KCB full-year profit falls by 22 per cent to Ksh.19.6 billion

Lender KCB has disclosed a 22.2 per cent profit dip for the year ending in December 2020 with earnings falling to Ksh.19.6 billion from Ksh. 25.2 billion in 2019.

The significant plunge in earnings is largely attributable to a higher cover for loan defaults with the provision costs rising to Ksh.27.5 billion from Ksh.8.9 billion previously.

The bank like many of its peers was forced to make increased provisions as borrower risks surged with its own stock of non-performing loans swelling to Ksh.96.6 billion from a lower Ksh.63.4 billion a year earlier.

While the higher loan loss cover raised overall expenses, the bank defied the tough operating environment to grow both its interest and non-interest funded (NFI) income streams.

Interest income for instance soared to Ksh.88.7 billion from Ksh.74.4 billion while NFI grew marginally to Ksh.28.5 billion from Ksh.28.2 billion.

KCB Group Managing Director Joshua Oigara nevertheless expects a turnaround in customer abilities to repay back loans to nullify the heightened credit risks to banks as seen across their performance in 2020.

“The pandemic significantly affected our business across the markets we operate in, with most of them going into some degree of lockdown. The negative impact on the economy drastically reduced our customers’ ability to operate necessitating loan restructures. Signs of recovery were evident at the tail end of the year with increased business activity, and we believe this momentum will carry into 2021,” he said.

“Despite the challenges, we strengthened our balance sheet to give us room to support our customers and stakeholders through the crisis while ring-fencing the business for future growth. I am proud of our staff who showed great dedication and commitment, enabling us to continue offering banking services at all our touch points.”

KCB Group has nevertheless held off the concerns to declare an unlikely Ksh.1 final dividend to shareholders even as its earnings per share declined to Ksh.6.10 from Ksh.8.11 a year before.

The Group has however fallen shy off crossing its desired Ksh.1 trillion balance-sheet in the period with assets sitting at Ksh.987.8 billion to leave its peer Equity Group as the only bank with the landmark balance-sheet.

KCB’s asset base includes Ksh.595.3 billion in net loans and advances to customers and Ksh.767.2 billion in customer deposits.