The KCB Group (KCB) earnings growth will slow due to lower net interest margin (NIM), higher operating expenditure (OPEX), and loan loss provisions

We lower our FY23-27e earnings per share (EPS) estimates for KCB by an average of 12.2%. Its risk pricing model (RPM) will result in lower gross yields reducing our average NIM estimates by 110 basis points to 7.9%. We also raise our FY23-27e operating expenditure (OPEX) estimates by 14.0% on average to reflect the impact of foreign exchange (FX) devaluation, inflation, and continued delays in extracting synergies from its acquisitions. We raise our loan loss provisioning estimates by 4.5 percentage points on average due to a 5.2 percentage point uptick in our net loan estimates (we keep our average COR estimate at 1.7%).