3 Things KCB CEO Joshua Oigara wants investors to know


KCB Group (KCB) operates banking businesses in Kenya and across the East Africa region. It is one of the region’s largest bank groups and one of the blue chip stocks on the Nairobi Securities Exchange.

In the first quarter of 2020, KCB delivered a profit of Ksh6.3 billion, which jumped about 8.6% year-over-year. The group paid a cash dividend of Ksh3.50 per share out of from the Ksh25 billion profit in made in 2019.

KCB Group CEO Joshua Oigara spoke with the East African newspaper on the bank’s outlook and coping with the Covid-19 disruption. Here are three key takeaways from that interview and more from us.

1. KCB bracing for Covid-19 impact on business
The Covid-19 outbreak and the resulting economic disruption had minimal impact on KCB’s business in the first quarter because the problem started toward the end of the period. But the bank expects the impact of the pandemic to start showing in its second quarter results onward.

The bright side to the pandemic, according to the executive, is that it would accelerate banks’ digital transformation. To operate more efficiently and profitably, banks have been rolling out digital products that allow customers to access banking services without having to walk into a conventional banking hall.

For example, customers can make cash deposits and withdrawals at agent locations. Moreover, customers can also apply for loans and access a range of banking services on their smartphone or personal computer. At the end of 2019, KCB had pushed 95% of its customer transactions outside traditional bank branches. At the end of the first quarter of 2020, 97% of KCB transactions were taking places outside the branches.

2. NBK on track to stand alone
KCB acquired its rival National Bank of Kenya (NBK) in 2019 for Ksh6.5 billion in an all-stock transaction. NBK is doing well under KCB and contributed to the more than 8% profit jump in the first quarter.

KCB made Ksh5 billion capital injection into NBK in 2019. But it doesn’t plan to inject more cash in the subsidiary in 2020 because the business is now on track to stand on its own.

NBK and KCB’s other subsidiaries across East Africa are doing well. For example, KCB expects its Ugandan unit to record 20% growth in 2020.

3. KCB to restructure 25% of loans to cushion borrowers
KCB expects to restructure at least 25% of its loans in response to the Covid-19 economic crisis. The restructuring range from allowing borrowers to apply for extension of their loan repayment period to pause on loan repayments.

In other cases, the bank is providing top-up loans so customers can complete the work they had started before the pandemic struck. The goal of the loan restructuring is to help customers stay financially float in this pandemic. Moreover, banks are keen to help customers weather the pandemic so they can retain them for a long time.

Equity Group (EQTY), Absa Bank (ABSA) and Co-op Bank (COOP) are the other big banks that are revision loan terms to help their customers cope in the pandemic-driven economic crisis.

KCB shares closed Friday at Ksh34.90.

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