KCB Group first-half pretax profit rises 5pc to record Sh17.93billion

Kenya’s biggest lender by assets KCB Group on Thursday reported a 5% jump in its pretax profit for the first half of the year to Sh17.93 billion shillings.

The bank, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, said in a statement it boosted its provisions for bad debts to 3 billion shillings during the period, from 0.8 billion shillings a year earlier.

It expects to complete its takeover of National Bank of Kenya in a share-swap transaction by the end of this quarter, it added.

“We had a strong second quarter and witnessed continued growth across our businesses segments. The investment in technology generated positive return and further helped drive efficiency and deepen access to affordable financial services in all markets,” said the Group CEO and MD.

Net interest income increased by 5% to KShs. 25.4 billion, attributable to a 14% expansion of the loan book and a marginal 2% increase in the interest expense. Fees and commissions increased by 31% to KShs. 8.9 billion as revenues from digital channels in particular KCB M-PESA grew significantly powered by the new platform launched late last year. The value of loans disbursed via the service during the period of review increased from KShs. 14.9 billion in H1 2018 to KShs. 66.7 billion in H1 2019.

Total operating income was up 8% to KShs. 38.6 billion from KShs.35.6 billion on the back of strong non-funded income which grew 15% to KShs.13.1 billion. Operating expenses increase of 2.6% was well below inflation to close at KShs.17.6 billion. Loan loss provision on the other hand saw a significant increase to KShs. 3 billion from KShs. 0.8 billion reported same period in 2018.

“This big increase in loan provision is mostly due to impact of day 1 adjustments done during implementation of IFRS 9 last year,” said KCB Group CFO Lawrence Kimathi. “Our cost management initiatives continue to bear fruits and is now becoming embedded in the culture,” he added.