Considered the most profitable lender in East Africa, KCB Group has posted KSh 7.6 Billion in its 2020 half-year net earnings, a 40% decline from the previous period last year.
This subdued performance is attributed to huge provisions made on its loan book to cover the high loan default rates due to disruptive effects of coronavirus on its borrowers.
The first lender to release its H1, 2020 financials, KCB’s performance provides a sneak preview into the stress levels the industry is experiencing as a result of the pandemic.
During the past six months, the lender has restructured facilities worth KSh 101 billion to shield distressed borrowers against effects of the pandemic.
The Group’s balance sheet grew by 28% to KSh 953.1 Billion, funded by customer deposits and existing business growth.
Net loans and advances grew 17% to close the period at KSh 559.9 Billion. On the funding side, customer deposits were up 35% to KSh 758.2 Billion.
For the first six months, the ratio of non-performing loans (NPLs) to total loan book increased to 13.7% from 7.8% in 2019, mainly due to consolidation of NBK & heightened defaults associated with the pandemic.
The stock of NPLs more than doubled to KSh83.9Billion up from KShs 39.1Billion over a similar period last year.
KCB said Q2 of this year has been the toughest, a period that coincided with lockdowns in Nairobi and Mombasa
The lender said the second quarter of 2020 had been the toughest in its recent memory as the pandemic ravaged businesses in all markets it operates in.
“Most of the key sectors were nearly shut down, and our customers continue to face unprecedented challenges, ” said Joshua Oigara, KCB Group CEO.
The group’s total comprehensive income, which includes net income and unrealized income, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses, declined from KSh 11.7 Billion in H1, 2019 to KSh 8.6 Billion at the end of six months period ended 30th June 2020.
Staff costs rose significantly from KSh 8.9 Billion in H1, 2019 to KSh 10.1 Billion in H1, 2020 as the lender completed its acquisition of state-owned National Bank of Kenya(NBK).
The lender’s gross profit declined to KSh 12.8 Billion during the period under consideration.
KCB Group is considered one with the largest branch network in the East Africa region with more than 344 branches, 1,055 ATMs and 23,302 agents.
It has a subsidiary in South Sudan, Burundi, Rwanda, Uganda and Tanzania as well as a representative office in Ethiopia. Other investments include KCB Capital Limited, KCB Insurance Agency, KCB Foundation and Kencom House Limited.