National Bank welcomes Cytonns banking report findings

National Bank of Kenya (NBK)  has welcomed the findings of Cytonns banking report by Investment firm Cytonns which reviewed key banking ratios and metrics for 11  banks listed on the Nairobi Securities Exchange and then ranked the banks based on their performance on each.

Munir Sheikh Ahmed termed this ‘first of a kind’ survey “a qualitative assessment that might further incentivize competition in the Kenyan banking industry”.

Cytonns banking report was prepared for the consumption of its own investors and placed National Bank of Kenya 2^nd of the 11 banks in the Loan/Deposit Ratio after CFC Stanbic, 11 out of 11 in cost/income ratio category and 6 out 11 in the Net Interest Margin ratio category.

Overall, the survey ranked National Bank of Kenya at 10 out 11 and CFC Stanbic as number 1.

“We are halfway through the five year restructuring process to take National Bank among top five tier 1 banks and we see these kind of market Surveys coming from Investment advisors being useful markers for National Bank as we seek to benchmark ourselves with peers in pursuit of competitiveness. We encourage these engagements,” said Mr. Munir.

National Bank, he said, had inherited a legacy of bad loans from the previous management which at one time was as high as 25%.  The bank prior to 2012 also had no commercial business units and run on an antiquated business model in addition to running on a bloated workforce. The bank new strategy has however helped achieve early results reducing the bank’s non-performing loans (NPLs) to 8.75% in the last two years and is targeting to get the same to below 5% by 2016.

Through an elaborate Voluntary Early Retirement program and new investment in modern banking technology, the bank has also managed to reduce the cost income ratio from a high of 75% to the current 65% and hope to take this down to 50% when complete this program.

Central Bank of Kenya reported the non performing loans average at 5.8% and cost to income ratio average at 41% for the sector in 2014.

The banking sector’s aggregate balance sheet grew by 3.4% from Kshs 3.26 trillion in December 2014 to Kshs 3.37 trillion in March 2014.

National Bank own Assets are growing faster at a rate of 33% CAGR. NBK impressively doubled its assets in a period of two years (from 67B in 2012 to 123B in2014), something the bank has never achieved before since its founding. Further, NBK profits have been growing at 45% CAGR, in spite of restructuring costs, which is 15% faster than the target set to get the bank into the Tier1 bank club by 2017.

“We are fast becoming a strong match for our peers. All our ratios are improving faster than we expected them to and we look forward to end of year result to how our strategy is impacting the bank,” he said.