KCB Bank reports 22% fall in earnings, but sees strong recovery in 2021

KCB Bank Group, trading under KCB Group PLC on the Nairobi Securities Exchange, has reported a 22% drop in earnings in 2020, largely attributed to the impact of the COVID-19 pandemic. Despite the challenges faced in the previous year, Group Chief Executive Officer Joshua Oigara remains optimistic about the bank's performance in 2021. Oigara highlighted the significant recovery in the market and expressed confidence in the rebound of economies in Kenya, Uganda, Tanzania, South Sudan, and Peru. The central bank of Kenya's directive to hold off on dividend payouts has affected shareholding sentiments, impacting the bank's share pricing. Oigara acknowledged the need to conserve resources, especially cash, to mitigate risks during the crisis. While dividend payouts were reduced last year, the bank plans to resume dividends in 2021, with a proposed payout in the second and fourth quarters. Oigara emphasized the importance of maintaining resilience and strong support for clients amidst the challenges faced. The bank's resilience and strong performance in 2020 were attributed to its focus on supporting customers through loan restructuring and providing additional moratoriums. Despite a 22% decline in profits, KCB Bank Group saw double-digit growth in loans, strong asset quality, and robust top-line growth. Oigara emphasized the strategic investments in digital channels and mobile payments, which proved crucial during the pandemic, as the bank worked to enhance customer experience and transaction efficiency. The impact of the central bank's decision on mobile revenue, resulting in a loss of approximately 2.2 billion Kenyan shillings, posed challenges for the bank. Oigara acknowledged the need to restructure business models and explore new revenue streams, focusing on services like wealth management, insurance, payments, and new lending products. The bank introduced innovative platforms like 'M-Pesa' payment platform to adapt to changing market dynamics. Looking ahead, Oigara highlighted the importance of supporting sectors like manufacturing, education, trade, and SMEs, which show promising growth prospects. While certain sectors like hospitality and tourism may take longer to recover, the bank remains committed to providing support and restructuring efforts to facilitate their revival. Oigara expressed confidence in the gradual recovery of sectors as vaccination efforts progress and business activities resume. The bank's acquisitions in Rwanda and Tanzania have been pivotal in expanding its regional presence and market position. Oigara emphasized the strategic importance of these acquisitions in strengthening the bank's offerings and market stature. The integration of acquired entities is expected to enhance business operations and drive growth across regions, positioning KCB Bank Group as a significant player in the financial services sector. Amidst speculations about potential job cuts following the acquisitions, Oigara assured minimal restructuring and emphasized the retention of most jobs. He reiterated the bank's focus on maintaining strong businesses in both corporate and consumer segments, with a commitment to supporting small businesses and driving financial inclusion initiatives. In conclusion, KCB Bank Group's performance in 2020, despite the challenges, reflects its commitment to resilience, customer support, and strategic investments in digital transformation. With a positive outlook for 2021, the bank remains focused on driving growth, innovation, and sustainable business practices across its diverse markets.