KCB Group half year net profit has fallen by Sh. 4 billion. This decline represented a 20 per cent drop from Sh. 19.5 billion net profit that was recorded in the six month period of 2022 to Sh. 15.5 billion.
The profit drop has been attributed to staff restructuring costs and provisioning for loan defaults that has nearly tripled.
The operating costs were made up from a rise in provisions for non performing loans, a 24 per cent rise in staff costs to Sh. 17.5 billion and a 79.8 per cent jump in other operating expenses to Sh. 17.1 billion.
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These saw operating expenses increase by 60 per cent to Sh. 50.61 billion in the period provisioning for non-performing loans increased 2.4 times to Sh. 10.2 billion from Sh. 4.32 billion.
The lender’s net interest income grew 12.1 per cent to Sh. 45.5 billion while the loan book expanded by 32.3 per cent to Sh. 964 billion. At the same time, non-interest income grew by 30.3 per cent to Sh. 27.56 billion.
“Profitability was under pressure in the first half from increased funding costs on higher market deposit rates, prudent provisioning on legacy credit facilities, and provisions for legacy legal claims at NBK,” KCB Group chief executive officer Paul Russo said.
“Looking ahead, noting the actions we have taken and with significantly improved liquidity, business focus is on accelerated performance in the second half of the year while supporting the distressed customers.”
