B.y George Obulutsa
NAIROBI, March 17 (Reuters) – The KCB group of Kenya KCB.NR, the country’s largest lender by activity, posted a 30% drop in pre-tax profit last year on Wednesday, while net profit fell 22%, penalized by the increase in loan loss provisions and the effects of the COVID-19 pandemic.
The bank, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, said its pre-tax profit fell to 25.7 billion shillings (234.3 million dollars) and its net profit to 19 , 6 billion shillings. Its full-year pre-tax profit increased 9% from the previous year.
It said its non-performing loans in 2020 jumped to 96.6 billion shillings from 63.4 billion shillings a year earlier, while the ratio of non-performing loans to gross loans rose to 14.7% from 10.9%. .
“The operating environment has caused a significant increase in credit risk which has pushed the cost of risk of the group up, leading to an increase in loan provisions to 27.1 billion shillings,” reads a statement.
In 2019, provisions for credit losses stood at 8.9 billion shillings. He said he expects his NPL ratio to drop to 12.5% this year.
Central banks in Kenya and other countries where the KCB Group operates have allowed lenders to provide customer assistance, such as loan restructuring and rescheduling of payments, since mid-March 2020 after the first cases of COVID-19 are been reported in the region.
The bank said its net interest income rose to Sh. 67.9 billion from Sh. 56.1 billion the previous year. Net loans and advances have increased 11% to 535.4 billion shillings and the bank expects 10% growth this year.
“Signs of recovery were evident at the end of the year with increased commercial activity and we believe this momentum will continue into 2021,” Chief Executive Joshua Oigara said in the statement.
($ 1 = 109.7000 Kenyan shillings)
(Reporting by George Obulutsa; Editing by Jan Harvey)
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