KCB has posted a 14.1 per cent net profit rise in the first quarter ended March buoyed by increased lending.
The bank made a Sh. 5.1 billion net profit in the review period compared to Sh. 4.5 billion a year earlier, riding on a 5.8 per cent loan book growth that raised interest income 11 per cent to Sh. 15.6 billion.
Investment in government bonds and T-bills rose 1.5 per cent to Sh. 94.6 billion.
KCB also benefited from lower loan loss provision of Sh. 600.2 million, down from Sh. 958.1 million in the same quarter last year despite a 36.1 per cent surge in gross defaults to Sh. 43.7 billion.
Non-interest income was flat at Sh. 5.5 billion, an outcome that the company attributed to reduced forex trading in South Sudan.
KCB’s ratio of total capital to total risk weighted assets dropped by 1.3 percentage points in the review period as provisions for default started to eat into its capital in line with the stricter accounting rules.
“Total capital adequacy ratio dropped by 130 basis points largely driven by the impact of the adoption of the IFRS 9, which came into effect from January 2018,” KCB said in a statement. The move left the ratio above the minimum requirement of 14.5 per cent by 0.8 percentage point, the thinnest buffer it has recorded in recent times.
KCB chief executive Joshua Oigara, however, gave a positive guidance for the full year, which he pegged on expected improvement in economic conditions.
“The outlook for the year is favourable with an expected improvement in economic conditions leading to a pickup in investments across the East African region,” Mr Oigara said. “The business remains strong and our portfolio mix gives us an opportunity to tap into this recovery.”
KCB said its long term debt fell five per cent to Sh. 22.5 billion. Customer deposits grew 8.6 per cent to Sh. 496.3 billion, a move that saw interest expenses rise 12.5 per cent to Sh. 4.2 billion.
Operating expenses rose 1.7 per cent to Sh. 9.4 billion. The lender also deferred taxes amounting to Sh. 786.4 million in the quarter under review.