KCB Group’s post-tax profit in the first nine months of the year dropped by 43 percent to Ksh. 10.9 billion down from Ksh. 19.2 billion recorded in a similar period in 2019.
The lender has attributed the performance to increased provision on loans and advances in the wake of increased risk of credit default associated with the COVID 19 pandemic.
“This has been a challenging period for the business, staff, our customers, and the economy. Our focus has been on keeping our staff and customers safe while at the same time giving business support to the communities we operate in as well as our customers,” said KCB Group CEO Joshua Oigara.
According to the financials released on Wednesday, the bank’s total income grew 16percent to stand at Ksh.69.1 billion in the period under review compared with Ksh.59.7 billion reported in September 2019.
Net interest income increased 24 percent to Ksh.47.9 billion from Ksh.38.7 billion, riding on additional interest from investments in Government securities and lending. During the period, the lender’s non-funded income slightly increased from Ksh.21.0 billion to Ksh.21.3 billion, impacted by the reduction in loan disbursements to mobile customers during the period.
Loan loss provisions similarly increased to Ksh. 20.0 billion from KSh.5.8 billion in the previous period, this has been driven by changes in customer risk profiles and impact of the pandemic on macroeconomic drivers.
The Group’s balance sheet also expanded by 27 percent to Ksh.972 billion, funded by customer deposits growth and acquisition of the National Bank Kenya (NBK). Net loans and advances similarly grew 19 percent to close the period at Ksh. 577.5 billion while customer deposits increased by 32 percent to Ksh. 772.7 billion.
The Group’s non-performing loans (NPLs) book increased in the period under review to Ksh.97.0 billion up from Ksh. 42.6 billion in 2019. Consequently, the bank’s ratio of NPLs to total loan book increased to 15.2 percent from 8.3 percent in 2019, mainly due to the consolidation of NBK and COVID-19 related downgrades.
“While the pandemic is far from over and likely to continue into the next year, further straining the business and economy, we are projecting some recovery as the East Africa region finds some stability in living with the effects of the virus. We will continue to support our customers through the crisis and enhance initiatives geared towards ring-fencing the business. Our approach is conserving cash and managing cost,” said Mr. Oigara.