KCB Group’s profit after tax shrunk 43% in the nine months ended September 30, 2020, to post Ksh10.9 billion compared to the Ksh19.2 billion posted at the same juncture last year on higher loan loss provisioning.
In its balance sheet for the period under review, the lender set aside Ksh20 billion for this purpose up from Ksh5.8 billion with the bank expecting a huge chunk of its customers to default on their loans in the wake of the COVID-19 Pandemic.
In totality, the group’s balance sheet expanded 27% to read Ksh972 billion.
During the period, bad loans penciled as Non Performing Loans (NPLs) rose to Ksh97 billion from Ksh42.6 billion which might have informed the lender’s decision to make a higher provisioning.
The ratio of NPLs to total loan book increased to 15.2% in the third quarter, from 8.3% posted last year.
The lender also says it has restructured loans loans amounting to Ksh105 billion since the outbreak of COVID-19 pandemic in March this year as borrowers sought moratoriums on loans following intervention from the Central Bank of Kenya (CBK).
“This has been a challenging period for the business, staff, our customers, and the economy. Our focus has been on keeping our staff and customers safe while at the same time giving business support to the communities we operate in as well as our customers. The pandemic has had a deep socio-economic impact and hence our decision to stand with our stakeholders,” said KCB Group CEO & MD Joshua Oigara.
On a brighter front, total operating income grew by 15.7% to Ksh69.1 billion on solid performance by the interest income counter.
Net interest income which perfomed relatively well after investment in government securities increased to Ksh47.9 billion from Ksh.38.7 billion, translating into a 24% increase.
Non-funded income ticked up marginally from Ksh21.0 billion to Ksh21.3 billion, taking a beating from the reduction in loan disbursements to mobile customers.
Net loans and advances grew 19% during the first nine months of the year to Ksh577.5 billion while deposits from customers adjusted up 32% to Ksh772.7 billion .
“While the pandemic is far from over and likely to continue into the next year, further straining the business and economy, we are projecting some recovery as the East Africa region finds some stability in living with the effects of the virus. We will continue to support our customers through the crisis and enhance initiatives geared towards ringfencing the business. Our approach is conserving cash and managing cost,” said Oigara.