National Bank Records Loss of KES 1.2Bn

National Bank has today announced FY2015 results reporting a loss of KShs1.2B for the year ended 31 December 2015. This compares to a profit before tax of KShs1.3B reported for same period last year. The Bank attributed the loss to heavy provisions and loan impairment charge which increased by KShs 3.2b over the period.

The Bank’s non-performing loan portfolio increased sharply towards the end of 2015 undoing gain of Ksh3.3B in profit before tax reported by the bank for Q3 2015. Speaking while releasing the results, the Bank’s Acting Managing Director Wilfred Musau said the reduction in profits resulted from heavy bad debt provisions and higher interest expenses.  “Increasing provisions is a prudent practice in accounting. We have further put elaborate steps in place to manage the recovery of this position. ”

Growing assets and loan book

During the period under review, the bank grew its assets by 1.6% to KShs 125B. Net loans & advances grew by 3.3% to KShs 67.8B while customer deposits grew by KShs 5.6B to KShs 110.6B as at 31 December 2015. NBK net interest income, however, declined by Kshs 0.4B to KShs 6.4B. This was attributed to an increase in interest expense which rose by a significant 50% to KShs 5.9B on account of tight liquidity in 2015. Operating expenses increased marginally by 7.1% to KShs 7.5B against KShs 6.9B last year on account of stringent cost cutting measures put in place by the management.

In the year under review, the Bank continued to expand its network in order to bring products and services closer to customers. “Currently we have a total of 80 branches, ATM network of 140 and over 1500 agencies nationwide. Our customers continue to enjoy access to over 1,000 other ATMs belonging to the bank’s partners around the country,” pointed out Musau. NBK has recently also been awarded for high level automation of business processes.

Mr. Musau said NBK would continue to invest in new product lines and service differentiation in line with Bank’s transformation program. Within the year, the bank has plans to launch a micro-finance business wing in further differentiating services to its customer base.  The Bank delivers differentiated service lines for Shariah compliant banking known as National Amanah, Premium Banking for high net worth individuals, Corporate and retail banking as well sections dedicated to Chinese business.

Musau said the differentiated segments have performed exceedingly well in the market.