KCB brushes off South Sudan storm, posts profit growth

Corporate News

KCB Group chairman Ng’eny Biwott during a media briefing at the Hilton Hotel in Nairobi July 31, 2014. The lender’s profit rose 14 per cent to Sh8.1 billion. PHOTO|CORRESPONDENT 

By DAVID HERBLING

In Summary

• KCB South Sudan contributed 7.1 per cent to the group earnings, equivalent to about Sh831 million.
• KCB controls nearly half of the South Sudan banking market.
• Total earnings from regional subsidiaries remained flat, generating 7.3 per cent of profit before tax from the units in South Sudan, Uganda, Tanzania, Rwanda and Burundi.

Kenya’s largest bank by asset base and geographical spread, KCB, weathered the political storm in South Sudan to record revenue and profit growth for its subsidiary in the troubled country.

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KCB’s six-month performance released Thursday showed the lender’s after-tax profit jumped 14.1 per cent to Sh8.1 billion, maintaining a lead over its closest rival Equity Bank whose half-year earnings rose 21.4 per cent to Sh7.6 billion.

Chief executive Joshua Oigara said KCB’s South Sudan business contributed 7.1 per cent to the group earnings, equivalent to about Sh831 million.

“Despite the setbacks in South Sudan, overall the international business reported improved performance,” he said while releasing the results Thursday.

“In the month of August, two additional branches will be opened in Juba as business now starts to pick up in the country.”

The South Sudan subsidiary accounted for 6.9 per cent of group pre-tax profit as at June 2013.

Mr Oigara said KCB remains bullish about South Sudan’s economic outlook and plans to open two additional bank branches in the oil-rich nation.

KCB in January shut three of its 21 branches in South Sudan due to civil strife in Africa’s youngest country, prompting fears that the closure may hurt its most profitable regional subsidiary set up in 2006.

ALSO READ: KCB resumes work in South Sudan after recent fighting

The bank controls nearly half of the South Sudan banking market with the subsidiary’s assets making up 10.2 per cent or Sh44.8 billion of the group’s Sh439.7 billion.

“Today, KCB South Sudan enjoys 50 per cent of the market share and we are very optimistic going forward that South Sudan will flourish and thrive economically,” said the lender.

KCB’s total earnings from regional subsidiaries remained flat, generating 7.3 per cent of profit before tax from the units in South Sudan, Uganda, Tanzania, Rwanda and Burundi.

The Burundi business made a gross profit in the first six months of 2014 after making a loss in a similar period last year.

However, the Uganda business slid into the red as at June 2014, a pointer that Kenyan lenders are finding it hard to crack Kampala’s competitive banking market.

READ: Kenyan banks face tough new capital rules for their Ugandan subsidiaries