KCB Group Profits Up 8.1% on Higher Interest Margins
KCB Group posted KES 62.08Bn profits before tax (PBT) for the first nine months of 2025 (herein referred as Q3-2025), an 8.1% rise compared to KES 57.43Bn announced same time in 2024. The performance was largely driven by a low cost of financing its interest earning assets coupled with marginal growths in the overall interest income. This was mainly occasioned by the ongoing rate cuts that saw the cost of customer deposits and other funds narrow down while making credit a bit cheaper and raising the general credit score of both businesses and individuals. Easing of rates has so far seen commercial banks’ lending rates drop from 16.09% in September 2024 to 15.07% by end of Q3-2025 as the cost of customer deposits fell from 11.24% to 7.63% in a similar period.
Quarter on quarter performance saw Group PBT stabilize at 8.1% supported by lower provisions of KES 5.79Bn in comparison to KES 6.87Bn made in Q2-2025.
The Group’s profits after tax rose 3.4% year on year from KES 45.76Bn in Q3-2024 to KES 47.32Bn in Q3-2025, depressed by a higher effective tax rate of 23.8% in Q3- 2025 in relation to that of 20.3% paid out in Q3-2024.
KCB Bank Kenya’s PBT grew faster at 9.3% from KES 40.12Bn to KES 43.87Bn as of Q3-2025, supported by higher interest income accelerated by improved disbursements and a rapid decline in the interest expenses.
Subsidiaries’ PBT were up 5.2% from KES 17.31Bn to KES 18.21Bn in Q3-2025 to contribute a 29.3% of the Group PBT in relation to a 30.1% reported as of Q3-2024.
Overall, the Group’s annualized earnings per share (EPS) rose marginally at 0.7% from 18.99 reported in Q3-2024 to 19.12 in Q3-2025. Its price to earnings and price to book ratios stand at 6.0x and 0.5x, respectively, with a book value per share of KES 96.01, elevated by retained earnings.
We retain our earlier pricing of KES 60.06 per share issued in August 2025, representing a 7.6% downside from the current price of KES 65.00 per share as of November 20th 2025, and therefore revise our recommendation to a SELL. We recommend a Sell on the counter’s share price to gain on the capital gains already earned of above 7.6%; plus, a dividend yield of above 7.0% for investors who entered the stock at a price of below KES 57.00 per traded after the interim dividend book closure that happened on 3rd September 2025. The interim dividend was paid on 11th November 2025).
The Group’s Board of Directors recommended did not recommend another interim dividend.
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Income Statement
Net interest income (NII) rose 12.4% y-y from KES 92.80Bn in Q3-2024 to KES 104.34Bn in Q3-2025 elevated by low interest expense and a marginal growth in the total interest income. This saw the NII contribution to total income expand from 64.9% in Q3-2024 to 69.8% in Q3-2025.
Total interest income was up 1.1% from KES 149.03Bn to KES 150.66Bn mainly stagnated by interest incomes from loans and advances.
Interest income from loans and advances stabilized at KES 104.45Bn to reflect a marginal growth of 0.4% in spite of an 8.1% expansion in the Group’s loan book. We attribute the slow growth to the low lending rates evidenced in the market following the constant rate cuts which offset the gains made from the growing loan book.
Yield on advances however, moved up from 12.9% to 13.1% on what appears to be improved turnovers in the Bank’s short-term loan facilities.
Interest from government securities enlarged 4.6% from KES 37.87Bn to KES 39.61Bn propelled by increased focus in the sector which saw the securities book balloon by 14.1% from Kes 361.11Bn to KES 411.88Bn to curb the rising nonperforming loans. Consequently, the yield on securities remained relatively stable from 13.3% as of Q3-2024 to 13.2% by end of Q3-2025.
Interest expense dipped 17.6% from KES 56.24Bn to KES 46.32Bn to benefit from the low interest rates by passing the same to the customer deposit holders.
Non funded income dropped 10.1% from KES 50.18Bn to KES 45.09Bn pulled down by low foreign exchange trading income. The low forex income follows stability in the forex market as the shilling remained flat against the US dollar at an average of KES 129.30 for entire reporting period.
Operating expenses were contained at a 2.1% rise to KES 87.35Bn on low loan loss provisions. Provisions for losses rose 2.7% to KES 18.26Bn while staff costs rose 7.3% y-y from KES 29.35Bn to KES 31.49Bn on normal annual salary review for inflation.
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Balance Sheet
Total assets rose 2.6% y-y from KES 1.99 trillion (Tr) to surpass the KES 2Tr mark at KES 2.04Tr in Q3-2025, a position last recorded in Q3-2023, Q4-2024 and Q1- 2025 before slowing down on low disbursements. The asset book largely benefitted from loans and advances plus other shot-term investments for cash management.
Total loan book expanded by 8.1% y-y from KES 1,053.20Bn to KES 1,139.90Bn benefiting from the low interest rates and the above improved credit scores.
Government securities book also attracted an additional KES 50.77Bn or 14.1% to KES 411.88Bn in what we view to be management of the bank’s asset quality on non-performing loans.
Drops in customer deposits from KES 1,538.43Bn to KES 1,525.83Bn saw the bank’s borrowings escalate 41.2% up from KES 58.32Bn to KES 82.32Bn in order to support the rising loan book.
Shareholders’ funds shoot up 23.9% from KES 218.82Bn to KES 308.51Bn to benefit from the rising retained earnings which hit KES 282.44Bn in Q3-2025 up from KES 248.95Bn by end of Q3-2024.
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Key Ratios
The Group’s return on average assets (ROaA) improved from 3.0% in Q3-2024 to 3.2% in Q3-2025 supported by higher profits reported. Return on average equity (ROaE) however, sunk from 26.3% to 22.2% by end of Q3-2025 on a faster rise in the shareholders’ funds in relation to the profits.
Low cost financing the bank’s loan book saw the net interest margins (NIMs) climb up from 6.5% to 8.1% year on year. This was as the cost of funds narrowed down from 4.4% to 3.9% in the same period.
Group non-performing loans (NPLs) ratio further declined marginally from 17.9% in Q3-2024 to 17.1% on aggressive recoveries and payment of some pending bills.
Group non-performing loans (NPLs) ratio further declined marginally from 18.5% in Q3-2024 to 17.8% in Q3-2025 but still above the industry NPL ratio of 17.1% as of September 2025. The Group targets an NPL ratio ranging between 14% and 16% before end of 2025. The higher NPL is mainly elevated by KCB Kenya at 21.2% and TMB and the Democratic Republic of Congo with 15.1% NPL.
