Listed tier-one lender KCB’s share price fell 6.5 percent on Thursday to a new 52-week low as investors reacted to its performance in the half-year that ended June after it reported lower earnings.
The lender’s stock closed at Sh25.15, moving 715,600 shares in Thursday’s trading session.
KCB was among the three top losers at the stock market on Thursday behind Kenya Orchard whose share fell 8.26 per cent to Sh3 and Williamson Tea Kenya, which retreated 6.83 percent to Sh228.5. Williamson Tea on Thursday closed its books for its final dividend of Sh30 per share.
KCB reported a 20 percent net profit drop in the six months to June, nearly tripling its provisioning for loan defaults. Net profit fell to Sh15.5 billion from Sh19.5 billion posted in the preceding similar period.
The hard economic times facing Kenyans has seen increased defaults which have resulted in higher provision from lenders.
KCB’s operating expenses increased by 60 percent to Sh50.61 billion in the reviewed six months while provisioning for non-performing loans (NPLs) jumped 2.4 times to Sh10.2 billion from Sh4.32 billion.
The rise in NPL provisions added to a 24 percent rise in staff costs to Sh17.5 billion. A 79.8 percent jump in other operating expenses to Sh17.1 billion added to the spike in operational costs.
National Bank of Kenya’s legal claims were among the factors that piled pressure on the lender’s profit in the first six months of the year.
KCB’s net interest income grew 12.1 percent to Sh45.5 billion as the loan book expanded by 32.3 percent to Sh964 billion. Non-interest income was up 30.3 percent to Sh27.56 billion, adding to the growth in revenue.
KCB rose to become the largest bank by total assets, which grew 54 percent to Sh1.84 trillion, driven by the consolidation of Trust Merchant Bank acquired last December, placing it ahead of Equity Group, which closed June with assets of Sh1.64 trillion.
