KCB Group’s earnings net profit rose by a marginal 1.8 per cent in the first quarter ended March, held back by lower fees and commissions on short-term mobile loans.
The lender reported net earnings of Sh6.37 billion in the review period compared to Sh6.26 billion the year before.
It is the second-largest net profit after Equity Group whose net income surged 63.3 per cent to Sh8.6 billion in the same period on the back of higher interest and non-interest income.
KCB 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.
Non-interest income consequently fell 20 per cent to Sh6.3 billion from Sh7.8 billion.
“Overall performance was largely impacted by lower non-interest income due to subdued digital lending on reduced disbursements and lower customer transactions,” chief executive Joshua Oigara said in a statement.
The bank started reducing mobile lending in the year ended December when customers took out Sh154 billion, down 27.3 per cent from Sh212.1 billion in 2019.
KCB says 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.
The lender’s total interest income from loans and government debt securities rose 8.7 per cent to Sh21.9 per cent.
Its loan book expanded 7.8 per cent to Sh597.1 billion while investment in bonds and T-bills rose by a marginal 1.4 per cent to Sh190.5 billion.
Loan loss provision was flat at Sh2.8 billion despite gross non-performing loans jumping 48 per cent to Sh98 billion, indicating increased confidence about the economic outlook.
“Quarter two of the year started with a month-long lockdown in Kenya, a reminder that the pandemic is not over yet,” Mr Oigara said.
“We however expect to see a recovery in the last two months of the quarter with an increase in uptake on our mobile platform –VOOMA and a strong balance sheet growth.”