KENYA: KCB loses Sh2.2bn mobile revenue on free M-Pesa

KCB Group  lost Sh2.16 billion mobile banking revenue last year on waiver of transaction fees charged to customers in the wake of Covid-19 infection as the regulator sought to cut cash handling.

The lender discloses that the mobile banking revenue dropped 22 percent to Sh7.71 billion after the Central Bank of Kenya (CBK) waived the fees of moving money between mobile wallets such as M-Pesa and bank accounts.

The reliefs on mobile phone transactions were in place between March 16 and end of December to encourage cashless payments on mobile phones as part of efforts to contain the spread of Covid-19.

“(The) 22 percent decline in mobile banking revenues (was) due to fee waivers,” KCB said in a breakdown of the financial year ended December.

KCB earns money on transactions such as deposit and withdrawal of money and loan application and processing.

The fall in revenue was despite the value of mobile transactions rising by 75.6 percent from Sh616 billion to Sh1.08 trillion.

The number of mobile transactions also surged from 204 million to 261 million as customers took advantage of the waived fees.

CBK in December rejected bankers’ push to reinstate fees on transfer of cash between accounts and mobile phone wallets, even as it ended free M-Pesa transactions of up to Sh1,000.

Free money transfer cost Safaricom Sh9 billion in six months to last June, which saw the firm report a six percent drop in net profit to Sh33.07 billion—the first fall in nine years.

Before the financial reliefs were introduced, most bank-to-M-Pesa transactions attracted fees ranging from Sh30 to Sh197.

The regulator later made a unilateral decision to extend the relief measures until December 31, drawing protests from Safaricom and banks.

The fall in mobile channel revenue also came on the back of KCB cutting mobile loans such as KCB M-Pesa and Mobi loan after CBK froze listing of defaulters of Sh1,000 and below.

KCB says total mobile loans advanced to customers fell by 27.4 percent to Sh154 billion, mainly driven by 50 percent fall in KCB M-Pesa disbursements.

Loans on KCB M-Pesa product dropped from Sh124 billion to Sh62 billion.

KCB Group’s net profit declined 22 per cent from Sh25.1 billion to Sh19.6 billion in the year ended December on the back of increased provisions for coronavirus-related defaults.