The forecast was lower than an estimate of 25% made in August by the bank's chief executive office because some businesses have now resumed repayments.

"Some of the customers have come back and told us 'we are comfortable', they are comfortable to continue paying their facilities as business as usual," Chief Financial Officer Lawrence Kimathi told Reuters. "So we are looking at, I would say, between 20% and 22%."

Regulators in Kenya and other countries where KCB operates have allowed banks to restructure loans and reschedule payments for customers suffering under the pandemic ever since COVID-19 first hit East Africa in March.

KCB, which also operates in Rwanda, Burundi, Tanzania, Uganda and South Sudan, posted a 37% drop in nine-month pretax profit to 17.1 billion shillings ($157 million) on Wednesday as it increased provisions for bad loans.

The bank also restructured customer loan facilities worth 105 billion shillings to cushion borrowers from the impact of the pandemic.

Kimathi said he expected National Bank of Kenya, which KCB acquired in 2019, to contribute 1 billion shillings of the group's profit for 2020.

"Going forward, we see that number tripling into 2021," he said.

Kimathi said the bank forecast new customer loans would increase 9% in the last three months of 2020.

Loans rose 19% in the first nine months of the year, though the increase would have been 8% without the inclusion of National Bank's business on KCB's books, Kimathi said.

($1 = 109.0000 Kenyan shillings)

(Reporting by George Obulutsa; Editing by Omar Mohammed and David Clarke)

By George Obulutsa