KCB Group #ticker:KCB, Kenya’s largest bank by assets, has announced a 5.03 per cent growth in third quarter net profit to Sh15.1 billion, helped by cost cutting and a strong growth in transactions income.
The lender defied a 3.6 per cent total interest income drop to Sh46.8 billion to post positive profit growth at a time when most banks have been announcing a decline in earnings following last year’s interest rates cap.
Total non-interest income jumped 18.38 per cent to Sh17.5 billion in the period ended September 30, driven by a sharp rise in transaction fees.
The lender’s interest expense on customer deposits on the other hand dropped by 13.17 per cent to Sh9.9 billion, improving its margins.
KCB’s loans and advances dropped 4.39 per cent to Sh37.1 billion as the bank adopted a cautious lending approach in wake of the control on cost of loans.
Investments in government securities went up 1.92 per cent to Sh9.2 billion in the quarter compared to Sh9.1 billion in a similar period a year earlier.
The non-funded income included earnings from foreign exchange trading, mobile banking and diaspora remittances.
Provisions for bad debts decreased 7.75 per cent as total non-performing loans jumped 16.69 per cent or by Sh4.4 billion to Sh30.9 billion in the period.
Group chief executive Joshua Oigara said the performance was achieved on the back of the effects of the interest rates cap and an economic slowdown during the quarter, when the political season set in.“Our business fundamentals remain strong,” said Mr Oigara in a statement.
“As the business environment evolves, it is important for the group to expand its revenue streams to remain competitive. This aggressive focus on non-branch channels leveraged on our Fintech strategy is paying off,” said Mr Oigara.
The CEO said KCB expects alternative revenue channels to be the lender’s growth driver in the next few years.
The bank has pegged its future on its financial technology strategy that rides on a digital platform to provide online services for its customers.