Kenyan banker Paul Russo-led KCB group reinstates dividend after 87-percent profit surge to $225 million

Oluwatosin Racheal Alabi -

Key Points

  • KCB Group brings back dividends with a Sh1.5 ($0.012) per share payout after an 87-percent profit jump to Sh29.1 billion ($224.8 million).
  • KCB’s profits soared by 87 percent, beating competitors thanks to strong results from its core banking services.
  • Even with rising costs and loan challenges, KCB boosted efficiency and grew its total assets to Sh1.976 trillion ($15.2 billion).

KCB Group, under the leadership of CEO Paul Russo, is back to rewarding its shareholders with dividends after an 87 percent surge in net profit for the first half of 2024.

The bank reported profits of Sh29.1 billion ($224.8 million), an increase that has led to the reinstatement of a dividend payout of Sh1.5 (USD 0.012) per share, totaling Sh4.8 billion ($37.1 million). Shareholders on record as of Sept. 12 can expect their payouts on Oct. 30.

A welcome return to dividends

Last year, KCB made the tough decision to skip dividend payments for the first time since 2002, focusing instead on strengthening its financial base.

But this year’s strong financial performance has changed that. The bank’s ability to bounce back and offer dividends again shows its confidence in the future. It’s a move that’s likely to be well-received by investors who’ve been waiting for this moment.

Joseph Kinyua, KCB Group’s chairman, expressed the bank’s pride in its resilience, saying, “KCB Group showed incredible strength and flexibility during tough times, and this solid performance has allowed us to recommend an interim dividend of Sh1.50 (USD 0.012) per share.”

Record-breaking profit growth

KCB’s profit growth is the fastest among Kenya’s publicly traded banks, even outpacing its main competitor, Equity Group, which posted a 12.1-percent increase in net profit to Sh28.54 billion ($220.3 million) during the same period.

KCB Bank Kenya, the group’s main subsidiary, played a huge role in this success, with its net profit soaring by 52.3 percent to Sh21.22 billion ($163.8 million). The National Bank of Kenya, another subsidiary, also turned things around by moving from a loss to a net profit of Sh828.74 million ($6.4 million).

KCB’s earnings from interest rose by 34.8 percent to Sh61.33 billion ($473.4 million), thanks to higher interest rates and an expanded loan book.

On top of that, the bank’s non-interest income, which comes from fees, commissions, and foreign exchange, grew by 52.3% to Sh33.2 billion ($256.2 million). Altogether, this pushed KCB’s total income to Sh94.6 billion ($730.1 million), a big jump from Sh73.07 billion ($564.5 million) last year.

Even with the profit surge, KCB faced higher costs. Operating expenses climbed by 11.7 percent to Sh56.51 billion ($436.0 million), mainly due to increased provisions for potential loan losses and higher staff costs.

Despite these challenges, KCB improved its efficiency, reflected in a better cost-to-income ratio. However, the bank did see an uptick in non-performing loans, which rose to Sh212.1 billion ($1.6 billion), highlighting some ongoing challenges in the Kenyan market.

Moving forward

KCB Group’s total assets have grown to Sh1.976 trillion ($15.2 billion), bringing the bank closer to the Sh2 trillion ($15.4 billion), while deposits increased slightly to Sh1.49 trillion ($11.4 billion). This growth shows that KCB is in a strong position, even in a tough economy.

CEO Paul Russo credited the bank’s success to the trust of its customers and the hard work of its employees. “We had a strong first half of the year, despite facing challenges, thanks to the support from our customers and the dedication of our staff,” Russo said.