KCB shakes off pandemic hit to post Sh6.4bn first quarter profit

KCB net earnings for the three months to March have grown by 1.8 per cent to Kes 6.4 billion from Kes 6.3 billion attributable to cost savings and an uptick in interest income.

In the period under review, the lender’s total interest income surged by 8.7 per cent to close the quarter at Kes 22 billion even as net interest income grew by 11 per cent to Kes17 billion from Kes 15 billion driven by a rise in interest earning assets.

This growth was, however, offset by a 20 per cent decline in non-funded income that closed at Kes 6.3 billion due to slowdown in digital lending and waivers of mobile transactions service fees that was rolled out in Kenya to cushion customers from the pandemic.

“Revenues have remained flat with the costs declining marginally. Overall performance was largely impacted by lower non-interest income due to subdued digital lending on reduced disbursements and lower customer transactions,” said KCB Group CEO Joshua Oigara.

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In the period, KCB’s stock of non-performing loans nearly doubled to close at Kes98 billion up from Kes 66.2 billion in March 2020 while NPL ratio rose to 14.8 per cent from 11.1 per cent last year due to COVID-19 related downgrades.

The lender’s loans and advances grew by 7.8 per cent to close at Kes 597 billion on account of additional lending during the period even as loan loss provision remained at Kes 2.9 billion in the quarter due to an increase in loan balances.

The regional bank managed to grow deposits by 1.2 per cent in the first quarter 2021 to Kes 749 billion while investments in government securities increased by 1.5 per cent to Kes 191 billion.

In the trading quarter, the Group’s capital headroom remained strong with its ratios well above the minimum regulatory requirement.

The total capital for the Group stood at Kes 172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8 per cent against a regulatory minimum of 14.5 per cent, the bank’s financial disclosures show.

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“Quarter two of the year started with a month-long lockdown in Kenya, a reminder that the pandemic is not over yet. We, however, expect to see a recovery in the last two months of the quarter with an increased in uptake on our mobile platform – VOOMA and a strong balance sheet growth,” said Mr Oigara.

The board has proposed the first and final dividend of Kes 1.00 per share following shareholders’ equity growth of 8.8 per cent to Kes 147.5 billion from Kes 135.5 billion on account of improved profit for the period.

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