If you’re looking for a hint of what could be lying ahead for Kenya Commercial Bank (KCB), executives of the lender recently offered an important clue: the future looks bright.
Forget interest rates issue
KCB doesn’t expect interest rate cap to roil its loan business. CEO Joshua Oigara reasons that lower interest rates will boost customer appetite for loans and expansion of the loan book should translate into more interest income for the company. The company reported its net interest income rose to Ks36.1 billion in 3Q16 from Ks28.4 billion a year earlier. Net loans increased 5% to Ks364.5 billion in the latest quarter.
What about staff retrenchment?
Though the advent of the new interest rates regime has scared off many lenders, leading some to cut down their workforce, KCB says it has no plans for branch closures that could result in redundancies. Nevertheless, the lender hinted that opening new physical branches would be difficult as automation of operations and embrace of mobile banking eliminate the need for more physical outlets.
How did KCB fare in 3Q16?
But will looking at the company’ results for September quarter, or 3Q16, make you doubt the management’s word or firm your confidence in the lender’s future? Here’s is what transpired in the quarter.
Though the advent of the new interest rates regime has scared off many lenders, leading some to cut down their workforce, KCB says it has no plans for branch closures that could result in redundancies. Nevertheless, the lender hinted that opening new physical branches would be difficult as automation of operations and embrace of mobile banking eliminate the need for more physical outlets.
How did KCB fare in 3Q16?
But will looking at the company’ results for September quarter, or 3Q16, make you doubt the management’s word or firm your confidence in the lender’s future? Here’s is what transpired in the quarter.
Total operating income for the quarter rose to Ks50.4 billion, up from Ks45.7 billion in the comparable quarter last year. Net profit jumped 15% to slightly more than Ks15.9 billion, yielding EPS (earnings per share) of Ks6.96, same as the prior quarter.
KCB’s profit drivers in 3Q16
The chart above shows KCB’s net profits in the last five quarters.
The management explained that continued cost curtailment, operations automation and diversified business approached support gains in the latest quarter.
Asset base declines
But keep in mind that KCB’s asset base weakened in the latest quarter compared to a year earlier. Total assets shrank to Ks570.1 billion in 3Q16 from Ks607.3 billion in 3Q15.
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