National Bank of Kenya recorded a 785 million shillings Profits before tax for the period ending 31 December 2017.
The bank stated that the growth was recorded despite an unfavorable macroeconomic environment and a protracted electioneering process.
Net Interest income for the period was 6.7 billion shillings, a 14 percent drop from 7.7 billion shillings’ same period previous year mainly due to the effect of interest rate capping law reducing interest earned from loans and advances. This was partially compensated by an increase in interest earned from Government securities and improved funding mix which reduced interest expense by 0.9 billion shillings.
Total operating revenues closed at 9.1 billion shillings compared to 10.6 billion shillings in 2016 representing 14 percent decrease due to the impact of interest capping and lower fees as volumes of new loans dropped.
As part of the diversification of revenues, Revenues from subsidiaries (NBK Insurance agency limited and National Trustee Investment services limited) grew 45 percent year on year from 74 million shillings to 108 million shillings.
Loan provisions declined from 2.4 billion shillings to 0.76 billion shillings benefiting from the reduction in NPL book and improved credit management ensuring minimal negative migration.
Total operating expenses declined by 6 percent to 7.6 billion shillings from 8.1 billion shillings over the same period last year due to improved cost management and rigor in operational controls.
Customer Deposits grew 1 percent from 93.8 billion shillings to 94.2 billion shillings on account of customer confidence in the Bank and new products such as diaspora banking, enhanced batmobile and improved client service.
Net loan and advances reduced by 5 percent over the same period driven by reduced loan volumes. The group deployed effective recovery strategies resulting in a reduction in gross Non-performing loans by 2 billion shillings from 30 billion shillings to 28 billion shillings.
As a result of growth in customer flows and deliberate rebalancing of the bond portfolio, the bank improved its liquidity with ratio closing at 36.3 percent compared to 32.6 percent in the previous year.
In a further boost, the Bank also announced that its major shareholders – the Government of Kenya and NSSF – have made commitments to address its capital requirements.
Commenting on the results, the Bank’s Managing Director, Mr. Wilfred Musau said that their transformation agenda momentum continued unabated during the 2017 financial year as they made strategic strides in addressing NPL’s, cost management, improving operational efficiency and leveraging on technology to deliver solutions to customers.
“The solid commitment made by our major shareholders to tackle the recapitalization is an overt approval of the measures taken in the financial year under review to sustain growth. The capital injection will unlock and bolster the key pillars of our growth going forward,” added Mr. Musau.