KCB Group on Wednesday reported a Ksh6.3 billion profit for the first quarter (Q1) ended March 2020, an 8% surge from the Ksh5.8 billion reported at a comparable period the previous year on stronger non-funded income lines and interest income.
Despite the somewhat solid performance, Chief Executive Joshua Oigara said the performance falls below expectation and expects more underwhelming perfomances over the course of the year due to the COVID-19 disruption.
“The operating landscape has further been exacerbated by COVID- 19 immediately shifting our focus to supporting our customers through the crisis, pursuing business continuity and the safety and well-being of our staff and all other stakeholders,” said Mr. Oigara in a statement.
“We expect performance in the next two quarters to be impacted as the crisis is affecting the ability of customers to service their loans and reducing the demand for credit. We have taken measures to conserve out capital, manage costs and keep a keen eye on liquidity,” he added.
As per the financials posted on Wednesday, KCB’s balance sheet remained strong, growing 31% from Ksh725.7 billion to Ksh947.1 billion.
Customer deposits rose 34% to Ksh740.4 billion, a figure which represents the group’s acquisition of the National Bank of Kenya.
The group’s loan book grew fatter to Ksh553.9 billion, a 19% growth from Ksh464.3 billion reported in Q1 2019.
Total operating income adjusted up 22% to Ksh22.95 billion in the period compared to the Ksh18.76 billion posted in Q1 2019.
Net interest income was up 18% to KSh15 billion from additional investments in government securities and lending.
Non funded income surged 31% to Ksh7.9 billion from Ksh6.1 billion, driven by digital banking, improved foreign exchange earnings, and additional income from NBK.
The continued focus on driving digital transactions saw non branch transactions rise 97% up from 94% in Q1 2019 mainly driven by mobile, internet and agency banking.
Operating expenses surged 22% to Ksh11.1 billion, from Ksh9.1 billon following NBK’s acquisition.
Non-Perfoming Loans (NPLs) increased to Ksh66.2 billion up from Ksh38.8 billion in 2019 a figure which also epitomizes the NBK acquisition which came with Ksh25 billion stock of NPLs.
Conversely, the ratio of NPLs to total loan book increased to 11.1%.
Shareholders’ funds closed the period at KShs.135.6 billion from KShs.119.5 billion in 2019