KCB Group has posted a 22.2 per cent slump in full year 2020 earnings to Kes19.6 billion from a higher Kes25.2 billion at the end of 2019 on the back of higher loan loss provisions and uptick in operating expenses.

In a year that Covid-19 pandemic triggered massive job losses and disruptions in the economy, KCB provided Kes27.5 billion for bad loans from a lower Ksh8.9 billion previously.

“The pandemic significantly affected our business across the markets we operate in, with most of them going into some degree of lockdown. The negative impact on the economy drastically reduced our ability to operate necessitating loan restructures. Signs of recovery were evident at the tail end of the year with increased business activity, and we believe this momentum will carry into 2021,” said the Group CEO Joshua Oigara.

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In the period under review, KCB's total income grew by 14 per cent to Kes96.0 billion, compared with Kes84.3 billion recorded in December 2019.

This was largely driven by funded income which went up by 21 per cent fueled by interest from government securities which increased by 65 per cent compared to the previous period.

The bank's non-funded income remained flat to close the year at Kes28.1 billion on the back of revenue from trading activities and strong foreign exchange earnings.

The performance of non-funded income was partially weighed down by the waiver on mobile transaction fees, which kicked in on the onset of the Covid-19 pandemic to help cushion customers.

KCB’s 2019 move to acquire and consolidate its rival, the National Bank of Kenya, saw its operating expenses soar by 12 per cent to Kes43.2 billion in the year under review.

With economic fallout of Covid continuing to inflict a heavy toll on industries, KCB’s non-performing loans book rose to Kes96.6 billion up from Kes63.4billion in 2019, mainly due to pandemic related downgrades.

As the pandemic raged, KCB was forced to restructure 20 per cent of loans with borrowers in real estate, hotels and hospitality, education and construction affected most. Mr Oigara said the bank will extend loan moratoriums to its customers this year, adding “this is the year to provide support and partnerships with our customers.”  

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Nevertheless, the bank has defied the weight of the profit decline to declare a surprise first and final Kes1 dividend per share from Kes3.50 last year.

The bank has moved closer to the Kes1 trillion balance sheet mark after booking Kes987.8 billion in assets, a 10 per cent jump from the previous year, contributed by loan book growth, and rising customer deposits.

Net loans and advances were up 11 per cent to close the period at Kes595.3 billion while customer deposits rose 12 per cent to Kes767.2 billion.

KCB plans to cement its presence in the regional banking industry by acquiring Atlas Mara Limited Group shares in Banque Populaire du Rwanda PLC (BPR) and in African Banking Corporation Tanzania later this year.