In December 2022, KCB Group completed the acquisition of TMB after receiving all the regulatory approvals and subsequently kicked off integration of the business to the Group.

The acquisition is part of KCB Group’s regional expansion strategy, which includes investments in its existing businesses and the acquisition of new businesses in the region.