KCB Q1 2021 Profit: KCB Group shook off the effects of the ongoing COVID-19 pandemic to post a net profit of Ksh6.4 billion in the first quarter of 2021 ending 31st March. The 2% increase in profitability from Ksh6.3 billion a year earlier was on the back of cost-saving initiatives and increase in net interest income.
KCB Group CEO & MD Joshua Oigara said the economic environment marginally improved in the quarter although the uncertainties from the pandemic remain a big risk to the outlook. “Focus was on conserving cash, supporting customers navigate the crisis and implementing our strategic focus areas which are anchored on digital banking and excellence in customer experience,” said Mr Oigara.
Revenues have remained flat with the costs declining marginally. Overall performance was largely impacted by lower non-interest income due to subdued digital lending on reduced disbursements and lower customer transactions.
Income Growth
Net interest income grew 11% to close the quarter at Ksh16.7 billion driven by a rise in interest earning assets and effective management of cost of funding. This growth was offset by a 20% decline in non-funded income due to slowdown in the digital lending and service fees waivers in Kenya to cushion customers from the pandemic. As a result, total income stood at Ksh23 billion.
Key Financial Highlights
| Performance Matrix | Q1 2020 | Q1 2021 |
| Profitability | KShs.6.3 | KShs.6.4 |
| Total Assets | KShs. 947B | KShs. 978B |
| Customer Deposits | KShs.740B | KShs.749B |
| Net Loans | KShs.553.9B | KShs.597.1B |
| Cost of Funds | 2.7% | 2.6% |
| % of NPLs | 11.1% | 14.8% |
Cost Management & Loan Provisions
The Group continued to enforce cost management initiatives, ring-fencing the business from the impact of the healthcare crisis. Operating costs remained flat from the previous year, closing at Ksh11.1 billion.
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The cost of risk went down slightly although loan provision remained at Ksh2.9 billion in the quarter due to an increase in loan balances. The stock of Non-Performing Loans (NPLs) rose to Ksh98 billion up from Ksh66.2 billion in 2020 while NPL ratio rose to 14.8% from 11.1% last year mainly on the back of COVID-19 related downgrades.
Capital and Dividend Proposal
The Group’s capital headroom remained strong with its ratios well above the minimum regulatory requirement. The total capital for the Group stood at Ksh172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8% against a regulatory minimum of 14.5%.
The Group injected US$30 million in additional debt capital to National Bank of Kenya in April 2021 to enhance the subsidiary’s capital buffers.
KCB Group will hold its 50th Annual General Meeting (AGM) today 27th May 2021 where the Board shall seek shareholder approval for the first and final dividend of Ksh1.00 per share which if approved, shall be paid on or before 26th June 2021, net of withholding tax to the shareholders that were on the register of Members at the close of business on 26th April 2021.
Outlook
“Quarter two of the year started with a month-long lockdown in Kenya, a reminder that the pandemic is not over yet. We however expect to see a recovery in the last two months of the quarter with an increased in uptake on our mobile platform – VOOMA and a strong balance sheet growth,” said Mr Oigara.
The Group is pursuing new opportunities to strengthen its international businesses, having initiated acquisition of Banque Populaire du Rwanda PLC (BPR) and the African Banking Corporation Tanzania Limited (BancABC Tanzania). The AGM will contain, as part of the agenda, the request to the shareholders for the acquisition of up to 100% of the issued share capital of BPR and BancABC.
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