Two Kenya-headquartered regional banks have announced a combined
profit of $108.25 million in the first three months of this year,
brushing off the lower than expected outlook for the period despite
being bogged down by rising non-performing loans.
Equity
Bank Group on Thursday announced a 21.7 per cent rise in its net profit
to $58.24 million for the three months ended March, surpassing the
industry leader KCB which registered $50.25 million over a similar
period.
The two lenders announced their results using
the new IFRS 9, which was expected to increase their provisioning for
bad debts through anticipated defaults.
Equity Bank
Group chief executive officer James Mwangi said that the bank’s cautious
approach to credit underwriting was paying off.
Equity’s
loan book expanded by $90.53 million to $2.68 billion in the three
months, which saw total interest income rise by 10.5 per cent to $124.4
million.
Interest income from loans and advances rose 6.97 per cent to $86.49 million.
The bank registered growth of its non-interest income by $3.78
million to $66.35 million which helped to boost its margins. However,
its interest expenses rose by 10.54 per cent to $28.14 million.
Its
loan loss provisions halved by 55 per cent to $3.54 million, with its
non-performing loans dropping $17.77 million from $19.25 million the
previous year. Customer deposits grew by 9 per cent to reach $3.76
billion up from $3.44 billion, boosting the balance sheet to top $4.9
billion.
“Diaspora remittances processed in the quarter
grew to $183.63 million, up from $31.6 billion the previous year, an
increase of 474 per cent. This increased diaspora remittance processing
income by 183 per cent from $414,659 to $1.16 million,” the bank said in
a statement.
Shift from branches
On
Wednesday, KCB Group, saw its net profit rise to $50.25 million, a 14.1
per cent growth in first quarter net profit, buoyed by a six per cent
loan book growth that raised interest income 11 per cent to $154.02
million. However, its gross defaults rose by 36.1 per cent to $431.44
million.
The bank saw loan loss provision drop to $5.93
million, $9.46 million in the same quarter last, while the reduced
forex trading in South Sudan saw the banks non-interest income remaining
flat at $54.3 million.
“We are keen on further
bolstering non-interest income with continued investment in new
technology-based financial solutions focused on enhancing the customer
journey by providing convenient access to a host of products and
services,” KCB Group chief executive officer Joshua Oigara said.
The
bank also said its transactional activity continued to shift away from
branches, with non-branch transactions standing at over 85 per cent of
the total volumes.
At least 57 per cent of transactions
were handled on mobile devices, 20 per cent through the bank’s agents
and point-of-sale terminals and 10 per cent via the ATM network.
Its
international business continued to show stability and resilience,
despite a harsh operating environment in some markets like South Sudan
where hyper-inflation impacted earnings.
Operating expenses remained within inflationary increase, posting a growth of 6 per cent from $44 million to $81.94 million.
“This
reflects the effort and focus on cost management to systematically and
consistently reduce cost-to-income ratio,” KCB said.
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