KCB edges out Equity as big 3 banks’ half-year profits rise
By Otiato Guguyu and Dominic Omondi | August 17th 2018
Three of the country’s top banks have defied the effects of the rate cap to post growth in profit, according to financial results for the six months of this year released yesterday.
Kenya Commercial Bank (KCB) edged out Equity Bank as the country’s most profitable bank, announcing an 18 per cent growth in net profit to Sh12.1 billion.
Equity Bank’s net profit, on the other hand, jumped 17 per cent to Sh11 billion in the first six months of the year, up from Sh9.4 billion that the lender made in a corresponding period last year.
Co-operative Bank came in third with an after-tax profit of Sh7.1 billion, a 7.6 per cent rise from the Sh6.6 billion realised last year.
The growth in profit by the three lenders came despite the controversial rate cap law and the decisions by the Central Bank of Kenya to lower the benchmark rate twice this year.
KCB Chief Executive Joshua Oigara said at an investor briefing in Nairobi they hope to close the year on high on the back of the expected removal of the rate cap and continued cost containment.
“In the second half of the year, we foresee strong growth on an improved macroeconomic environment, especially in Kenya and expect improved investor confidence in South Sudan on the back of the newly signed peace agreement,” said Mr Oigara.
In the first quarter, Equity Bank Group has announced a 21.7 per cent rise in net profit to Sh5.9 billion for the three months ended March, surpassing the industry leader KCB which at the time reported a 14.1 per cent growth in first quarter net profit to Sh5.1 billion.
The two banks have maintained a strong rivalry over the last few years, with Equity Bank gaining the edge over KCB in terms of customer numbers.
KCB has, on the other hand, maintained the lead as the biggest bank in the country in terms of its asset base.
During the period under review, Equity’s customer base grew the lender’s interest income by nine per cent to Sh19.6 billion while its loan book grew by four per cent to Sh275 billion from January to June this year compared to Sh265.1 billion in the same period last year.
Deposits grew nine per cent to Sh393.7 billion in the period under review up from ShSh362.8 billion in the same period last year.
KCB on its part grew its assets to Sh667.6 billion, a six per cent growth from Sh630 billion last year.
Cooperative Bank boss Gideon Muriuki said the lender made key gains from continued implementation of the “Soaring Eagle” Transformation Agenda, focusing on improved operational efficiencies, cost management and innovative delivery systems.
Equity’s Mr Mwangi said a good chunk of their income resulted from Government lending, with the bank’s hold of Treasury-bills growing by 37 per cent to Sh158.9 billion in the first half of 2018 from Sh115.6 billion in the same period last year.
He said the bank has the capacity to finance most of the projects under President Uhuru Kenyatta’s Big Four agenda.
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