A new report by Cytonn Investment Company has accorded the title of the most attractive bank in Kenya to Kenya Commercial Bank Group. The ranking considered franchise value, and future growth opportunity perspective, but leaned heavily on the likelier ability of the banks to generate profits from its core business.
November 13, the KCB reported that it realized a 6 percent increase to USD 187.59 Mn compared with what it had a year earlier. This marked the most modest growth so far for the financial institution.
According to the CEO, Joshua Oigara, the bank had a strong quarter, which made the business witness growth across a variety of segments.
A story by Digital Standard, corroborating him, said: We made continued strong investments in our capabilities to serve customers better. “The international businesses have continued to improve while our digital offerings are witnessing increased activity, giving the business impetus to continue growing.
Going forward, we are emphasizing on driving more sustainable growth, excellent customer experience, and diversification.”
In spite of harsh environments in the countries it operates in, the financial institution posted positive performance. Excluding the Kenyan subsidiary, the combined after-tax profit increase by 8 percent to over USD 12 Mn. Apart from the Ugandan arm of the lender, the other banking subsidiaries brought in business earnings.
Per the third-quarter report by Cytonn, KCB’s status is bolstered by a strong franchise value and intrinsic value score. The franchise score considers the vast and comprehensive strength of a bank across 13 different metrics.
As for the intrinsic score, it measures the investment return potential. KCB emerged at the top also because of its regulation, revenue diversification, SME-focused lending, consolidation, and quality of assets.
The report titled: “Higher net interest margins and consolidation to drive growth in the posted rate cap era” analyzed the third quarter results of the listed banks.
“We note that the increased emphasis on revenue diversification by banks seems to be bearing fruit, with the listed banking sector’s average non-funded income (NIF) improving year on as seen in the third-quarter figures,” said David Gitau, Investment Analyst at Cytonn Investments.
Meanwhile, KCB is still in talks to acquire the National Bank of Kenya. Although the deal is being delayed by a bone of contention between the MPs and the treasury, the multi-billoon dollar buy is expected to further cement KCB’s position in the domestic banking sector. Not just that, but it will also help the lender double down on the ability to access more business flows.
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