This archive report was first published on 20 May 2020.
On May 20, 2020, KCB Group announced an 8 percent surge in its net profit to Sh6.3 billion in the first quarter of 2020, compared to Sh5.8 billion in the same period last year.
The Group's Chief Executive Officer and Managing Director, Joshua Oigara, attributed the lower-than-expected quarterly performance to a tougher macroeconomic operating environment.
Despite this, the Group's total operating income rose 22 percent to Sh22.95 billion in the period, driven by stronger non-funded income lines and interest income boost due to loan book growth.
Net interest income increased by 18 percent to Sh15 billion, while non-funded income surged 31 percent to Sh7.9 billion, driven by digital banking, improved foreign exchange earnings, and additional income from National Bank of Kenya, the Group's newest subsidiary.
The Group's focus on digital transactions led to a 97 percent increase in non-branch transactions, mainly driven by mobile, internet, and agency banking. Non-branch volumes increased by 31 percent, while branch volumes decreased by 8 percent due to channel migration initiatives.
On the cost side, operating expenses increased 22 percent to Sh11.1 billion, mainly due to the NBK acquisition, increased depreciation, and annual staff salary increments.
The Group's provision expense increased to Sh2.9 billion, up from Sh1.2 billion last year, to cover for downgraded facilities and expected growth in defaults across key sectors of the economy due to the pandemic.
The Group's balance sheet remained strong, growing 31 percent to Sh947.1 billion, well within the target of Sh1 trillion by the end of 2022. Customer deposits rose 34 percent to Sh740.4 billion, while the loan book expanded to Sh553.9 billion, a 19 percent growth from Sh464.3 billion in Q1 2019.
