The Kenya Commercial Bank Group has posted a Ksh. 6.3 Billion net profit for the first three months to March which was a 1.8% rise from a similar period last year.
The marginal rise in profitability was as a result of 9% rise in the interest income to KSh21.97 billion at the end of the first quarter, from KSh20.21 billion in the same quarter last year, due to increased lending. However, there were lower fees and commissions on short-term mobile loans. This is due to the fact that the bank scaled down its mobile loans to mitigate defaults in the wake of the economic difficulty brought by the Covid-19 pandemic, hurting fees from the short-term credit facilities. Also, non-interest income fell 20 percent to Sh6.3 billion from Sh7.8 billion.
The bank started reducing mobile lending in the year ended December when customers took out Sh154 billion, down 27.3 percent from Sh212.1 billion in 2019. KCB indicated that the suspension of listing defaulters on credit reference bureaus, which was in place between April and December last year, removed a major deterrence against defaults in mobile lending.
KCB Group CEO, Joshua Oigara, had this to say, “Overall performance was largely impacted by lower non-interest income due to subdued digital lending on reduced disbursements and lower customer transactions.”
At the same time, the Group’s gross bad debt grew in the first quarter of this year to KSh98 billion, the highest level ever recorded by the bank, from KSh66.2 billion in the first quarter of 2020.
The Group restructured loans worth KSh102.5 billion at the end of Q1 2021. The restructured debt includes 4,197 personal loans worth KSh13.5 billion, 937 real estate loans worth KSh29.6 billion, 225 loans to the tourism and hospitality sector worth KSh16.9 billion and 307 loans to the manufacturing sector worth KSh13.5 billion.