Joshua Oigara plays down rise of KCB bad loans
Kenya Commercial Bank chief executive officer Joshua Oigara poses for a photo after he was named the Banker of the Year during the Banker Africa East Africa Awards at the Crown Plaza Hotel in Nairobi on May 24, 2016. Mr Oigara has downplayed the rise of KCB's non-performing loans. PHOTO | SALATON NJAU | NATION MEDIA GROUP
What you need to know:
- KCB CEO Joshua Oigara attributes increase of non-performing loans to two clients.
Mr Oigara said the two customers contributed to the 90 per cent increase in the non performing loans in the period.
During the quarter, KCB’s dud assets or gross non performing loans rose to Sh30.44 billion for the group from Sh23.5 billion last December.
KCB has played down a Sh7 billion jump in non-performing loans in its books during the first quarter of the year, saying affected customers would pay up by next month.
KCB Group chief executive Joshua Oigara linked the increase mainly to two of its clients who supply both the national and county governments, but added that the challenge was synonymous with all banks in every first quarter of the year.
“We see difficulties in the settlement of bills and payments in the last quarter. We do expect this to improve in any case by the second half of the year. It is mainly temporary in my view. It is not something that is systemic across all our customers,” said Mr Oigara in an interview with the Daily Nation.
He added: “We have got some delays in one or two clients in the quarter and we expect this to correct itself in the second quarter. The two customers should be okay by end of June.”
Mr Oigara said the two customers contributed to the 90 per cent increase in the non performing loans in the period.
“They are specific names and we are not worried about them. They are in their 90-day arrears and they will pay up,” he said.
East Africa’s largest commercial bank by assets was hit by a Sh7 billion increase in gross non-performing loans, even as it recorded a 6.1 per cent growth in net profit in the first quarter of the year compared to last year.
Provisioning for loan losses more than doubled to Sh1.34 billion, cutting into the company’s net profit that now stands at Sh4.63 billion in the quarter ending March 31, up from Sh4.36 billion in the same period last year.
During the quarter, KCB’s dud assets or gross non performing loans rose to Sh30.44 billion for the group from Sh23.5 billion last December.
The increase arose mainly from the Kenyan unit whose NPLs now total Sh26.1 billion from Sh19.3 billion last December.
Meanwhile KCB saw its total loans and advances flat at Sh345.94 billion as at the end of March compared to Sh345.97 billion in the quarter ended last December.
Mr Oigara said a high interest rate regime has had a dampening effect.
“This is the impact of high interest rates in December. Generally as the interest rates increased, we don’t see a growth in loans,” said Mr Oigara.
