KENYA – KCB Group reported a 27.5 percent rise in net profit for the half-year ended June 2022 benefiting from higher income from lending and transactions.

The lender’s net income in the period stood at KSh19.5 billion (US$163.04m), up from KSh15.3 billion (US$127.93m) the same time last year.

KCB did not declare an interim dividend, joining others such as Standard Chartered Bank Kenya and Stanbic Holdings as well as Equity to suspend payouts amid renewed economic uncertainty brought by disputed presidential elections results and rising inflation among other factors.

The country’s second-largest bank by assets has had a tradition of paying an interim dividend of Sh1 per share.

“We delivered solid results, supported by our diversified business model as we sharpened our focus on customer obsession and execution to better support our customers in a rather difficult operating environment,” KCB Group chief executive Paul Russo said at a briefing in Nairobi.

“Despite some uncertainties and headwinds, we saw sustained signs of recovery across the region, allowing us to deliver stronger shareholder value.”

The bank’s total interest income rose 15.7 percent to KSh54.5 billion (US$455.69m) amid increased lending and investment in government debt securities.

KCB’s loan book expanded 20.3 percent to KSh730.3 billion (US$6.11bn) while the purchase of treasuries increased 26.2 percent to KSh246.2 billion (US$2.06bn).

The bank is among institutions that have raised their loan rates in recent months, a move that has raised their margins.

The average interest rate on KCB’s short-term corporate loans, for instance, increased from 12 percent in March to 12.7 percent in June according to Central Bank of Kenya data.

KCB also benefitted from a 29.8 percent surge in non-interest income to KSh19.2 billion (US$160.54m) in the half-year period under review. Banks are expected to record even higher fees from transactions once they are allowed to resume charging on bank-to-mobile payments and transfers.

Fees on the platforms were waived following the outbreak of the Covid-19 scourge in early 2020 to minimise the handling of cash besides offering financial relief to households.

KCB and Equity Group, which have the biggest market share in retail banking with millions of customers, have lost billions of shillings from the waiver of the fees.

KCB’s loan loss provision shrunk by KSh2.2 billion (US$18.39m) to KSh4.3 billion (US$35.95m) despite the stock of gross non-performing loans rallying 81.1 percent to KSh173.4 billion (US$1.45m).

Operating expenses increased 7.9 percent to KSh31.6 billion (US$264.21m), partly driven by staff costs which rose to KSh14 billion (US$117.06m) from KSh12.1 billion (US$101.17m).

The bank earlier said that its payroll expenses have jumped due to the acquisition of Banque Populaire du Rwanda Plc (BPR) and salary increments across its regional operations in response to inflationary pressures.

KCB’s interest expenses increased 30.3 percent to KSh13.9 billion (US$116.22m), partly due to customer deposits rising 15.5 percent to KSh908.5 billion (US$7.6m).

The bank recently commenced the process of buying a controlling 85 percent stake in Trust Merchant Bank in the Democratic Republic of Congo in its latest regional expansion drive.

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