KCB profit down 43 percent from higher loans default cover


KCB Group CEO Joshua Oigara during the release of the bank's half year financial results ...
KCB Group CEO Joshua Oigara during the release of the bank's half year financial results on August 12, 2020 PHOTO | COURTESY

In Summary

  • The significant earnings slide is heavily attributable to the bank’s increased cover for potential loan defaults associated with riskier customer borrowing profiles under the COVID-19 pandemic.
  • The bank’s total operating costs in the period rose by 149 per cent to Ksh.67.4 billion as loan provisioning costs jumped by three and a half times to Ksh.20 billion from Ksh.5.8 billion last year.
  • The lender nevertheless marked growth in its balance sheet which edged it closer to its Ksh.1 trillion asset base goal as total assets moved to Ksh.972 billion

KCB Group has reported a 43 per cent decline in profit through the first nine months of the year to September 30, 2020. The lender’s profit in the period stood at Ksh.10.9 billion from Ksh.19.2 billion last year.

The significant earnings slide is heavily attributable to the bank’s increased cover for potential loan defaults associated with riskier customer borrowing profiles under the COVID-19 pandemic.

The bank’s total operating costs in the period rose by 149 per cent to Ksh.67.4 billion as loan provisioning costs jumped by three and a half times to Ksh.20 billion from Ksh.5.8 billion last year.

Similarly, KCB Gross non-performing loans (NPLS) soared by two fold to Ksh.97 billion from Ksh.42.6 billion last year.

“This has been a challenging period for the business, staff, our customers and the economy. Our focus has been on keeping our staff and customers safe while at the same time giving business support to the communities we operate in as well as our customers. The pandemic has had a deep socio-economic impact and hence our decision to stand with our stakeholders,” said KCB Group CEO Joshua Oigara.

The bank’s operations however remained solid in the period as its total operating income grew by 15.7 per cent to Ksh.69.1 billion on greater interest income.

KCB net interest income hit Ksh.47.9 billion from Ksh.38.7 billion while its non-interest funded income stream remained flat at Ksh.21 billion.

Further, the lender marked growth in its balance sheet which edged it closer to its Ksh.1 trillion asset base goal as total assets moved to Ksh.972 billion.

KCB’s earnings per share (EPS) has nevertheless shrunk to Ksh.4.52 from Ksh.8.33 as a result of the profit slide.

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Story By Kepha Muiruri
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