KCB Group Plc. has reported KShs.6.3 billion in profit after tax in the first quarter of 2020 ending March. This is an 8 per cent jump from the KShs. 5.8 billion posted a similar period last year. The jump is driven by stronger non-funded income lines and interest income boost due to loan book growth.
The earnings included the performance of the newly-acquired subsidiary, National Bank of Kenya (NBK). Whose net profit more than doubled to Sh154.9 million from Sh66.2 million over the same period.
KCB chief executive Joshua Oigara said the results were below expectations, attributing to the tougher Macroeconomic environment.
“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,” Mr Oigara said.
The Bank’s total operating income rose from 22 per cent to KShs. 22.95 billion in the period compared to KShs.18.76 billion in Q1 2019. Net interest income was up by 18 per cent to KShs.15 billion from additional investments in Government securities and lending.
Non funded income grew by31 per cent to KShs.7.9 billion from KShs.6.1 billion, driven by digital banking, improved foreign exchange earnings and additional income from National Bank of Kenya, the newest subsidiary of KCB Group.
Additionally, the continued focus on driving digital transactions saw non-branch transactions rise by 97 per cent up from 94 in Q1 2019. The growth is mainly driven by mobile, internet and agency banking. Non-Branch volumes increased by 31per cent amounting to KShs.445 billion from KShs.340 billion same p[period last year. While branch decreased by 8% on channel migration initiatives.
Cost Management On the cost side, operating expenses increased 22 per cent to KShs.11.1 billion, from KShs.9.1 billion on the back of NBK acquisition, increased depreciation in line with IFRS 16 and annual staff salary increments effected in Q1.
The Group posted a higher provision expense from last year’s KShs1.2 billion to KShs.2.9 billion to cover for downgraded facilities, with expected growth in defaults across key sectors of the economy attributable to the pandemic.
“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.