KCB quarter one net profit rises 6.1pc to Sh4.63bn as bad loans surge

East Africa’s largest commercial bank by assets, KCB, was hit by a Sh7 billion increase in gross non-performing loans (NPLs), even as it recorded a 6.1 per cent growth in net profit in the first quarter of the year compared to last year.

Provisioning for loan losses more than doubled to Sh1.34 billion thereby cutting into the company’s net profit that now stands at Sh4.63 billion in the quarter ending March 31, up from Sh4.36 billion in the same period last year.

KCB saw its deposits fall by nearly Sh1 billion, amid the industry talk about flight to safety by customers from small banks to big banks after the collapse of several financial institutions since last year. Its loan book remained flat.

With the net profit standing at Sh4.63 billion the institution now falls behind Equity Bank which reported Sh5.1 billion in net profit for the first three months of the year.

During the quarter, KCB’s dud assets or gross NPLs rose to Sh30.44 billion for the group from Sh23.5 billion last December. The increase arose mainly from the Kenyan unit whose NPLs now total Sh26.1 billion from Sh19.3 billion last December.

The deposits stood at Sh423.43 billion at the end of March, down from Sh424.39 billion in December.

KCB was last month appointed the manager of Chase Bank which had collapsed on April 7, but re-opened its doors on April 27.

READ: KCB takes pole position in battle to acquire troubled Chase Bank

The total loans and advances were flat at Sh345.94 billion as at the end of March compared to Sh345.97 billion in the quarter ended last December.

In terms of assets, the lender’s local and foreign cash was slightly down to Sh11.69 billion compared to Sh11.96 billion at the end of last December.

KCB, however, increased investment in government securities held to maturity to Sh43.59 billion compared to Sh43.25 billion as at the end of last December.

Government securities available for sale increased to Sh45.22 billion up from Sh33.83 billion held as at the end of last December.

KCB paid the Kenya Revenue Authority Sh1.8 billion for the quarter, Sh100 million more than the tax remitted in the same quarter last year — underlining the fears expressed by KRA commissioner-General John Njiraini recently that corporate tax performance would not be as robust as the taxman had projected.

Mr Njiraini said the overall profit for banks in the first three months of this year grew by only five-per cent from the taxman’s perspective.