In what is seeming as a good year for banks in Kenya,KCB bank has earned a huge profit margin of 15.3 billion in the last six months. this is equivalent to 79% of what the earned full year in the year 2020.
The group chief executive officer attributed the success to the relaxation of containment measures, increasing new business models. He also gave a very staunch believe that the bank is doing well in its post covid 19 recovery path.
The bank has also cut provision on loan defaults.
This profit margins saw the bank close its balance sheet past the 1 trillion mark after its rival Equity who closed its balance sheet at 1.2 trillion shillings overall.
KCB is eyeing the purchase of two banks in Rwanda and Tanzania at an estimated figure of 6 billion. The CEO attributed the purchase as the major reason that the bank will not be paying its interim divided this year.
The bank is known for paying its interim divide at one shilling per share and later on paying the final divided but this will not be the case this year.
We are doing a lot of cash investments which are expected to grow our balance sheet at exponential rates and thus we won’t be paying our usual interim dividend this year. We are focusing on this future investments, the Group CEO noted.
Increased lending saw KCB’s net income rise 17.7 percent to Sh36.6 billion. Non-interest income rose by six percent to Sh14.79 billion, despite the continuation of waiver of charges on the bank-to-wallet transfers.
KCB’s bottom line was further supported by a nine percent fall in operating expenses from Sh32.21 billion to Sh29.29 billion as the lender cut provisioning for loan defaults.
Loan loss provisions fell by Sh4.44 billion or 40.3 percent to Sh6.6 billion. KCB said there was no need for a further increase in provisioning since Covid-19-related impairments had been recognised last year.
“We have seen positive vibes coming out of the economy and that number [level of provisioning] speaks to that,” said Lawrence Kimathi, the chief finance officer at KCB.
“We took the necessary provisions last year and did overlays to protect us since we did not have all the information on how Covid-19 was going to pan out.”
8,251 loan accounts with a total value of Sh106.1 billion were restructured to allow customers longer repayment periods or repayment holidays.
90 percent of the loans that the lender restructured to accommodate customers hit by the Covid-19 economic fallout were being serviced.
The bank’s earnings are in line with Central Bank of Kenya (CBK) data that showed banks made a record Sh96.4 billion in profit before tax in the first half of this year.
This is an indication that the industry is recovering well and it is promising handsome dividends to its shareholders.