By JAMES ANYANZWA

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Regional lender KCB recorded eight per cent growth in net profit during the three months period to March 31.

The performance is buoyed by the improved performance of its regional subsidiaries and the newly acquired National Bank of Kenya.

The group’s profit after tax rose to Ksh6.26 billion ($62.6 million) from Ksh5.77 billion ($57.7 million) in the same period last year with a huge portion of revenues coming from fees and commissions charged on banking transactions and investments in government securities.

However, the bank, which has operations in Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan, says its growth outlook in the whole of this year is not promising largely due to the expected impact on revenues by the Covid-19 pandemic.

The pandemic has seen lenders resort to loan restructuring to cushion borrowers from economic hardship, with governments implementing stringent measures to curb the spread of the disease including restriction of movements and adoption of cashless transactions.

“We are taking all the necessary precautions to safeguard the safety and well-being of our customers, staff and the general public in the wake of the pandemic. We expect our performance to be negatively impacted by the outbreak as business has been disrupted in all our markets. The crisis has taken toll on all segments of our customers, effectively suppressing demand for credit,” said Joshua Oigara, the group’s chief executive.

“We expect performance in the next two quarters to be impacted as the crisis is affecting the ability of customers to service their loans and reducing the demand for credit. We have taken measures to conserve our capital, manage costs and keep a keen eye on liquidity.”

Mr Oigara said the bank is reviewing its operations to focus more on digital banking to protect further the erosion of its revenues.

“We are recalibrating our business to focus more on digital banking and excellence in customer experience to give our clients the best service under the current difficult circumstances,” he said.

Market analysts, however, expect the bank, the biggest in the region by assets and branch network, to weather the economic storm largely due to its strong capital buffers and liquidity position.

“We may see the bad book expand further despite restructuring efforts if the effects of a closed economy continue to be felt in the short to medium term. We however remain confident that the group remains fundamentally sound and holds enough capital buffers to withstand the effects of a challenging economic environment. We therefore encourage investors to take positions at the current price of Ksh37.05($0.37) per share,” reads a market note report released by AIB Capital last week.

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TOUGH TIMES

Lenders in Kenya have warned that a raft of measures adopted to cushion Kenyan borrowers from the effects of the coronavirus pandemic could push them into a loans crisis.

The Central Bank of Kenya issued guidelines that compel lenders to re-negotiate loan repayment terms with borrowers, including payment holidays and penalty waivers.

Kenyan banks are to meet all costs related to the extension and restructuring of loans, waive all charges for balance inquiries on mobile digital platforms and all charges for cash transfers between mobile money wallets and bank accounts.

The banks now warn of a possible financial crisis due to the anticipated revenue loss from these measures.