National Bank Issues Profit Warning

The management of National Bank of Kenya (NBK) announced a decline in profit after tax for the full year ended December 31, 2015 which fell by over 25 percent compared to that of 2014.

“NBK’s earnings for the year ended 31st December 2015 will be at least 25 percent lower than that reported in the year ended 31st December 2014,” it said in a statement.

The low profit has been cited due to its non- performing loans (NPLs) portfolio which increased towards the end of 2015 thus leading to a sharp increase in the level of impairment charge.

Despite this, the bank has said that it has identified the NPLs and it is in the process of working towards its recovery.

Another factor stated to have led to the loses is the projected sale of one key low yielding asset, was approved by the board but was not completed in that year, thus reducing the projected income. The sale is said to be completed this year.

NBK posted a 21.7 percent net profit in 2014, which was weighed down by higher operating expenses and one-time restructuring costs.  Its net profit in 2014 was Sh.870.7 million as compared to that of 2013 which stood at Sh.1.1 billion.

The Banks’s CEO Munir Sheikh Ahmed together with five other top managers were on Tuesday sent on compulsory leave pending investigations into alleged breach of fiduciary duty and failure to adhere to corporate governance rule by the bank.

The move is as a result of an impeding audit by the Central Bank of Kenya (CBK) and the Capital Markets Authority found massive gaps in the bank’s books.

The six suspended executives are expected to present themselves for questioning during the  forensic audit.

“We reiterate that the internal process is not an indictment on the said managers but an opportunity to ensure a fair, transparent and independent audit process,” Mohamed Hassan, chairman of National Bank’s board, said in a statement.

The Central Bank of Kenya on Tuesday said it welcomed National Bank’s actions to strengthen the bank while ensuring its operations continued smoothly.  

Article by Vera Shawiza.