KCB Group profit for the first six months of 2019 hit Sh 12.7 billion, up five percent compared to same period last year.
The results were delivered on the back of a five percent rise in interest income to Sh25.4 billion as non-funded income grew 15 percent to Sh13.2 billion.
KCB Group #ticker:KCB profit for the first 6 months of 2019 hit Sh12.7 billion, up five percent compared to the same period last year despite loan loss provisioning nearly quadrupling to Sh3 billion.
The growth was a slower pace than the 18 percent rise that had been booked in the previous half-year, even as Group Chief Finance Officer Lawrence Kimathi played down the increased provisioning.
Mr Kimathi said the 266 percent jump in loan loss provisions from Sh0.8 billion to Sh3 billion was just a reflection of the absence of one-off benefit of passing non-performing loans through balance sheet as was last year during transitioning to the new accounting standard.
“This big increase in loan provision is mostly due to the impact of day one adjustments done during implementation of IFRS 9 last year,” he said yesterday during the release of results in Nairobi.
“The top-line is driving growth. The issue we have is on provisioning but this is something we are looking at very closely to deliver a robust second-half performance.”
The increased provisioning put pressure on costs, pushing operating expenses to Sh20.64 billion. This is 11.4 percent higher than the previous similar period.
During the period, interest income grew five percent rise to Sh25.4 billion as non-funded income grew 15 percent to Sh13.2 billion.
The growth in interest income was chiefly driven by 13.8 percent growth in loan book, pushing up interest on loans and advances to customers to Sh479 billion from Sh421 billion.
Retail loans grew at 12 percent while corporate and mortgage grew at 10 percent and five per cent respectively.
Group Chief Executive Joshua Oigara termed the performance as solid with rate cap remaining in place and the sector continuing to chase for more efficiency.
“We had a strong second quarter and witnessed continued growth across our businesses segments. The investment in technology generated a positive return and further helped drive efficiency,” he said.
The result puts KCB ahead of its closest competitor Equity Group #ticker:EQTY which closed the period with Sh11.92 billion net profit, being nine per cent jump.
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Note: The results are not exact but very close to the actual.
