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KCB Group shook off the effects of the ongoing COVID-19 pandemic to post a net profit of KES 6.4 billion in the first quarter of 2021 ending March.
The two percent increase in profitability from KShs.6.3billion a year earlier was on the back of cost-saving initiatives and an increase in net interest income.
Group CEO Joshua Oigara says the economic environment marginally improved in the first quarter of 2021 even as 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.
Oigara also attributes part of the growth in profits to reduced operational costs.
“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,” he said.
The lender grew its net interest income by 11% to close the quarter at KES 16.7 billion driven by a rise in interest-earning assets and effective management of the cost of funding during the period.
This growth was offset by a 20% decline in non-funded income due to
a slowdown in the digital lending and service fees waivers in Kenya to cushion customers from the pandemic. As a result, total income stood at KShs. 23 billion.
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 KShs. 11.1 billion.
The cost of risk went down slightly although loan provision remained at KShs. 2.9 billion in the quarter due to an increase in loan balances.
The stock of Non-performing loans (NPLs) rose to KShs.98 billion up from KShs. 66.2 billion in 2020 while the NPL ratio rose to 14.8% from 11.1% last year mainly on the back of COVID-19 related downgrades.
Total capital for the Group stood at KShs 172.6 billion, representing a total capital to risk-weighted assets ratio of 21.8% against a regulatory minimum of 14.5%.
The Group also injected USD 30 million in additional debt capital to NBK
in April 2021 to enhance the subsidiary’s capital buffers.
KCB Group will hold its 50th Annual General Meeting (AGM) on 27 May 2021 where the board shall seek shareholder approval for the first and final dividend of KShs 1.00 per share which if approved, shall be paid on or before 26 June 2021.
