Inside Politics

KCB Group profit dips to Sh19.6b

Thursday, March 18th, 2021 00:00 |
KCB Group CEO and MD Joshua Oigara.

KCB Group has reported a net profit of Sh19.6 billion for the full-year period ending December 2020.

This was a 22 per cent decline from the Sh25.2 billion a year earlier as higher provisions for loan losses and subdued economic activity associated with the Coronavirus (Covid-19) pandemic hit business performance. 

“The pandemic significantly affected our business across the markets we operate in, with most of them going into some degree of lockdown,” said the Group’s chief executive and managing director Joshua Oigara.

Oigara said the negative impact on the economy drastically reduced the lender’s customer’s ability to operate, necessitating loan restructures.

Financial highlights

The challenges notwithstanding, Oigara said the lender has strengthened its balance sheet to give the company headroom to support its customers and stakeholders through the crisis while ring-fencing the business for future growth.

During the period under review, according to the financial highlights, total income was up 14 per cent to stand at Sh96 billion, compared with Sh84.3 billion reported in December 2019, driven by a 21 per cent growth in funded income government securities that increased by 65 per cent compared to the previous year. 

However, non-funded income remained flat at Sh28.1 billion, with the performance partially subdued by the waiver on mobile transaction fees.

Operating expenses at Sh43.2 billion were up 12 per cent due to the full year consolidation of National Bank of Kenya (NBK), a subsidiary acquired at the end of 2019.

“Excluding NBK, expenses remained flat at Sh36.6 billion boosted by cost savings initiatives undertaken in the year under review,” said Oigara.

The group also saw provision for loans increase to Sh27.1 billion, with the non-performing loans book rising to Sh96.6 billion up from Sh63.4 billion in 2019.

The bank inched closer to crossing the Sh1 trillion balance sheet mark, booking Sh987.8 billion in assets, which was a 10 per cent jump from the previous year, contributed by loan book growth, funded by increased customer deposits.

Net loans and advances were up 11 per cent to close the period at Sh595.3 billion while customer deposits were up 12 per cent to Sh767.2 billion.

During the period under review, the group maintained healthy buffers on its capital ratios over the minimum regulatory requirement, with total capital for the group standing at Sh170.3 billion, representing a total capital to risk-weighted assets ratio of 21.6 per cent against a regulatory minimum of 14.5 per cent.

The group’s core capital as a proportion of total risk weighted assets closed the period at 18.2 per cent against the Central Bank of Kenya statutory minimum of 10.5 per cent. 

The board has proposed a final dividend of Sh1per share, a proposal Oigara said seeks to balance income distribution to shareholders while protecting capital for the bank in the current operating environment.

Groups chairman Andrew Kairu said the Covid-19 pandemic has accelerated an already rapidly shifting operating landscape, accentuated by elevated customer expectations, digital disruption, and intensified competition.

“Looking ahead into the next 9 months, KCB is optimistic of a gradual economic recovery,” said Kairu, adding that the pandemic has seen the world confront its biggest health crisis in this century, posing one of the most disruptive periods to businesses. 

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