Second half of the year offers better business prospects

I recently spoke to The East African on how KCB Group doubled its net profit despite the pandemic. Below is part of our conversation;

KCB doubled its net profit for the six months to June 30, during a pandemic. What did you do differently?

I would say three aspects: One is providing additional support for our clients during this period for them to recover. Two is loan restructuring, which we did in March, so most of our customers are now 90 percent back to normal with the restructuring terms. Three, we saw strong growth in our regional businesses in Rwanda, Tanzania, Uganda, Burundi, and South Sudan, which are growing by more than 64 percent because of recoveries.

Do you expect to sustain this good performance?

We have a lot of activities going on. If you look at the transactions on our mobile money platform, our mobile loans and our entire loan book are growing strongly. I think the second half will be much stronger across our businesses. We also have businesses we are buying in Rwanda and Tanzania and that will be a bonus.

You reduced your loan loss provisions during the first half. What does this say about non-performing loans?

Our coverage ratio has increased from 64 percent to 70 percent. So we increased the level of provisions for our stock of NPLs during the period. The reduction in loan loss provision is largely driven by the customers who were Covid-impacted, 90 percent of whom are now complying with the restructuring terms.

Would you say the banking industry is now out of the woods?

We see a very good momentum, but I would not say that we are fully out of the crisis. But I’m optimistic.

What are your plans for the region in terms of expansion?

We are a universal bank so we have opportunities to lend to large customers and SMEs. The East African opportunity is quite big.