Kenyan bank KCB Group on Wednesday announced a first half-year after-tax profit of Sh7.6 billion (about $70 million), a 40 percent drop compared to earnings during a similar period in 2019 largely due to the negative effects of COVID-19 pandemic.
CEO Joshua Oigara said that the quarterly period between March and June was the most difficult for the bank in nearly a decade.
Oigara said that disruptions occasioned by the pandemic had forced the bank to do a restructuring of more than Sh100 billion (more than $922 million), the largest in the industry.
“Overall, activities are subdued, our performance has been driven by loans, (and) growth has been quite challenged. We have had to restructure a lot of our customers who face challenges in all sectors from hospitality, transport, tourism, schools and many others.”
Oigara said the bank projected that it will begin recovering in the fourth quarter and the period heading into 2021. He added that the bank may recover quickly as businesses get back on their feet.
“We project a continued strain on the business and economy in the remaining part of the year as the COVID-19 pandemic evolves. We will accelerate our support to customers, roll out cost management initiatives and seek avenues to boost efficiency,” Oigara said.
Despite the deteriorating economic situation, Oigara reiterated the bank’s promise to look after its customers, staff and other stakeholders while pursuing business continuity.
The bank’s total Assets grew by 28 percent to Sh953.1 billion, funded by customer deposits and existing business growth while net loans and advances grew 17 percent to close the period at Sh559.9 billion. Meanwhile, the bank’s customer deposits increased by 35 percent to Sh758.2 billion.
The bank also said that for the six months, the ratio of non-performing loans (NPLs) to total loan book increased to 13.7 percent from 7.8 percent in 2019, mainly due to consolidation of National bank of Kenya and heightened defaults associated with the pandemic. The stock of NPLs increased to Sh83.9 billion up from Sh39.1 billion in 2019.
