Equity Analysis /

Kenya Commercial Bank: KCB Group: Q1 18 – lower loan loss provisions mask weakness

    Faith Mwangi
    Faith Mwangi

    Equity Research Analyst, Financials (East Africa)

    Tellimer Research
    18 May 2018
    Published byTellimer Research
    Q1 EPS was up by 14% yoy to KES1.69, which was weaker than we expected, mainly because: 1) non-interest revenue fell by 4% yoy; 2) the NPL ratio rose to 9.8% from 8.5% in FY 18 despite management promising a better 2018; and 3) balance sheet growth was weaker than expected, with loans up by 6% and deposits up by 9% versus the FY 18 forecast of 14% for both. The 14% earnings growth was mainly due to a 37% yoy decline in loan loss provisions. The bank is trading at a 2018f PB of 1.4x.