KCB 6-month profit down marginally to Sh10.26bn

KCB 6-month profit down marginally to Sh10.26bn
KCB Chief Executive Officer Joshua Oigara. PHOTO| FILE

The KCB group has reported a marginal drop in its six month after tax profit for the period ended June.

During the period KCB’s profit stood at Sh10.26 billion down from Sh10.28 billion a year earlier.

The drop in part is attributable to a drop in its loan book from Sh25.7 billion to Sh23.9 billion, seemingly an effect of the interest rate cap that has seen banks hold back lending.

This saw KCB’s interest income drop by over a billion shillings to Sh30.6 billion from Sh31.6 billion a year earlier.

The interest rate cap law took effect in September 2016 with banks now looking at other sources of income as they hold back on lending.

KCB was however able to marginally offset it by increasing income from fees and commission that stood at Sh3.1 billion from Sh2.4 billion banks look for alternative revenue channels.

The realignment in the banking sector saw the bank announce a redundancy plan as it seeks to let go of staff in favor of optimizing digital and agency banking to lower operating costs.

Staff costs during the period rose to Sh9.1 billion from Sh8.1 billion with the bank likely having made provisions for the exercise.

KCB Group chief executive officer Joshua Oigara said the bank had so far weathered the shocks and would be looking to a better second half.

“The banking sector continues to undergo numerous challenges and as a bank, our continuous innovation and customer centric orientation ensures that we remain focused on acting as an enabler for progress to our customers. That is what drives us to excellence,” Mr Oigara said.

During the six month period, alternative banking channels such as Mbenki, KCB M-Pesa and Mobi accounted for 86 percent of the bank’s total transactions.

The board has approved an interim dividend of Sh1 for every share held, payable in the next 90 days.

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