Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Kenya's KCB warns on bad debts, puts off cash call

05 August 2016, 16:22

Nairobi (Reuters) - KCB Group, Kenya's largest bank by assets, warned on Thursday of rising bad debts in the industry and postponed plans to raise cash through a rights issue.

The group, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, also reported pretax profit rose 14 percent in the first half of this year to 15.1 billion shillings ($149.09 million), as earning from Kenya surged 19 percent.

Its non-performing loans, however, jumped by over a third, sending the ratio of bad debts to 8.9 percent from 7.3 percent a year earlier.

The lender blamed three major loan accounts in the construction and government supplies services sectors for the jump, pledging to reverse the trend through recoveries.

"Generally, across the industry, the level of NPLs remain a concern," KCB Chief Executive Joshua Oigara said in a statement.

KCB's shares are down 28 percent this year at 31.75 shillings, underperforming the benchmark NSE-20 share index, which is down 13.88 percent this year.

KCB put off a rights issue planned for later this year to raise 10 billion shillings, citing a strong projected cash flow for the full year. It did not give a new time frame.

Daniel Kuyoh, a senior investment analyst at Alpha Africa Asset Managers, said the level of bad debts at KCB were generally in line with expectations, after the central bank tightened rules around classification of bad loans for commercial banks.

"The central bank is very heavy on enforcing the guidelines," Kuyoh said, adding lack of revenue growth among some major Kenyan firms, which took out bank loans, could also be driving bad loans.

Patrick Njoroge, the governor of the central bank, said in April that bad debts for Kenyan banks stood at 8 percent, well above the 5.7 percent level in April 2015.

Njoroge, who took over in June last year, has been driving efforts to tighten bank supervision, after three medium- and small-sized lenders collapsed in the nine months to April, sparking concerns about the stability of the sector.

KCB said net interest income rose 16 percent to 22.53 billion shillings in the first half, while net loans and advances went up 8 percent.

Its earnings per share rose to 6.94 shillings from 6.11 shillings. Its shares were up 1.6 percent to trade at 32.00 shillings on the Nairobi Securities Exchange at 0749 GMT, before giving up some of the gains to trade at 31.75 shillings later.

- Reuters

Tags banking

Read more from our Users

Submitted by
Cyril Mike Odhiz
Kenyans furious on young lady aft...

A young Kenyan woman is the talk of town after she posted a photo with her elderly lover after a round of steamy sex, or so the photo suggested.  Read more...

Submitted by
Kiplangat langat
Uhuru could be a one term Presid...

Bomet governor Isaac Ruto has said that President Uhuru Kenyatta could be a one term President if he fails to increase allocations to the counties. Read more...

Submitted by
Mody Sammy
35 year old farmer a new milliona...

A 35 year old farmer from Mpeketoni Lamu county has become the latest millionaire in town as she became winner in the ongoing ‘Shinda Mamili na Story Ibambe’. Read more...

Submitted by
Shakila Alivitsa
Leave your past relationship bagg...

Leave your past relationship baggage at the door when you start a new relationship. Read more...

Submitted by
Shakila Alivitsa
Advice from a young married Kenya...

I was just going to get water in the office kitchen and thought a simple hi was fine until I ended up in an hour long conversation with someone. Read more...

Submitted by
Shakila Alivitsa
Helping you find the type of man ...

To put it simply, you can’t go looking for fish in a meat market; you have to go to a fish market. Read more...