NAIROBI, Kenya Jul 13 – Increased interest income from loans and advances has seen Kenya Commercial Bank (KCB) post a 16 percent growth in its pre-tax profit for the first six months of 2010.
KCB on Tuesday reported a Sh4.2 billion pre-tax profit up from Sh3.2 billion on the back of a 24 percent growth in net interest income.
Net loans and advances grew by 25 percent to Sh130 billion which saw net interest income rise to Sh8.7 billion from Sh7 billion in 2009.
KCB Chief Executive Officer Martin Oduor-Otieno said the positive results were due to improvement in the economy that had curtailed the bank’s growth in 2009.
“We continue to lead the market in terms of assets due to the significant increase in deposits and loans as a result of extensive marketing initiatives and utilisation of our large branch network,” Mr Oduor-Otieno said.
With 213 branches in the region, the bank was able to grow its customer base to well over one million, with the CEO adding it would result in higher income in the future.
Deposits jumped 50 percent during the period recording Sh192 billion while provision for bad debt dropped by 44 percent to Sh331 million.
Mr Oduor-Otieno also expects subsidiaries in the region to break even at the end of the current financial year, further strengthening the bank’s profitability.
“At the half year stage there is a shortfall of about Sh100 million from the subsidiaries in total, but we do expect that will come good at the end of the year,” he said.
The bank is currently floating a Rights Issue as it seeks to raise Sh15 billion from shareholders to shore up its core capital base.
The additional capital is geared towards improving key bank ratios, fund business growth and consolidation across the markets and increase its capacity to provide long-term finance following rapid regional expansion.
KCB Group Chairman Peter Muthoka told investors that the bank was poised for greater success in the coming months saying; “We expect this momentum to reach its peak in the third quarter going into the final three months of the year, leading to an impressive end-year profitability position.”