March 6, 2019 / 11:53 AM / 6 months ago

Kenya's KCB Group reports rebound in annual earnings, shares up

NAIROBI (Reuters) - Kenya’s KCB Group reported a 22 percent rise in annual net profit to 24 billion Kenyan shillings ($240 million) on Wednesday after a flat 2017 and forecast double digit growth this year.

FILE PHOTO: A Kenya Commercial Bank (KCB), logo is seen outside the Kencom branch in Nairobi, Kenya July 10, 2018. Picture taken July 10, 2018. REUTERS/Thomas Mukoya

KCB Group, which also operates in Uganda, Tanzania, Rwanda, Burundi and South Sudan, said its pretax profit rose 16 percent to 33.9 billion shillings ($339.00 million), helped by faster growth in lending and higher transaction fees.

Loans at Kenya’s biggest by assets rose to 455.9 billion shillings from 423 billion a year earlier. It cut bad debts as a proportion of the total.

“We have been very good with the recoveries of some of our bad loans,” CEO Joshua Oigara told Reuters after the results announcement.

KCB shares were up 2.1 percent at 43.10 shillings after the results.

The lender’s latest profit growth showed improvement from a year earlier when its profit was flat, held back partly by slowed economic activity during a prolonged election period.

Oigara said he expected further consolidation in the banking sector in the next few years.

In January, NIC Group announced plans to merge with Commercial Bank of Africa (CBA) to create the third-biggest bank in the region.

KCB is in the process of finalizing the takeover of certain assets belonging to Imperial Bank, which was placed in receivership in October 2015 after the board of the privately owned bank alerted authorities to suspected malpractices.

In September 2018, parliament passed measures to double the excise duty on the fees charged by banks, money transfer services, and other financial institutions to 20 percent. Mobile money transfers are charged a 12 percent excise duty.

Oigara said the government ought to reconsider its move to raise excise duty on financial service fees.

“We totally disagree. It has huge implications on our small transactions,” he said.

Reporting by George Obulutsa; editing by Jason Neely

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