KCB has nearly doubled its cover for bad loans to Kes4.1 billion in the period that ended March as the regional lender’s net profit for the first quarter this year dipped to Kes9.75 billion from Kes9.85 billion in March 2022.
The lender said increased credit risk and the impact of forex devaluation in Kenya was presenting a challenging operating environment that has greatly impaired the quality of its assets.
In the period, KCB Group’s gross non-performing loans jumped by 34.8 percent to Kes176.5 billion from Kes130.9 billion in March 2022.
The bank’s loan book expanded by 31.9 percent to close the quarter at Kes928.8 billion while customer deposits rose by 41.5 percent to Kes.1.20 trillion, mainly from TMB and additional deposits from the existing businesses.
KCB has nevertheless grown its operating income by 26.9 percent to Kes36.9 billion.
Meanwhile, KCB Group net assets jumped to Kes1.63 trillion with the regional lender’s DRC acquisition Trust Merchant Bank (TMB) contributing Kes1.9 billion in profit before tax and 14 percent to the Group’s total assets.
Non-funded income for the Group rose the fastest at 59.2 percent to Kes14.8 billion due to service fee income stream on enhanced digital capabilities. Customer deposits grew by 41.5 percent to Kes.1.2 trillion.
Group revenue went up by 26.9 percent to Kes 36.9 billion mainly driven by the non-funded income from customer transactions as well as consolidation of TMB, the Group’s newest subsidiary in the DRC.
Consolidation of the DRC unit, however, pushed up Group costs by 53 percent to Kes22.99 billion from Kes14.99 billion, including expenditure to support additional revenues generated, the lender said.
The regional lender said the contribution of Group subsidiaries, excluding KCB Bank Kenya, to the overall profitability was up to 35 percent from 17.2 percent as investments in neigbouring countries continued to pay off.
“Our focus was on delivering value and support to customers to help them navigate the tough economic environment while driving revenue growth for the bank. The first quarter performance highlights the resilience of the business across the corporate and retail franchises. The regional businesses performed well, giving credence to the regional expansion strategy,” said KCB Group CEO Paul Russo.