KCB Group reported on Thursday that its profits had grossly dropped by 43.1% in the past nine months attributed to the deadly Covid-19 pandemic.
'The performance was largely impacted by increased provision on loans and advances in the wake of increased risk of credit default associated with the Covid-19 pandemic,' KCB said in a statement.
The lender raised its provision for potential loan losses 3.4 times to Sh20 billion from Sh5.8 billion, eating into its bottom-line.
The non-performing loans more than doubled to Sh96.9 billion or 16.8% of the total loan book.
The ramp-up in provisioning overshadowed robust earnings from the mainstay lending business, which saw total interest income jump 23% to Sh63.2 billion.
KCB's loan book expanded 18.7% to Sh577.5 billion but the lender invested most of its cash in government debt securities to mitigate the risk of defaults.
Its stock of bonds and T-bills surged 91.6% to Sh216.5 billion, contributing to the increase in total interest income.
Kenya confirmed its first case of coronavirus on March 12, setting off a series of public health measures that have hurt workers and companies' earnings including the closure of bars, ban on international travel and lockdown of counties like Nairobi and Mombasa.
Some of the restrictions have been removed but the economic damage is expected to linger for months.
KCB says it restructured loans worth Sh105 billion in the nine-month period to give financial relief to customers whose earnings have dropped due to the pandemic.
'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 African region finds some stability in living with the effects of the virus,' said chief executive Joshua Oigara in a statement.
'We will continue to support our customers through the crisis and enhance initiatives geared towards ring-fencing the business. Our approach is conserving cash and managing cost.'
KCB Group, for instance, suspended its interim dividend when announcing financial results for the half-year ended June in a move that saved it Sh3.2 billion.
The lender's interest expenses rose 20.7% to Sh15.4 billion, partly reflecting the impact of a 31.6% growth in customer deposits to Sh772.6 billion.
businessdailyafrica
Source : https://taarifa.rw/kcb-profits-drop-by-43-due-to-covid-19/
