INTERNATIONAL – KCB Group, Kenya’s biggest lender by assets, on Thursday posted a 5 percent rise in first-half pretax profit boosted by growth across segments, and said it set aside more money to cover bad loans.
The bank, which posted a pretax profit of 17.93 billion shillings ($173.82 million), said in a statement it boosted its provisions for bad debts to 3 billion shillings during the period, from 0.8 billion shillings a year earlier.
“This big increase in loan provision is mostly due to impact of day 1 adjustments done during implementation of IFRS 9 last year,” said Lawrence Kimathi, the group’s chief financial officer, referring to a new accounting standard.
Non-performing loans dropped to 7.8% of the total loan book, from 8.4 percent in the same period last year, and well below the industry average of 12.7 percent, said KCB, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan.
Net interest income rose by 5 percent to 25.4 billion shillings mainly due to a 14 percent expansion in lending.
“We had a strong second quarter and witnessed continued growth across our businesses segments,” said Chief Executive Joshua Oigara.
It expects to complete its takeover of National Bank of Kenya (NBK) in a share-swap transaction by the end of this quarter, it added.
Lawmakers put a dampener on the deal last week when they recommended that the deal, which is already open to NBK’s shareholders, be rejected by the government, which is NBK’s biggest shareholder.
Market regulator CMA said the fate of the transaction will depend on KCB attaining the minimum threshold of 75 percent of acceptance by NBK’s shareholders, who will get 1 KCB share for every 10 NBK shares.
KCB recommended an interim dividend of 1.00 shillings per share.Reuters