Banks bounce back from Covid-19 blues to report jump in profits

Banks are slowly getting on track after a tough year in 2020 due to the adverse effects of the Covid-19 Pandemic.

During 2020, most banks recorded a drop in profit as the effects of the virus forced many of them to devise ways of cushioning customers including temporary suspension of loan repayment and slashing of transaction fees.

Equity Group, NCBA and KCB Group on Wednesday exuded confidence of a better future going by the results for the first quarter of 2021.

According to NCBA Group Managing Director John Gachora, “the results reflect strong underlying performance across all areas of our business and a slowly improving economy”.  NCBA reported a net profit of Sh2.84 billion in the first three months of this year, which is a 74 per cent increase compared to the same period last year.

“We are proud of our strong financial results during the first quarter, NCBA Group has demonstrated the ability to tightly balance strong credit discipline with its commitment to support its customers during this period,” said Gachora.

“We view 2021, as our transition year following the finalisation of the merger and consolidation of all entities, systems and processes of CBA Group and NIC Group across the region in 2020.”

NCBA’s net interest income recorded a 20 per cent increase year on year due to growth in interest income from treasury investments and a reduction in interest expense following the retirement of NCBA Group’s medium term note in the third quarter of 2020. The overall effect was that, operating income in the period closed at Sh11.8 Billion representing 8 per cent growth against prior year performance.

Equity Group saw its profit after tax increase to Sh8.7 billion, a 64 per cent jump.

“We have returned strong quarter one results in a challenging environment amidst the multi-faceted Covid-19 crisis of health, economic disruption, and humanitarian challenges, giving hope of resilience and recovery,” said James Mwangi, Equity Group Chief Executive Officer.

During the multi-crisis year, Equity focused on social impact investment in health investing Sh1.7 billion in social response to society, forgoing Sh1.5 billion in waived mobile transaction fees, waiving Sh1.2 billion in loan rescheduling fees and accommodating Sh171 billon (or 31 per cent) of the loan book for up to 3 years of principal and interest repayment breaks to enable businesses to survive.

“We kept the lights of the economies we operate in on, supported businesses to repurpose, retool and recover by supporting livelihoods of our customers during the crisis”, said Mwangi.

Equity’s interest income grew by 32 per cent while non-funded income grew by 30 per cent to contribute 42 per cent of total income.

KCB Group recorded a net profit of Sh6.37 billion, a 1.7 per cent increase from Sh6.26 billion same period last year. ?