Improved revenue streams and lower cost of funding have seen regional lender KCB half-year net profit surge by 102 per cent to Kes15.3 billion from Kes7.6 billion realised in the six months to June 2020.
KCB Group net interest costs eased to Kes29.3 billion from a higher Kes32.2 billion as loan loss provisioning decreased to Kes6.6 billion from Kes11 billion recorded by June 2020.
“We saw a strong first half of the year for the business with improved economic activity. The resilient and diversified nature of our business has helped us navigate the unfolding impact of the COVID-19 pandemic” KCB Group CEO Joshua Oigara said.
In the six months to June, KCB Group customer deposits were up by four per cent to Kes786.03 billion mainly due to current and savings accounts, while loans grew nine per cent on account of corporate term loans and retail check offs during the period to close at Kes606.9 billion.
The lender disclosed that 90 per cent of all restructured loans are now performing normally with the balance being loans advanced to sectors that are likely to take some time before recovering.
The non performing loans may be attributed to the bank’s relatively high exposure to the hospitality sector which is about 4.4 per cent of the loan book compared with 3.4 per cent exposure of other banks. Hospitality sector has been hit hard by the pandemic.
In the period, KCB Group total operating income surged to Kes51.2 billion from a flat Kes45 billion last year attributable to higher interest and non-funded income.
“We have seen a strong performance and contribution from our subsidiaries, a 54 per cent growth in profit before tax (PBT). Total contribution to PBT from the subsidiaries outside of Kenya now stands at 15.2 per cent,” noted Mr Kimathi.
The group’s subsidiaries reported positive growth in profitability, which the exception of KCB Uganda, whose profitability declined 16 per cent year on year to Kes182 million. National Bank of Kenya reported the highest growth in profitability, a 446 per cent year on year surge to Kes1.02 billion.
As more and more transactions in the economy turn cashless KCB Group data shows that 98 per cent of their transactions are now taking place outside the branch channels.
The bank’s Mobi Service transactions posted 96 per cent jump in the half with 19 deals per customer per month as more clients embrace mobile banking.
“The value of mobile transactions was up 104 per cent to Kes1.1 trillion with over Kes172 billion in net mobile banking deposits,” Mr Oigara noted.
With the impressive earnings for the half, KCB Group balance sheet has grown by 7 per cent closing at historic Kes1.022 trillion from Kes953 billion.
Equally, the lender’s earnings per share went up closing at Kes8.53 from Kes5.33.
However, the board did not recommend the payment of interim dividend for the trading period.
“The real reason we haven’t recommended an interim dividend is to enable the Group to complete the acquisitions in Rwanda and Tanzania as they are largely cash transactions,” said KCB Group CEO Joshua Oigara.
The lender’s acquisition of Banque Populaire du Rwanda (BRP) is expected to close in quarter one while that of the African Banking Corporation (ABC) in Tanzania is set to close in the third quarter, added Mr Oigara.
The bank’s disclosures show that total capital for the Group stood at Kes172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8 per cent against a regulatory minimum of 14.5 per cent.