KCB Group has become the first Kenyan lender to register a drop in half-year profits attributing it to the biting Covid-19 that is sweeping across the country.
The largest bank by asset in the country registered a drop in profits by 40 percent in the first half of 2020, blaming it on the roaring pandemic.
According to the financial results released by the lender, the bank made 7.6 billion shillings in profits for the first 6 months of 2020, a drop from 12.7 billion shillings recorded at the same time in 2019
“This has been catastrophic. Never have we seen our provisions increase from an average of Sh3 billion to more than Sh11 billion,” Joshua Oigara, the CEO of the Group said.
KCB says the loss in profits was occasioned by the increased provisions in the wake of higher credit risk due to the Covid-19 pandemic.
In March, the Central Bank of Kenya called on banks to be fair to customers who had loans by considering dialogue and restructure some of the loans to shield them against the tough economic times brought about by Covid-19.
Kenyan commercial banks have restructured a total of 844.4 billion shillings in loans since the month of March. When Covid-19 broke out, the government and CBK called on Kenyan banks to be lenient on their customers by giving them time to pay back through the restructuring of loans.
“The restructured loans are 29 percent of Kenyan banking sector loan book of 2.9 trillion shillings recorded during the month of June in line with the emergency measures announced by CBK in March,” said CBK in a statement.
“The Committee noted that the package of policy measures implemented since March were having the intended effect on the economy,” said CBK.
“Banks will eventually feel the heat. It might not be soon but the ripple effect of loan restructuring will be felt. Businesses are collapsing and people are losing jobs. Soon people will run out of cash and they will not be able to pay loans,” said Mr. Edward Kibutukhani, an economic analyst.