KCB Group’s FY20 PAT declined 22.1% y/y to KES 19.6B below our expectation of a 9.8% y/y decline in net earnings. The drop was driven by a 209.5% y/y surge in loan loss provisions to KES 27.5B coupled with a 11.6% y/y uptick in operating expenses to KES 43.2B. The group announced a first and final dividend of KES 1.00 (dividend yield of 2.5%).

We maintain a BUY recommendation on KCB Group with a target price of KES 46.17 offering a potential upside of 15.1% on the current price of KES 40. 10.