KCB bank half-year profit tumbles 40pc as Covid triggers defaults

Thursday August 13 2020

Customers waiting to be served at a KCB bank branch in Nairobi, Kenya. FILE PHOTO | REUTERS


Regional lender KCB Group has reported a 40 percent drop in net profit for the six months to June 30, 2020, over increased provisioning to deal with bad loans linked to the Covid-19 pandemic.

The bank, which has operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, and South Sudan, recorded a net profit of Ksh7.57 billion ($75.7 million) compared to Ksh12.72 billion ($127.2 million) in the same period last year.

According to its unaudited financial statements released on Wednesday, KCB set aside Ksh11 billion ($110 million) in provision for potential loan losses that could crystalise as a result of the pandemic impact, compared to Ksh3 billion ($30 million) during the same period last year.

During the six months period, the ratio of non-performing loans (NPLs) to total loan book increased to 13.7 percent from 7.8 percent,  mainly due to consolidation of its subsidiary National Bank of Kenya (NBK) and heightened defaults associated with the pandemic. 

The stock of NPLs increased to Ksh83.9 billion ($839 million) from Ksh 39.1 billion ($391 million) during the period under review.

“The second quarter was the toughest in our recent history as the pandemic hurt economic activity across markets. Most of the key sectors were nearly shut down and our customers continue to face unprecedented challenges,” said KCB Group Chief Executive Officer Joshua Oigara.


“When the virus hit home in March, we made a commitment to look after our customers, staff, and other stakeholders while pursuing business continuity. We intend to keep on this promise even under the current worsening operating environment.”

KCB’s total operating income, however, increased 17 percent to Ksh45 billion ($450 million) from Ksh38.6 billion ($386 million) in June 2019, while the net interest income grew 22 percent to Ksh31.1 billion ($311 million) from Ksh25.4 billion ($254 million), mainly due to additional investments in Government securities and lending.

Non-funded income increased six percent to Ksh14  billion ($140 million) from Ksh13.2 billion ($132 million), driven largely by revenues from the digital proposition, growth in the forex income, and additional income from NBK.

In the first quarter to March 31, KCB recorded eight percent growth in net profit to Ksh6.26 billion ($62.6 million) from Ksh5.77 billion ($57.7 million) in the same period last year.