KCB Group Posts Sh6. 3 Net Profit for the First Quarter of 2020

Kenya Commercial Bank (KCB) Group results released on Wednesday, March 20 indicated that the bank posted Sh6.3 billion in profit after tax in the first quarter of 2020 ending March, a jump of 8 percent from the last year’s quarterly results.

Profits posted for a similar period last year was Sh5.8 billion, driven by stronger non-funded income lines and interest income boost due to loan book growth.

Joshua Oigara, the bank’s CEO and Managing Director said the overall quarterly performance was below expectations due to the tough macroeconomic operating environment.

According to the financial results, the total operating income increased by 22 percent to Sh22.95 billion in the 2020 Q1 compared to Sh18.76 billion in Q1 2019

The net interest income went up by 18 percent to Sh15 billion following additional investments in Government securities and lending. Non funded income rose by 31 percent to Sh7.9 billion from Sh6.1 billion, brought by digital banking, improved foreign exchange earnings and additional income from the recently acquired subsidiary of KCB, the National Bank of Kenya (NBK).

Digital transactions saw non-branch transactions up by 97 percent from 94 percent in Q1 2019 mainly driven by continued focus on mobile, internet and agency banking.

Non-Branch volumes increased to Sh445 billion compared to Sh340 billion in 2019, a 31 percent increase, whereas branch transactions reduced by 8 percent on channel migration initiatives.

On the other hand, operating costs went up to Sh11.1 billion, from Sh9.1 billion (22 percent) on the back of NBK acquisition, increased depreciation in line with IFRS 16 and annual staff salary increments affected in Q1.

The group’s provision expense went up to Sh1.2 billion in 2019Q1 to Sh2.9 billion in this year’s quarter. This was to cover for downgraded facilities brought by the Covid-19 global pandemic which is expected to increase defaulting across key sectors of the local, regional and

However, the company’s balance sheet remained strong, growing to Sh947.1 billion from Sh725.7 billion (31 percent). This was within the range of the Sh1 trillion target by the end of 2022.

Customer deposits went up by 34 percent to Sh740.4 billion on the back of NBK acquisition and onboarding of new customers. Additional Sh53 billion was deposited into the Bank by customers in the last three months from December 2019.

The loan book expanded to Sh553.9 billion, a 19 percent growth from Sh464.3 billion reported in Q1 2019. Asset Quality During the period, the ratio of non-performing loans to total loan book increased to 11.1 percent, mainly due to the consolidation of NBK.

The stock of NPLs increased to Sh66.2 billion up from Sh38.8 billion in 2019, following consolidation with NBK which brought on board Sh25 billion in NPLs. The NPL portfolio is concentrated in trade, personal and real estate segments.

The Group increased the NPL coverage to 65.3 percent from 60.8 percent in 2019 Shareholder Returns.

Despite the challenging environment, the business continued to generate good returns for its shareholders. Shareholders’ funds closed the period at Sh135.6 billion from Sh119.5 billion in 2019, a 13 percent improvement.