Profits for the Kenyan operations of East Africa’s biggest banking group by assets, KCB, fell in the nine months ending September 1017 although it reported a 5.3 percent jump in group’s net earnings for the period.
Financial results released today show the KCB Bank Kenya operations took a hit from the interest rate capping dragging down interest income.
The results show that the bank which is the biggest business in the group recorded a net profit drop of 4.87 percent to Sh14.49 billion from Sh15.1 billion when the interest rate capping law came into force.
Interest income from loans and advances in Kenya dropped by 4.5 percent to Sh33.7 billion from Sh35.3 billion while income from deposits with other banks shrunk 52.58 percent to Sh257 million from Sh542.2 million.
However, earnings from fees and commissions increased by 29 percent to Sh4.5 billion from Sh3.48 billion.
The banking group has reported a net profit increase to Sh15.07 billion compared to Sh14.3 billion in a similar period last year.
Group CEO and MD, Mr. Joshua Oigara, said the full effect of the law capping interest rate in a quarter marked by a slow business environment on account of the general election in Kenya – the Group’s largest market – was mitigated by growth in the loan book, prudent management of cost of funds and focus on non branch channels.
“Our business fundamentals remain strong. We remain optimistic and true to our strategy, even in the face of challenges. As the business environment evolves, it is important for the Group to expand its revenue streams to remain competitive. This aggressive focus on non-branch channels leveraged on our Fintech strategy is paying off,” said Oigara.