KCB Cuts Non-Performing Loans as Q1 Profit Rises to KShs. 24.4 Billion

KCB Group PLC has reported improved asset quality across its regional operations, with the lender reducing its Non-Performing Loan ratio even as it posted strong growth in first quarter earnings.

The Group announced a pre-tax profit of KShs. 24.4 billion for the quarter ending March 31, 2026, representing a 15.3 percent increase compared to KShs. 21.2 billion recorded during the same period last year.

KCB said the performance underscored the resilience of its diversified business model despite a difficult operating environment.

According to the financial results, the Group recorded improvements in asset quality across all subsidiaries, helping lower the Non-Performing Loan ratio to 16.6 percent from 19.3 percent.

The stock of non-performing loans also declined to KShs. 217.8 billion from KShs. 233.3 billion, supported by aggressive recovery efforts and a 9.1 percent expansion in the gross loan book.

KCB however maintained a cautious approach amid prevailing economic uncertainties, setting aside KShs. 4.9 billion as provisions against potential loan losses, which strengthened both prudential and IFRS ratios.

The lender said the improved performance was driven by an 8.5 percent increase in total operating income to KShs. 53.6 billion, largely supported by growth in interest-bearing assets that helped offset declining Net Interest Margins.

KCB noted that sustained rate cuts by regulators across the region led to lower asset yields in all its markets during the period under review.

The Group’s balance sheet expanded by 10.8 percent to KShs. 2.3 trillion, supported by increased customer activity across key business segments.

Customer deposits also increased by 15.7 percent during the quarter.

Excluding the impact of National Bank of Kenya (NBK), which the Group divested from in May 2025, year-on-year growth in pre-tax profit and operating income stood at 17 percent and 16 percent respectively.

Subsidiaries outside KCB Bank Kenya continued posting strong performance, contributing 29.5 percent of the Group’s earnings and accounting for 31.5 percent of the Group balance sheet.

KCB Bancassurance Intermediary recorded KShs. 209 million in profit before tax, KCB Investment Bank posted KShs. 274 million, while KCB Asset Management contributed KShs. 64 million.

KCB Group Chief Executive Officer Paul Russo said the lender remained focused on disciplined execution, innovation, and regional growth despite prevailing economic pressures.

“Despite the challenging operating environment, we delivered solid growth driven by disciplined execution, continued investment in digital innovation, and our unwavering commitment to providing financing which catalyzes economic transformation across the region. We continued to optimize our regional footprint and scale to best serve our customers and create sustainable shareholder value,” said KCB Group CEO, Paul Russo.

“While economic activity in East Africa remained resilient, we continued to see the impact of the Middle East conflict on economies, with a likely ripple effect of depressed credit demand, increased credit risk and lower remittance receipts, and on deposits,” he added.

Financial results released by the lender show that total operating costs rose by 7.3 percent to KShs. 24.3 billion due to higher workforce expenses, scaled technology investments, and business expansion costs.

Non-funded income also increased by 8.3 percent to KShs. 17 billion, supported by increased digital loan disbursements and growth in foreign exchange income.

KCB said the Group continued supporting businesses and households with credit aimed at driving trade, investment, and working capital needs.

The Group’s balance sheet growth was largely driven by higher customer deposits, which rose by 16 percent to KShs. 1.7 trillion following sustained onboarding of new-to-bank customers across both corporate and retail businesses.

Meanwhile, the gross loan book grew to KShs. 1.32 trillion from KShs. 1.21 trillion recorded during the same period last year.

KCB also continued delivering value to shareholders, posting a Return on Equity of 21.5 percent.

Total equity attributable to Group shareholders grew by 18.5 percent from KShs. 297.1 billion to KShs. 352.2 billion, while Earnings per Share increased to KShs. 22.18 from KShs. 20.03 recorded during the same period last year.

The lender maintained strong capital buffers, with all banking subsidiaries remaining compliant with their respective local regulatory capital requirements.

Group core capital as a proportion of total risk-weighted assets stood at 18.2 percent against the statutory minimum of 10.5 percent, while total capital to risk-weighted assets stood at 21.6 percent against the regulatory minimum of 14.5 percent.

KCB also maintained a strong liquidity ratio of 51.1 percent, enabling the Group to effectively respond to emerging opportunities and potential risks.

KCB Group Chairman Dr. Joseph Kinyua said the lender remained confident in its long-term strategy and regional resilience despite evolving global economic pressures.

“The Group’s strong start to the year is a clear affirmation of the effectiveness of our long-term strategy, the resilience of our regional businesses, and the discipline with which we continue to execute our priorities. We remain confident in the Group’s ability to navigate evolving market dynamics while continuing to support economic growth, regional trade, and financial inclusion across our markets. The Middle East conflict presents a significant counterforce to global growth through its impact on commodity markets, inflation expectations and financial conditions” said KCB Group Chairman, Dr. Joseph Kinyua.

Among the latest corporate developments, KCB Foundation signed a partnership agreement with UNHCR in January aimed at advancing financial inclusion, livelihoods, and long-term socio-economic opportunities for refugees and host communities across the region.

In March, KCB Bank Kenya secured approval for a $96.9 million financing package equivalent to KShs. 12.5 billion from the Green Climate Fund and co-financing from the Bank to support green projects targeting MSMEs, farmers, and vulnerable communities.

KCB also sponsored the 2026 WRC Safari Rally, injecting KShs. 227 million into the international motorsport event.

Through a nationwide consumer promotion linked to the rally sponsorship, one customer won a one-bedroom apartment at Tatu City courtesy of Unity Homes.

In April, KCB Bank Kenya signed an agreement with the Ministry of Education aimed at promoting sustainable learning institutions through concessional financing for clean energy technologies in schools.

KCB Group also continued receiving international recognition, including being named Best Banking Group at the World Finance Banking Awards 2026.

Additionally, KCB Bank Kenya introduced a KShs. 20 flat fee on Pesalink transfers, while transactions below KShs. 1,000 remain free under the banking industry’s “Tuma Direct na 20/-” campaign aimed at making real-time payments more affordable and convenient for individuals and MSMEs.