Home Business KCB Group first half net profit down to Ksh 15B

KCB Group first half net profit down to Ksh 15B

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KCB Group has reported a decline in profit after tax to Ksh 15.6 billion in the first six months of the year to June from Ksh 19.5 billion the lender reported over the same period last year.

KCB Group Chief Executive Officer Paul Russo attributes the 20.1pc profit drop to aggressive provisioning on facilities in KCB Kenya, inherited legal claims in National Bank of Kenya (NBK) and staff restructuring costs incurred in KCBK and NBK being an investment to right size the organizations.

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“Despite a challenging economic environment across our operating markets, the business remained resilient delivering a strong balance sheet and increased contribution from regional businesses. Profitability was under pressure in the first half from increased funding costs on higher market deposits rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” said Russo.

During the period under review, loan provisions rose 136pc to stand at Ksh 10.2 billion compared to Ksh 4.3 billion the firm reported in the first half of last year as the lender’s loan book grew by 234.5 billion to stand at Ksh 964.8 billion representing a 34pc increase.

On the other hand, staff costs rose to Ksh 17.5 billion from Ksh 14.1 billion reported last year, a 24.1pc increase.

As a result, the giant lender reported a 60.1pc increase in total operating expenses which surged to Ksh 50.6 billion compared to Ksh 31.6 billion reported last year.

“Looking ahead, noting the actions we have taken and with significantly improved liquidity, business focus is on accelerated performance in the second half of the year while supporting the distressed customers” he added.

KCB Group total assets grew 54pc to stand at Ksh 1.86 trillion in the first half of the year ending June 30, 2023, from Ksh 1.2 trillion.

The balance sheet growth was driven by consolidation of Trust Merchant Bank (TMB) acquired in December 2022, and increase in customer deposits to Ksh 1.47 trillion, the lender said.

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