KCB profit up 22pc on reduced costs
Management targets income growth from mobile loans platform run jointly with Safaricom.
KCB Bank made a Sh24 billion net profit last year, a 21.8 per cent jump from Sh19.7 billion in 2017 on lower costs and sustained incomes.
The bank cut provision on bad debts by 50 per cent from Sh5.9 billion to Sh2.9 billion after adjusting to new International Financial Reporting Standard (IFRS9) that shifts focus on future defaults rather than those that have occurred.
In addition, an 11 per cent dip in staff costs saw expenses come down from Sh36.4 billion to Sh35 billion. Employees now stand at 6,220 from 6,483 in 2017.
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The country’s biggest lender by assets at Sh714.3 billion had flat growth in net interest income, which increased from Sh48.4 billion to Sh48.8 billion. Non-funded income was also flat at 23 billion.
KCB Group Chief Finance Officer Lawrence Kimathi said the lender will target strong growth on its mobile lending platform to continue delivering good results.
“Our focus is getting our growth back on the top line. This year we have delivered the numbers but they have not been delivered from the right sources,” he said.
“We saved on costs and the application of IFRS 9 on bad loans. Going forward total income has to grow and we are looking at a high single digit on that front.”
Mr Kimathi said the bank’s mobile-based lending platform, KCB M-Pesa has capacity to push up non-funded income by 25 per cent.
He said KCB M-Pesa was initially crippled by a problem of capacity and the lender shelved plans to grow it or advertise because whenever loan applications went above 50,000, it would crash.
“That is why we have invested in a big platform which has a capacity to do 250,000 applications in a day and it’s flying. Two months of this being in, we have overtaken M-Shwari in terms of number of loans and value,” he said.
M-Shwari is a similar loan product on M-Pesa offered by Commercial Bank of Africa.
The KCB platform is also built in a way that it would be able to take up other products including payments, insurance and collect and do data analytics.
KCB increased loans to the Government from Sh110 billion in 2017 to Sh120 billion last year, which ensured that the mainstay of its income came from Treasury.