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Ecobank after-tax earnings register 86pc drop

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Mr Samuel Adjei, Ecobank Kenya MD / Regional Executive. FILE PHOTO | NMG

Ecobank Kenya’s net profit for six months through June shrank 86.1 per cent on reduced lending amid rising bad debt, the mid-tier lender reported in a statement on Friday.

The bank’s net earnings declined to Sh7.6 million from Sh54.70 million a year earlier.

Ecobank advanced Sh8.16 billion less in loans during the review period to Sh20.78 billion, with net interest income falling 18.70 per cent to Sh1.01 billion.

The local unit of the pan-African banking conglomerate, Lome-based Ecobank Transnational, continued to grapple with defaults on its loan book in first six months of the year.

Total non-performing loans jumped nearly one-and-a-half fold to Sh7.13 billion from Sh2.89 billion in June 2016, forcing the lender to more than double loan loss provisions to Sh1.40 billion from Sh633.76 it had set aside 12 months earlier.

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Ecobank, however, managed to cut operating expenses by Sh200 million to Sh1.48 billion, helping lift it out of loss-making territory where it had stayed in the quarter period to March and full-year period ended December 2016.

The lender sank into Sh2 billion full-year loss for period ended December 2016 from Sh90.3 million the previous year, blamed on Sh1.2 billion provisioning for bad loans and a Sh1.9 billion write-off of unamortised premium on government bonds.

“Despite posting growth in interest income from Sh4.1 billion to Sh4.4 billion during the period in review, the impact of the above two business decisions has seen Ecobank Kenya record a Sh2 billion loss in 2016 compared to a profit after tax of Sh90.3 million the previous year,” Ecobank had said on March 27.

The bank mobilised Sh2.34 billion more in customer deposits in the six-month period to June 2017 to Sh32.47 billion, it reported.

The lender is among creditors that moved to court to block Kenya Airways' #ticker:KQ planned conversion of Sh800 million the airline owes into a stake in the ailing business.

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