KCB income from trading dollars doubles

KCB Group nearly doubled its fees and commissions on higher forex trades both locally and across its East African markets that saw the lender post a 19.5 percent net profit growth to Kes40.8 billion in the financial year that ended in December.

The lender non-funded income grew 39.8 percent largely from trade finance income, lending fees and commissions.

A look at the lender’s balance sheet shows the bank nearly tripled forex income from the Kenyan parent lender KCB Bank business, growing from Kes3.9 billion to Kes8.9 billion while its subsidiary National Bank of Kenya made Kes964 million trading dollars.

At the consolidated level, the lender made Kes11 billion from forex trades which means the regional business made Kes1.2 billion from exchanging the greenback.

Banks are reaping big from trading scarce dollars that has seen Investments, Trade and Industry Cabinet Secretary Moses Kuria call for Central Bank of Kenya curbs on lenders for holding too much foreign currency and for charging too much for the exchange. 

Mr Kuria said lenders were making as much as ten shillings from the rate of buying and selling dollars while holding huge reserves despite the current shortages. 

At the end of last year, the Central Bank was holding $7.9 billion dollar reserves which has been drawn down to $6.6 billion at the beginning of this month to pay debts and intervene in the market. 

Banks were holding $4.1 billion by the end of last year which they have leveraged against the nine percent decline of the Kenya Shilling from 113.1 in January to 123.3 against the US dollar in December last year.

The shilling has continued to depreciate with Banks trading the currency for up to Kes145 for a unit of the green back a far cry from the official rate of Kes129.5.

Forex income made up a quarter of KCB Group non-funded income of Kes43.2 billion that was also supported by higher fees and commissions.

Revenues increased by 19.6 percent to Kes129.9 billion, driven by net interest income which grew by 11.5 percent, supported by a 27.8 percent customer loan growth to KShs.863 billion from lending in the Kenya business and acquisition of international businesses through Congolese lender TMB.

The huge returns were however consumed by the Banks further expansion in the region that saw costs rise 24.1 percent compared to last year on account of increased business activities and impact of BPR and TMB acquisitions.

Subsequently the bank cut dividends to Kes6.4 billion or 15.7 percent of the net earnings, down from Kes9.6 billion last year.

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