Home Finance & Banking KCB Group’s Half year profit surge 14 per cent, postpones rights issue

KCB Group’s Half year profit surge 14 per cent, postpones rights issue

by Tullah Stephen

By Tullah Stephen

KCB group on Thursday, reported a 14 per cent surge in its half-year pretax profits to KSh 15.1 billion. The bank attributed the result to increased lending as well as tight cost management during the period in review.

The group’s total asset declined by 1 per cent to KSh560 billion from KSh567 billion reported in the first half of the year. The group also reported a 2 per cent decline in customer deposits to KSh433 billion down from KSh443. the group’s CEO Mr Joshua Oigara, attributed the decline in both the total assets and customer deposits to the devaluation of the South Sudan pound.

Net loans also saw an 8 per cent increase to KSh321 billion to KSh347 billion in the period under review. The net interest, the revenue generated from the bank’s assets and the expenses and paying out its liabilities, also jumped by 16 per cent to KSh22.5 billion from 19.4 in the same period last year.

The Group’s Non Performing Loans (NPLs) grew 36 per cent during the six months in review, said Mr Oigara, adding that the management was pursuing more sustained recovery efforts to reverse the downward trend. The bank reported that the 2016 NPL increase was driven by three key accounts which included two in Construction and on being a Government body. According to Central Bank of  Kenya, non performing ratios deteriorated to 6.8 per cent at the end of 2015, form 5.6 per cent as a result of delays in payment to suppliers and contractors.

KCB Group’s total expenses were up by 6 per cent in line with inflation, bringing the Cost to Income Ratio down from 48.6 per cent last year to 47.9 per cent.

The financials also show that total liabilities at KShs 469 Billion decreased by 4 per cent from 488 billion the previous year. The group’s equity decreased by 1 per cent due to a drop in customer deposits and depreciation of the South Sudan Pound while shareholders’ funds are up 16 per cent due to a higher profitability during the period. The group also saw its borrowed funds declined by 21 per cent due to repayment of debt.

The group also announced the postponement of its rights issue as a result of what it termed as strong projected cash flow for the full year. The group intends to raise KSh10 billion from the rights issue.

The Bank, also said the Group CEO, continues to deepen its investment in technology innovations to drive its digital banking agenda. Last week, the Bank refreshed its mobile banking application to enhance its capabilities and guarantee tighter security features.

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