Regional lender, KCB Group, has reported a 40 per cent drop in net profit for the first half of the year, owing to factors linked to the Covid-19 pandemic.

The bank recorded a net profit of Ksh7.57 billion ($75.7 million) compared to Ksh12.72 billion ($127.2 million) in the same period last year.

Following the news however, the lender attributed the dip to increased provisions in the wake of higher credit risk due to the Covid-19 pandemic.

According to the bank’s financial statement, KCB set aside Ksh11 billion ($110 million) in provision for potential loan losses that could crystalize as a result of the pandemic impact, compared to Ksh3 billion ($30 million) during the same period last year.

KCB CEO Joshua Oigara said, the March to June period has been the most difficult quarter for nearly ten years at the bank, citing the provisions the lender has been forced to make as ‘catastrophic’.

“This has been catastrophic. Never have we seen our provisions increase from an average of Sh3 billion to more than Sh11 billion,” Oigara said.

Additionally, he pointed out that the cost of risk has risen by four times from 1 percent to 4 percent.

“The second quarter was the toughest in our recent history as the pandemic hurt economic activity across markets. Most of the key sectors were nearly shut down and our customers continue to face unprecedented challenges,” Oigara said in a statement.