ATM
Diaspora
Equity Bank Group
IFRS
Joshua Oigara
KCB
KCB Group
Kenya
South Sudan

KCB, Equity defy bad loans to post $108.3 million

Two Kenya-headquartered regional banks have announced a combined profit of $108.25 million in the first three months of this year, brushing off the lower than expected outlook for the period despite being bogged down by rising non-performing loans.

Equity Bank Group on Thursday announced a 21.7 per cent rise in its net profit to $58.24 million for the three months ended March, surpassing the industry leader KCB which registered $50.25 million over a similar period.

The two lenders announced their results using the new IFRS 9, which was expected to increase their provisioning for bad debts through anticipated defaults.

Equity’s loan book expanded by $90.53 million to $2.68 billion in the three months, which saw total interest income rise by 10.5 per cent to $124.4 million.

The bank registered growth of its non-interest income by $3.78 million to $66.35 million which helped to boost its margins. However, its interest expenses rose by 10.54 per cent to $28.14 million.

Its loan loss provisions halved by 55 per cent to $3.54 million, with its non-performing loans dropping $17.77 million from $19.25 million the previous year. Customer deposits grew by 9 per cent to reach $3.76 billion up from $3.44 billion, boosting the balance sheet to top $4.9 billion.

“Diaspora remittances processed in the quarter grew to $183.63 million, up from $31.6 billion the previous year, an increase of 474 per cent. This increased diaspora remittance processing income by 183 per cent from $414,659 to $1.16 million,” the bank said in a statement.

On Wednesday, KCB Group, saw its net profit rise to $50.25 million, a 14.1 per cent growth in first quarter net profit, buoyed by a six per cent loan book growth that raised interest income 11 per cent to $154.02 million. However, its gross defaults rose by 36.1 per cent to $431.44 million.

The bank saw loan loss provision drop to $5.93 million, $9.46 million in the same quarter last, while the reduced forex trading in South Sudan saw the banks non-interest income remaining flat at $54.3 million.

“We are keen on further bolstering non-interest income with continued investment in new technology-based financial solutions focused on enhancing the customer journey by providing convenient access to a host of products and services,” KCB Group chief executive officer Joshua Oigara said.

The bank also said its transactional activity continued to shift away from branches, with non-branch transactions standing at over 85 per cent of the total volumes.

At least 57 per cent of transactions were handled on mobile devices, 20 per cent through the bank’s agents and point-of-sale terminals and 10 per cent via the ATM network.

Its international business continued to show stability and resilience, despite a harsh operating environment in some markets like South Sudan where hyper-inflation impacted earnings.

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