KCB Group Plc has recorded a Profit After Tax of KES 16.1 Billion for the first half of 2023, representing a decline of 17.9% compared to the same period in 2022, which recorded KES 19.6 billion.
The lender said the decline was attributed to multiple factors, including an increase in Loan Loss Provisions by 137.2%, coupled with a KES 3.8 billion loss in National Bank of Kenya (NBK), a subsidiary of KCB Group.
During the first quarter of 2023, the bank recorded a 1% decline in PAT to KES 9.8 billion compared to KES 9.9 billion in Q1 2022. During the half year period, the trend was accelerated by a significant increase in both Total Interest and Operating Expenses at 77% and 60.1% respectively.
“Despite a challenging economic environment across our operating markets, the business remained resilient delivering a strong balance sheet and increased contribution from regional businesses. Profitability was under pressure in the first half from increased funding costs on higher market deposits rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” said KCB Group CEO Paul Russo.
“Looking ahead, noting the actions we have taken and with significantly improved liquidity, business focus is on accelerated performance in the second half of the year while supporting the distressed customers” he added.
Despite the decline in bottom line, KCB Group’s total assets registered a 58.3% increase, reaching KES 1.9 trillion from KES 1.2 trillion. About 32% of this growth was be attributed to organic expansion, while the consolidation of Trust Merchant Bank (TMB) in DR Congo acquired in December 2022 contributed 22%.
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The bank’s loan and advances portfolio expanded by 32.1% to KES 964.8 billion in HY2023 compared to KES 730.3 billion in HY2022. Trust Merchant Bank (TMB) in DR Congo accounted for 10%, while the remaining 22% was attributed to organic expansion. Similarly, KCB Group’s holdings of Government securities increased by 26.5% to reach KES 320.3 billion.
KCB Group’s Total Interest Income surged by 28.6% driven by a 33.3% growth in interest income from loans and advances. The lender attributes the growth to the expansion of the loan book, buoyed by the approval and implementation of a risk-based pricing model. Total Interest Expenses rose by 77% as a result of deposit growth and the elevated cost of funds.
Non-Funded Income increased by 43.8% to KES 27.6 billion, fuelled by a 20.4% growth in foreign exchange trading income and a significant 101.6% surge in other fees and commissions income.
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