KCB net profit rises to Sh25.1 billion on high interest income

KCB Group #ticker:KCB net profit for the full-year to December 2019 grew by 4.8 percent to Sh25.1 billion from Sh23.99 billion the previous year bolstered by growth in interest income from consolidated book with National Bank of Kenya #ticker:NBK.

The lender’s assets stand at Sh898.5 billion from Sh714.3 billion edging it closer to the Sh1 trillion psychological mark for the country’s largest bank by assets.

The Group’s net interest income expanded 14.9 percent to Sh56.1 billion last year from Sh48.8 billion in 2018. The growth was supported by a 17.4 percent increase in the loan book to Sh535.3 billion from Sh455.8 billion as the bank prepares to take advantage of the removal of the interest rate caps to improve earnings.

Non-performing loans doubled from Sh32.6 billion to Sh63.3 billion after the lender inherited rogue NBK borrowers. KCB Group loan loss provision as a result jumped threefold to Sh8.8 billion from Sh2.9 billion.

KCB bought out NBK last year, injecting Sh5 billion of new capital in December to recapitalise the bank, which had breached critical capital ratios for years.

With a stronger balance sheet, NBK can now take in more deposits and expand its lending, a move that is expected to help it contribute to KCB’s consolidated earnings in the coming years.

The Nairobi Securities Exchange #ticker:NSE listed lender plans to give a final dividend payout of Sh2.50 per share subject to shareholders’ approval. The company had paid Sh1 per share interim dividend.