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Kenya

KCB H1 profit jumps 50pc

NAIROBI, Kenya, Jul 26 – Kenya Commercial Bank (KCB) has posted a 50 percent growth to Sh6.09 billion in its net profit for the first half of 2012.

“The strong growth in our profit is underpinned by good growth in our asset book and investments. We’ve also seen a lot of efficiencies created on the cost side which grew by lower numbers,” Group Chief Executive Officer (CEO) Martin Oduor-Otieno said.

Despite a tough lending period the group’s net loans and advances grew by 15 percent, to Sh202 billion, which Oduor-Otieno attributes to the range of products and services on the bank’s asset side.

“We are very strong on the corporate lending side because of our large balance sheet, which is now just under Sh50 billion of capital. The corporate side grew because there are a number of big infrastructure projects across all the sectors,” he said.

Net interest income up 36 percent to Sh14.3 billion from Sh10.5 billion posted in 2011.

“Total provisions to our loan book is around 5.5 percent, which is a significant improvement. In 2003 it was at about 18 percent. By managing our book much better and very robust credit processes and the Credit Reference Bureau helping us, we were able to manage our non-performing loan book,” Oduor-Otieno explained.

The bank recovered a significant amount in bad debts during the first half of the year from Sh469 million to Sh732 million for 2012.

The group’s balance sheet grew by 25 percent to Sh349.3 billion, with an improvement in its cost to income ratio to 56.4 percent from 62.8 percent, and a 21 percent increase in shareholder funds to Sh46.4 billion.

Total operating expenses increased by 16 percent to Sh11.9 billion from Sh10.3 billion in June 2011.

Earnings per share as at 30th June were Sh4.10, from Sh2.75 during the same period in 2011.

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The CEO acknowledged that though the bank’s base lending rate came down to 22 percent and 17.5 percent for its mortgage lending rate, the figures are still high adding that a further reduction is expected in the second half of the year.

“The challenge has been the high cost of funds in the early period of the first half, but with interest rates beginning to come down, we see the next half of the year giving us an opportunity to continue the momentum that we’ve established so far,” he said.

International business reported a 100 percent increase in pre-tax profit to Sh600 million.

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