Management targets income growth from mobile loans platform run jointly with Safaricom.
KCB Bank made a Sh24 billion net profit last year, a 21.8 per cent jump from Sh19.7 billion in 2017 on lower costs and sustained incomes.
The bank cut provision on bad debts by 50 per cent from Sh5.9 billion to Sh2.9 billion after adjusting to new International Financial Reporting Standard (IFRS9) that shifts focus on future defaults rather than those that have occurred.
In addition, an 11 per cent dip in staff costs saw expenses come down from Sh36.4 billion to Sh35 billion. Employees now stand at 6,220 from 6,483 in 2017.
The country’s biggest lender by assets at Sh714.3 billion had flat growth in net interest income, which increased from Sh48.4 billion to Sh48.8 billion. Non-funded income was also flat at 23 billion.
KCB Group Chief Finance Officer Lawrence Kimathi said the lender will target strong growth on its mobile lending platform to continue delivering good results.
“Our focus is getting our growth back on the top line. This year we have delivered the numbers but they have not been delivered from the right sources,” he said.
“We saved on costs and the application of IFRS 9 on bad loans. Going forward total income has to grow and we are looking at a high single digit on that front.”
Mr Kimathi said the bank’s mobile-based lending platform, KCB M-Pesa has capacity to push up non-funded income by 25 per cent.
He said KCB M-Pesa was initially crippled by a problem of capacity and the lender shelved plans to grow it or advertise because whenever loan applications went above 50,000, it would crash.
“That is why we have invested in a big platform which has a capacity to do 250,000 applications in a day and it’s flying. Two months of this being in, we have overtaken M-Shwari in terms of number of loans and value,” he said.
M-Shwari is a similar loan product on M-Pesa offered by Commercial Bank of Africa.
The KCB platform is also built in a way that it would be able to take up other products including payments, insurance and collect and do data analytics.
KCB increased loans to the Government from Sh110 billion in 2017 to Sh120 billion last year, which ensured that the mainstay of its income came from Treasury.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.