KCB Group Plc reported net profit growth of 54% for the three months to March 31, largely supported by growth in interest and non-interest income and a reduction in loan loss provisions.

The regional lender made a profit after tax of Ksh 9.78 billion ($84.31 million) compared to Ksh 6.37 billion ($54.91 million) in the same period last year.

“We are optimistic that business growth will improve in the remaining part of the year as economic fundamentals improve in the East African economy despite global threats and other local developments, including the upcoming general elections in Kenya,” said the group’s chairman, Andrew Kairu.

“Our priority is to harness the economic drivers to accelerate the pace of recovery and growth,” Kairu added.

The group’s unaudited financial statements show a 26% increase in total revenue to Ksh29.03 billion ($250.25 million) from Ksh23.04 billion ($198.62 million) with total costs increasing by 16, 8% to 12.9 billion Ksh ($111.2 million) against 11 Ksh. $0.1 billion ($95.68 million) in the same period last year.

Net interest income earned on loans and government securities increased by 18% to Ksh 19.7 billion ($169.82 million), while unfunded or non-interest income interest increased by 47.2% to Ksh 9.3 billion ($80.17 million).

The Group’s investment in government securities increased by 32.6% to Ksh281.8 billion ($2.42 billion) from Ksh212.5 billion ($1.83 billion).

Provisions for loan losses decreased by 27.5% to Ksh 2.07 billion ($17.84 million) from Ksh 2.86 billion ($24.65 million), even though the loan portfolio Non-performing companies continued to come under pressure due to the slow recovery in the construction, hospitality and part of the manufacturing sectors. Customer deposits increased by 12.9% to Ksh 845.8 billion ($7.29 billion), while the loan portfolio increased by 18% to Ksh 704.4 billion (6. 07 billion dollars). The Group’s balance sheet increased by 19.3% to Ksh 1.2 trillion ($10.34 billion), following the acquisition and consolidation of Banque Populaire du Rwanda.

Last year, KCB acquired a 62.06% stake in BPR from UK financial services conglomerate Atlas Mara Ltd (ATMA) and later increased the stake to 76.67% by acquiring a further 14.61% of the shares minority shareholders.

The transaction increased KCB’s assets by 15.4% to Ksh 1.13 trillion ($9.74 billion). KCB has operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan and a representative office in Ethiopia. He also wants to enter the Democratic Republic of Congo as part of his pan-African expansion bid.

Last year, the contributions of the regional subsidiaries to the Group’s profit increased to 13.7% compared to 13.6% in 2020.