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Kenya’s KCB Group H1 after-tax profit plummets 40% due to COVID-19

By George Obulutsa

NAIROBI (Reuters) – Kenya’s KCB Group said on Wednesday its after-tax profit plummeted in the first half, hit by the effects of the novel coronavirus pandemic, and that it expected strained business conditions for the rest of the year.

The bank, Kenya’s biggest lender by assets, said its after-tax profit fell 40% to 7.6 billion shillings ($70.1 million), while pretax profit also slid 28% to 12.82 billion shillings.

“The second quarter was the toughest in our recent history as the pandemic hurt economic activity across markets,” Chief Executive Joshua Oigara said in a statement.

Oigara said the bank expected the rest of the year to be challenging.

“We project a continued strain on the business and economy in the remaining part of the year as the COVID-19 pandemic evolves,” he said.

“We will accelerate our support to customers, roll out cost management initiatives and seek avenues to boost efficiency though digitisation to cushion the business from emerging pressures.”

The bank said it had set aside 11 billion shillings in provisions for loan losses in the first half, up from 3 billion a year earlier, due to the expected impact of the pandemic.

Thursday’s results are the first to fully capture the effects of the COVID-19 pandemic on the bank’s performance.

KCB, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, said its net interest income rose 22% to 31.1 billion shillings, while net loans and advances rose 17% to 559.9 billion shillings.

During the first half it restructured 101 billion shillings in facilities to cushion customers against the effects of the COVID-19 crisis, it said.

It said its ratio of non-performing loans to total loans rose to 13.7% from 7.8% a year before, mainly due to the consolidation of NBK – which it acquired last year – and increased defaults due to the pandemic.

($1 = 108.3500 Kenyan shillings)

(Reporting by George Obulutsa; Editing by Jan Harvey)

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