FINANCIAL RESULTS

KCB Group profits drop 22% to Sh19.6bn

Excluding NBK, expenses remained flat at Sh36.6 billion boosted savings initiatives undertaken in the year.

In Summary
  • Profits dropped to Sh19.6 billion
  • The bank's total income was up 14 per cent to stand at Sh96 billion, compared with Sh84.3 billion reported in December 2019.
KCB chief executive Joshua Oigara on March 2. Photo/Enos Teche.
KCB chief executive Joshua Oigara on March 2. Photo/Enos Teche.

KCB Group Plc net profit for the year ended December 2020 shrunk 22 per cent to Sh19.6 billion from Sh25.2 billion a year earlier on high Covid-19 loan loss provision.

Announcing the lender's results late Wednesday, KCB Group MD Joshua Oigara said the  pandemic significantly affected the business across the markets with most of them going into some degree of lockdown.

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

He added that signs of recovery were evident at the tail end of the year with increased business activity, and expects  the momentum will carry into 2021.

The bank's total income was up 14 per cent to stand at Sh96 billion, compared with Sh84.3 billion reported in December 2019.

This was largely driven by funded income which grew by 21 per cent largely as a result of interest from Government securities which increased by 65 per cent compared to the previous year.

Non-funded income remained flat to close at Sh28.1 billion on the back of income from trading activities and strong foreign exchange earnings.

While the Group maintained a stringent cost management approach to cushion the business, operating expenses (Sh43.2 billion) were up 12 per cent  mainly 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  savings initiatives undertaken in the year.

According to the bank, the operating environment caused a significant increase in credit risks which pushed up the Group’s cost of risk leading to an increase in loan provisions to Sh27.1billion.

This deterioration in the economy also had a negative impact non-performing loans (NPLs) book which rose to Sh96.6 billion up from Sh63.4billion in 2019,with the NPL ratio rising to 14.7 per cent , mainly due to Covid-19 related downgrades.

The Bank inched closer to crossing the Sh1 trillion balance sheet mark, booking Sh987.8 billion in assets, 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 up12 per cent to Sh767.2 billion.

Shareholders’ equity grew 10per cent  from Sh129.7 billion to Sh 142.4 billion on improved profit for the period.