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KCB buy buy buy
Ericsson
#1201 Posted : Wednesday, August 12, 2020 7:39:27 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#1202 Posted : Wednesday, August 12, 2020 8:29:08 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
Ericsson wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn


Culprit is the provision for bad debts up by 264% from ksh.3bn to 11bn.

All the subsidiaries were profitable with the aggregate PBT up 22% to ksh.1.5bn
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
heri
#1203 Posted : Wednesday, August 12, 2020 8:39:33 PM
Rank: Member


Joined: 9/14/2011
Posts: 777
Location: nairobi
Ericsson wrote:
Ericsson wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn


Culprit is the provision for bad debts up by 264% from ksh.3bn to 11bn.

All the subsidiaries were profitable with the aggregate PBT up 22% to ksh.1.5bn


Can someone help me understand, if they have restructured loans worth over sh 100B and growing, the provision will be much more i guess by year end?
Ericsson
#1204 Posted : Wednesday, August 12, 2020 8:46:59 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
heri wrote:
Ericsson wrote:
Ericsson wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn


Culprit is the provision for bad debts up by 264% from ksh.3bn to 11bn.

All the subsidiaries were profitable with the aggregate PBT up 22% to ksh.1.5bn


Can someone help me understand, if they have restructured loans worth over sh 100B and growing, the provision will be much more i guess by year end?


The CBK monthly monetary policy committee meetings usually give the figure of the restructured loans.
From there you can get the projections.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
heri
#1205 Posted : Wednesday, August 12, 2020 9:07:37 PM
Rank: Member


Joined: 9/14/2011
Posts: 777
Location: nairobi
Ericsson wrote:
heri wrote:
Ericsson wrote:
Ericsson wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn


Culprit is the provision for bad debts up by 264% from ksh.3bn to 11bn.

All the subsidiaries were profitable with the aggregate PBT up 22% to ksh.1.5bn


Can someone help me understand, if they have restructured loans worth over sh 100B and growing, the provision will be much more i guess by year end?


The CBK monthly monetary policy committee meetings usually give the figure of the restructured loans.
From there you can get the projections.


and what they are providing for is it based on CBK's covid guidance which i think means the provisions could be even higher?
Ericsson
#1206 Posted : Wednesday, August 12, 2020 9:36:52 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
heri wrote:
Ericsson wrote:
heri wrote:
Ericsson wrote:
Ericsson wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021


Edited to include profit before tax down 28% to 12.8bn


Culprit is the provision for bad debts up by 264% from ksh.3bn to 11bn.

All the subsidiaries were profitable with the aggregate PBT up 22% to ksh.1.5bn


Can someone help me understand, if they have restructured loans worth over sh 100B and growing, the provision will be much more i guess by year end?


The CBK monthly monetary policy committee meetings usually give the figure of the restructured loans.
From there you can get the projections.


and what they are providing for is it based on CBK's covid guidance which i think means the provisions could be even higher?


CBK gets the data from each of the banks on the loan amounts they have restructured.
CBK then sums them up and gives the total figure of the total restructured loans during the monthly monetary policy committee review meeting.

The provision KCB has given is what they anticipate as loss of interest income from the restructured loans.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ebenyo
#1207 Posted : Thursday, August 13, 2020 8:08:26 AM
Rank: Veteran


Joined: 4/4/2016
Posts: 1,866
Location: Kitale
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021




This was anticipated due to covid 19.
The best thing is that it's the higher provisioning that has caused the 40% decline in profit.This will recover with time.
Towards the goal of financial freedom
Angelica _ann
#1208 Posted : Thursday, August 13, 2020 9:04:38 AM
Rank: Elder


Joined: 12/7/2012
Posts: 11,700
Ebenyo wrote:
Ericsson wrote:
HY 2020
Profit before tax down 28% to 12.8bn from 17.9bn in HY 2019
40% decline in after tax profit to ksh.7.6bn
Caused by increased provisions due to the COVID-19 pandemic
Total assets grew by 28% to Ksh.953.1bn
Net loans and advances grew 17% to ksh.559.9bn
Customer deposits up 35% to ksh.758.2bn
Stock of Non-performing loans increased to ksh.83.9bn from 39.19bn in 2019
--Ratio of non-performing loans (NPLs)to total loan book increased to 13.7% from 7.8% in 2019,due to consolidation of NBK and heightened defaults associated with COVID-19 pandemic.

Q3 will equally be reasonably difficult,form and growth will start from Q4 and into 2021




This was anticipated due to covid 19.
The best thing is that it's the higher provisioning that has caused the 40% decline in profit.This will recover with time.


Expect 2020/2021 to have poor performance with reduced earnings in most sectors which will reflect on financial sector aka Banks.

You will see new lows in the financial sector at the NSE.
In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
Ericsson
#1209 Posted : Thursday, August 13, 2020 2:42:14 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
KCB Group, Kenya’s biggest bank by assets, expects the proportion of loans it will restructure due to effects of the novel coronavirus to hit 25% of its total loans by December.

By June it had restructured about 20% of total loan book.

A significant jump in the figure for provision for bad debts is not expected compared to the one witnessed in HY
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
mlennyma
#1210 Posted : Thursday, August 13, 2020 7:06:29 PM
Rank: Elder


Joined: 7/21/2010
Posts: 6,052
Location: nairobi
Iam a buyer sub 20
"Don't let the fear of losing be greater than the excitement of winning."
muandiwambeu
#1211 Posted : Thursday, August 13, 2020 10:05:44 PM
Rank: Veteran


Joined: 8/28/2015
Posts: 1,224
mlennyma wrote:
Iam a buyer sub 20

whats guides your sabatical turn smile
quite radical, or what were you expecting. Restructing means
1. banks capital is tied further up the loan repayment period- some business may take longer to turnaround again due to inertia, does this word, inertia, really mean anything here
2. Gross income from sale of money(surely is money being sold in the banksSad ) has been pushed forward thus profitability in the short term will decrease-
3. Working capital stress- opens up NISIE to another round of bonus issues, rights issues and dividend drought. will you survive, if i survive covid, why notPray
4. npl will increase with time increase, as the time bound risk mainfests. and some will actually be declared bad debts in the long run, thats not good,Sad
I dont want to be drawn and be quartered. I have lost money here and its painful to conteplate doing it once more.
5. Banks with poor banking ratios may have to breathe with caution, it is not good here at NISIESad . when are fin cautionary statements checking in. Two more weeks of trading before august is retired towards end of 3rd qtr.
,Behold, a sower went forth to sow;....
Ebenyo
#1212 Posted : Friday, August 14, 2020 6:04:22 PM
Rank: Veteran


Joined: 4/4/2016
Posts: 1,866
Location: Kitale
Ericsson wrote:
KCB Group, Kenya’s biggest bank by assets, expects the proportion of loans it will restructure due to effects of the novel coronavirus to hit 25% of its total loans by December.

By June it had restructured about 20% of total loan book.

A significant jump in the figure for provision for bad debts is not expected compared to the one witnessed in HY




Link?
Towards the goal of financial freedom
Ericsson
#1213 Posted : Friday, August 14, 2020 6:07:36 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
Ebenyo wrote:
Ericsson wrote:
KCB Group, Kenya’s biggest bank by assets, expects the proportion of loans it will restructure due to effects of the novel coronavirus to hit 25% of its total loans by December.

By June it had restructured about 20% of total loan book.

A significant jump in the figure for provision for bad debts is not expected compared to the one witnessed in HY




Link?

Source Bloomberg
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#1214 Posted : Saturday, August 15, 2020 4:13:42 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
KCB said loans issued via mobile phones almost halved in the first six months of the year,indicating that the fallout from the coronavirus pandemic is hitting lower-income hardest.
Monthly disbursement by KCB Group Plc averaged 4 billion shillings ($36.9mn)to 5 billion shillings,down from 7 billion shillings to 8 billion shillings before the outbreak,and defaults have more than tripled,according to CEO Joshua Oigara.
Many of the bank's mobile loan customers are from the informal sector."Because we are not providing any moratorium or extensions to them,then they are facing problems of payment,"Oigara said in an interview Thursday.
In addition to booking fewer mobile loans,KCB is losing as much as 150 million shillings monthly after the central bank waived costs for many mobile-banking transactions.
Still,the lender forecast overall loans will grow by about 10% this year boosted by demand from the manufacturing,transport,trade,retail and construction industries.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
sparkly
#1215 Posted : Saturday, August 15, 2020 5:53:57 PM
Rank: Elder


Joined: 9/23/2009
Posts: 7,882
Location: Enk are Nyirobi
Ericsson wrote:
KCB said loans issued via mobile phones almost halved in the first six months of the year,indicating that the fallout from the coronavirus pandemic is hitting lower-income hardest.
Monthly disbursement by KCB Group Plc averaged 4 billion shillings ($36.9mn)to 5 billion shillings,down from 7 billion shillings to 8 billion shillings before the outbreak,and defaults have more than tripled,according to CEO Joshua Oigara.
Many of the bank's mobile loan customers are from the informal sector."Because we are not providing any moratorium or extensions to them,then they are facing problems of payment,"Oigara said in an interview Thursday.
In addition to booking fewer mobile loans,KCB is losing as much as 150 million shillings monthly after the central bank waived costs for many mobile-banking transactions.
Still,the lender forecast overall loans will grow by about 10% this year boosted by demand from the manufacturing,transport,trade,retail and construction industries.


It's the banks that have stopped lending not borrowers that have stopped borrowing. Banks give out umbrellas when it's sunny and take them away when it starts raining.
Life is short. Live passionately.
MaichBlack
#1216 Posted : Monday, August 17, 2020 3:00:37 PM
Rank: Elder


Joined: 7/22/2009
Posts: 7,340
sparkly wrote:
Ericsson wrote:
KCB said loans issued via mobile phones almost halved in the first six months of the year,indicating that the fallout from the coronavirus pandemic is hitting lower-income hardest.
Monthly disbursement by KCB Group Plc averaged 4 billion shillings ($36.9mn)to 5 billion shillings,down from 7 billion shillings to 8 billion shillings before the outbreak,and defaults have more than tripled,according to CEO Joshua Oigara.
Many of the bank's mobile loan customers are from the informal sector."Because we are not providing any moratorium or extensions to them,then they are facing problems of payment,"Oigara said in an interview Thursday.
In addition to booking fewer mobile loans,KCB is losing as much as 150 million shillings monthly after the central bank waived costs for many mobile-banking transactions.
Still,the lender forecast overall loans will grow by about 10% this year boosted by demand from the manufacturing,transport,trade,retail and construction industries.


It's the banks that have stopped lending not borrowers that have stopped borrowing. Banks give out umbrellas when it's sunny and take them away when it starts raining.

Banks don't give money. They loan it. And they expect the money to be repaid!! When the risk of default is higher, they don't lend (especially if the interest rate can't be raised to level high enough to cover the risk)

Individuals operate the same way. You would very quickly lend 50,000/= to your rich uncle with a "judged lower risk" and be very hesitant to lend 5,000/= to your struggling cousin. Note I am talking about lending, not giving. The dynamics for giving are different.
Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
VituVingiSana
#1217 Posted : Monday, August 17, 2020 5:03:35 PM
Rank: Chief


Joined: 1/3/2007
Posts: 17,199
Location: Nairobi
MaichBlack wrote:
sparkly wrote:
Ericsson wrote:
KCB said loans issued via mobile phones almost halved in the first six months of the year,indicating that the fallout from the coronavirus pandemic is hitting lower-income hardest.
Monthly disbursement by KCB Group Plc averaged 4 billion shillings ($36.9mn)to 5 billion shillings,down from 7 billion shillings to 8 billion shillings before the outbreak,and defaults have more than tripled,according to CEO Joshua Oigara.
Many of the bank's mobile loan customers are from the informal sector."Because we are not providing any moratorium or extensions to them,then they are facing problems of payment,"Oigara said in an interview Thursday.
In addition to booking fewer mobile loans,KCB is losing as much as 150 million shillings monthly after the central bank waived costs for many mobile-banking transactions.
Still,the lender forecast overall loans will grow by about 10% this year boosted by demand from the manufacturing,transport,trade,retail and construction industries.


It's the banks that have stopped lending not borrowers that have stopped borrowing. Banks give out umbrellas when it's sunny and take them away when it starts raining.

Banks don't give money. They loan it. And they expect the money to be repaid!! When he risk of default is higher, they don't lend (especially if the interest rate can't be raised to level high enough to cover the risk)

Individuals operate the same way. You would very quickly lend 50,000/= to your rich uncle with a "judged lower risk" and be very hesitant to lend 5,000/= to your struggling cousin. Note I am talking about lending, not giving. The dynamics for giving are different.
Applause Applause Applause
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#1218 Posted : Tuesday, August 18, 2020 10:21:43 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
https://www.businessdail...10242-4eo0lr/index.html

Foreign investors have sold Sh11.34 billion shares in KCB Group
in the last two and half years, cutting their stake to a low of 16.36 per cent as local institutional investors tightened grip on Kenya’s top lender.

The bank’s latest shareholder profile dated June 2020 shows that foreign investors now hold 525.59 million shares.

This is in contrast with the 896.79 million shares or 29.25 per cent of the total that were in the hands of foreigners at the end of December 2017.

The latest profile shows that foreigners now hold the smallest stake in KCB after local institutional investors (37.48 per cent), local individuals (26.4 per cent) and National Treasury (19.76 per cent).

Between March and June—the period which coincides with onset and spread of Covid-19 cases in Kenya—foreigners sold 87.89 million shares valued at Sh2.68 billion when calculated using Friday’s closing price of Sh30.55.

The sales are in line with Capital Markets Authority (CMA) data that shows that foreign investor net-sales at the Nairobi Securities Exchange (NSE) hit Sh21.43 billion in six months to June.

Collectively, foreign investors have now sold 371.2 million shares in KCB between December 2017 and last June, helping local and institutional investors to deepen their stake in the bank.

Local institutional investors have emerged as the biggest winners during this period as they added 579.8 million shares to close June with 1.204 billion shares.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#1219 Posted : Wednesday, August 19, 2020 1:34:16 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,843
Location: NAIROBI
https://www.theeastafric...ising-bad-loans-1920792

KCB Group’s net earnings dropped by a staggering 40.4 percent in the half year ended June, indicating the impact of coronavirus-related defaults and loan restructuring on the banking industry.

The country’s biggest bank by assets said it made a net profit of Sh7.5 billion in the review period compared to Sh12.7 billion the year before, attributing the performance to increased provisioning for bad debt.

KCB Group CEO Joshua Oigara spoke with Njiraini Muchira after the bank announced its half-year results this past week.

KCB has posted a 40 per cent decline in profitability in the first half of the year. Was this expected?

The Covid-19 pandemic was unprecedented, but the performance is better than our expectations. In our forecast, we had expected 33 per cent of our total loan portfolio to be affected by the pandemic. Of our Ksh560 billion ($5.1 billion) loan book, we had expected up to Ksh170 billion ($1.5 billion) to be impacted. We had a situation that badly affected our customers. Although our numbers went down by 40 per cent, we thought our business could have been affected by as much as 75 per cent.

How did international subsidiaries perform during the period?

They have done quite well considering that last year we had a problem in Uganda where one of our big clients delayed in making payments. This has now been resolved.

Overall performance of the subsidiaries was up by 22 per cent compared with last year. In Tanzania and Burundi we didn't see major issues on Covid-19 restrictions, but it's still too early to call. In Tanzania we have opted to be conservative, and our profitability in the country was down 30 per cent because we increased our provisions.

Is the first half performance a pointer to what investors should expect for the rest of the year?

Not really. We remain optimistic going to the second half because if you look at our balance sheet there is a 17 per cent growth in income, loans and advances increased by 17 per cent, customer deposits were up 35 per cent and total assets by 28 per cent.

Based on this, we should have a better second half despite the impacts of Covid-19. Also, we have restructured Ksh101 billion (923.2 million) loans, which is nearly all the loans we intend to restructure.

Are you concerned about the increase in non-performing loans (NPLs)?

It is a fact that because of Covid-19 our customers are not able to repay their loans following disruptions and even the shutdown of economies. This is almost behind us and we expect that as customers come back our provisions will definitely go down.

We are also happy because we have seen the reopening of many sectors of the economy like restaurants, hotels, transport and even some partial reopening of schools.

We have to be more conservative and support our customers during this period. When the economy turns around, the customers we supported the most will be on the right side of our business. The NPLs do not worry me because they are in line with impacts of Covid-19 in our markets.

How badly has the restructuring of loans affected your interest earnings?

The only thing is that we have increased is the level of provisions. This is the only impact because we have extended the loan period and waived fees. We have completed most of the loan restructuring. What’s left is not more than five per cent.

How has the consolidation of National Bank of Kenya (NBK) impacted your performance?

It is positive, and we are on track. The only thing that is remaining is putting additional capital of KSh3 billion ($27.4 million), which will be completed by the end of September. We have a plan to recover NBK’s non-performing loans. We are confident that by the end of the year the NPLs will have come down from 45 per cent to 30 per cent.

Covid-19 is becoming the new normal. How is this going to change banking?

It is too early to say how banking will change, but our customers are learning about our different channels. We are at a point of reflection and remain optimistic that the world will find a solution to cope with the virus. We have been operating non-stop since March despite the situation, and we will continue to do so.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ebenyo
#1220 Posted : Thursday, August 20, 2020 7:03:19 AM
Rank: Veteran


Joined: 4/4/2016
Posts: 1,866
Location: Kitale
Ericsson wrote:
https://www.theeastafrican.co.ke/tea/business/optimism-at-kcb-despite-dip-in-profit-rising-bad-loans-1920792

KCB Group’s net earnings dropped by a staggering 40.4 percent in the half year ended June, indicating the impact of coronavirus-related defaults and loan restructuring on the banking industry.

The country’s biggest bank by assets said it made a net profit of Sh7.5 billion in the review period compared to Sh12.7 billion the year before, attributing the performance to increased provisioning for bad debt.

KCB Group CEO Joshua Oigara spoke with Njiraini Muchira after the bank announced its half-year results this past week.

KCB has posted a 40 per cent decline in profitability in the first half of the year. Was this expected?

The Covid-19 pandemic was unprecedented, but the performance is better than our expectations. In our forecast, we had expected 33 per cent of our total loan portfolio to be affected by the pandemic. Of our Ksh560 billion ($5.1 billion) loan book, we had expected up to Ksh170 billion ($1.5 billion) to be impacted. We had a situation that badly affected our customers. Although our numbers went down by 40 per cent, we thought our business could have been affected by as much as 75 per cent.

How did international subsidiaries perform during the period?

They have done quite well considering that last year we had a problem in Uganda where one of our big clients delayed in making payments. This has now been resolved.

Overall performance of the subsidiaries was up by 22 per cent compared with last year. In Tanzania and Burundi we didn't see major issues on Covid-19 restrictions, but it's still too early to call. In Tanzania we have opted to be conservative, and our profitability in the country was down 30 per cent because we increased our provisions.

Is the first half performance a pointer to what investors should expect for the rest of the year?

Not really. We remain optimistic going to the second half because if you look at our balance sheet there is a 17 per cent growth in income, loans and advances increased by 17 per cent, customer deposits were up 35 per cent and total assets by 28 per cent.

Based on this, we should have a better second half despite the impacts of Covid-19. Also, we have restructured Ksh101 billion (923.2 million) loans, which is nearly all the loans we intend to restructure.

Are you concerned about the increase in non-performing loans (NPLs)?

It is a fact that because of Covid-19 our customers are not able to repay their loans following disruptions and even the shutdown of economies. This is almost behind us and we expect that as customers come back our provisions will definitely go down.

We are also happy because we have seen the reopening of many sectors of the economy like restaurants, hotels, transport and even some partial reopening of schools.

We have to be more conservative and support our customers during this period. When the economy turns around, the customers we supported the most will be on the right side of our business. The NPLs do not worry me because they are in line with impacts of Covid-19 in our markets.

How badly has the restructuring of loans affected your interest earnings?

The only thing is that we have increased is the level of provisions. This is the only impact because we have extended the loan period and waived fees. We have completed most of the loan restructuring. What’s left is not more than five per cent.

How has the consolidation of National Bank of Kenya (NBK) impacted your performance?

It is positive, and we are on track. The only thing that is remaining is putting additional capital of KSh3 billion ($27.4 million), which will be completed by the end of September. We have a plan to recover NBK’s non-performing loans. We are confident that by the end of the year the NPLs will have come down from 45 per cent to 30 per cent.

Covid-19 is becoming the new normal. How is this going to change banking?

It is too early to say how banking will change, but our customers are learning about our different channels. We are at a point of reflection and remain optimistic that the world will find a solution to cope with the virus. We have been operating non-stop since March despite the situation, and we will continue to do so.




By the end of HY 2 things will have improved
Towards the goal of financial freedom
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