This archive report was first published on 15 August 2019.
Kenya Commercial Bank (KCB) has reported a five percent increase in profit for the first six months of 2019, reaching Ksh12.7 billion ($122 million).
According to the bank's results, released on August 15, 2019, the profit was driven by a five percent rise in interest income to Ksh25.4 billion ($250 million) and a 15 percent growth in non-funded income to Ksh13.2 billion ($130 million).
However, the bank's bottom-line was impacted by a 266 percent jump in loan loss provision from Ksh0.8 billion ($8 million) to Ksh3 billion ($30 million), as Group Chief Finance Officer Lawrence Kimathi explained:
“The bottom-line was impacted by a 266 percent jump in loan loss provision from Ksh0.8 billion ($8 million) to Ksh3 billion ($30 million). This is something we are looking at keenly to deliver a robust second half performance,”
Kimathi attributed the increase to the absence of a one-off benefit from passing non-performing loans through the balance sheet, as was the case last year during the transition to a new accounting standard.
Despite this, KCB's growth in interest income was driven by a 13.8 percent growth in loan book, pushing up interest on loans and advances to customers to Ksh479 billion ($4 million) from Ksh421 billion ($4 million).
The bank's retail loans grew at 12 percent, while corporate and mortgage loans grew at 10 percent and five percent respectively.
With the Central Bank of Kenya keeping benchmark lending rates at nine percent, no commercial loan was priced higher than 13 percent during the six-month period.
Following the results, the board has approved payment of an interim dividend of Ksh1.00 per share, which will be paid in November 2019.
