KCB Group profit after tax has declined 43% in the third quarter ending 30th September 2020, to register Kshs. 10.9 billion compared to Kshs. 19.2 billion the lender recorded last year.
The lender attributes the reduced earnings in nine months of the year to increased expenses it set aside to cover potential loan defaults, otherwise known as loan loss provision, which surged to Kshs. 20 billion from Kshs. 5.8 billion.
The bank says it has restructured loans amounting to Kshs. 105 billion since the outbreak of COVID-19 pandemic in March this year as borrowers sought new terms on loans.
According to the bank, the amount of bad loans also known as non-performing loans during the period under review rose to Kshs. 97 billion from Kshs 42.6 billion indicating the impact COVID-19 has had on its borrowers.
The ratio of NPLs to total loan book increased to 15.2% in the third quarter, from 8.3% registered in 2019, on account of the consolidation of NBK and COVID-19 related downgrades.
“This has been a challenging period for the business, staff, our customers, and the economy. Our focus has been on keeping our staff and customers safe while at the same time giving business support to the communities we operate in as well as our customers. The pandemic has had a deep socio-economic impact and hence our decision to stand with our stakeholders,” said KCB Group CEO & MD Joshua Oigara.
Net loans and advances grew 19% during the first nine months of the year to top KShs. 577.5 billion, the lender said.
Deposits from customers which shot up 32% to reach KShs. 772.7 billion and the acquisition of the National Bank of Kenya in September last year saw the Group’s balance sheet expand 27% to stand at Kshs. 972 billion.
According to the financials released on Wednesday, total income was up 16% to stand at KShs. 69.1 billion, compared to KShs.59.7 billion reported in September 2019.
Despite setbacks on personal loans, net interest income which was sustained by investment in government securities increased to KShs.47.9 billion from KShs.38.7 billion, a 24% increase.
During the period, non-funded income was slightly up from KShs.21.0 billion to KShs.21.3 billion, impacted by the reduction in loan disbursements to mobile customers during the period.
“While the pandemic is far from over and likely to continue into the next year, further straining the business and economy, we are projecting some recovery as the East Africa region finds some stability in living with the effects of the virus. We will continue to support our customers through the crisis and enhance initiatives geared towards ringfencing the business. Our approach is conserving cash and managing cost,” said Oigara.