Kenya Commercial Bank (KCB) net profit increased 18 per cent to Sh7.1 billion in the first half of the year helped by cheap deposits and improved earnings from its regional subsidiaries.
The lender Thursday reported that contribution from its operations in Tanzania, Rwanda, Uganda, South Sudan and Burundi grew 80 per cent to Sh879 million as June 2013 compared to Sh487 million a year earlier.
KCB grew its loan book by six per cent to Sh214 billion and mobilised cheap deposits leading to net interest income of Sh16 billion compared to Sh14.3 billion in June last year.
The bank, ranked top in terms of assets, said its deposit base stood at Sh287 billion up from Sh278 billion a year ago.
“The subsidiaries are performing well and contributed significantly to the group profitability,” said Joshua Oigara, group chief executive of KCB Group.
“We also retired expensive fixed deposits and we want to mobilise cheap deposits and lend aggressively.”
KCB is now ranked Kenya’s most profitable lender ahead of Equity which posted Sh6.3 billion in half-year profits and Co-operative Bank at Sh4.7 billion.
The bank’s staff costs increased seven per cent to Sh6.3 billion, attributed to a Sh750 million one-off cost in laying off 200 staff members early this year.
KCB’s volume of bad loans was up 73 per cent to Sh8.8billion, blamed on a government freeze on paying State suppliers in the run up to the March poll.
This is in line with an industry-wide trend which saw total non-performing loans increase 10 per cent as at the end of June.
KCB stock was quoted at Sh43 on Thursday 0800 GMT; unchanged from Wednesday’s average closing price at the Nairobi bourse.
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