Kenya Commercial Bank has a strong headroom to finance big projects in East Africa on the back of high capital and liquidity buffers, Global Credit Ratings has said. The African-focused rating agency assigned an AA rating for KCB in the long term and A1+ in the short term with respect to its ability to bankroll capital-intensive projects, the highest rating for a Kenyan bank accorded by Global Credit Ratings (GCR).
This is currently the highest rating for a Kenyan bank accorded by GCR. KCB Group operates across six East African countries — Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan — targeting both retail and wholesale market segments.
“KCB’s strong market position within the regional banking space makes it well positioned to take advantage of positive growth and infrastructure/other developments within the local economy, and within the East African bloc,” said GCR in a statement.
KCB Group CEO Joshua Oigara said the rating was a clear affirmation that the lender was readying itself for a continental race, as it can now take up bigger projects in East Africa and beyond.
“KCB is now running a different kind of race; the race for trillions. Being in the market for more than a century has enabled us to connect with the DNA of the society,” said Mr Oigara.
“Throughout the year, we did well to protect ourselves against slow business volumes by focusing on high margin plays and cutting on operational and funding costs. Looking ahead, the management is putting in place strategies that should result in more sustainable future earnings,” he said.
KCB is planning to venture into five new markets in the next ten years, with an eye on Ethiopia, Zambia, Somalia, Djibouti, Mozambique and the Democratic Republic of Congo. The banking group continues to build capital at a rate in excess of what is being consumed for organic growth, with a capital adequacy ratio of 21 per cent in the financial year ending December 2014. Furthermore, the group’s capital base is deemed adequate to absorb potential termination and/or credit losses under our business stress scenario, said GCR.
The 2014 full year financial results indicated that the Bank’s KCB Bank Group has posted an 18 per cent rise in full year 2014 pre-tax profit, riding on double-digit growth in balance sheet and non-funded income and all subsidiaries returning positive earnings. During the 12 months ending December 2014, profit before tax jumped from Sh20.12 billion to Sh23.79 billion while its balance sheet hit Sh510.3 billion.