KCB Group Salvages NBK, Cuts Non-Performing Loans By 20%

National Bank of Kenya (NBK) cut its non-performing loan book by 20 percent during the 2019 financial year ending December, signaling a strong recovery for the business following its acquisition by KCB Group Plc in September.

According to financials released on Thursday, the stock of NPL stood at 25 billion shillings, down from 31 billion shillings in 2018, as a result of an aggressive recovery strategy during the period.

The gains were however diluted by higher provisions for loan loss, at KES1.9 billion, compared to KES185 million the previous year, effectively hurting the bottom-line. Consequently, the Bank posted a loss after tax of KES 302 million for the period.

“We spent the last quarter of the last financial year, following the acquisition, building a firm foundation for the bank’s recovery and takeoff. We have also been on an aggressive loan recovery drive. We are optimistic of a better year ahead,” said NBK Managing Director Paul Russo while releasing the results.

The Bank’s total operating income for the year grew by 5 percent to 8.4 billion shillings, driven by increased interest income from loans and advances and higher in non-interest income from innovations, the launch of new products and strategic partnerships.

Cost management strategies delivered a 3 percent drop in total operating expenses (excluding loan provisions) from 7.3 billion shillings to 7.1 billion shillings.

From a balance sheet perspective, assets stood at 111.9 billion shillings. Customer deposits stood at 86 billion shillings, while net loans and advances, on the other hand, reduced marginally by four percent over the same period as a result of the reduced loan books and increased provisioning.

Following the acquisition, KCB Group injected 5 billion shillings in fresh capital which has significantly improved NBK’s capital buffers and an enhanced capacity to underwrite new loans and mobilize more deposits.

“This has further boosted our optimism about the future of the Bank. We see a brighter outlook going forward with a strong growth pipeline across business segments” said Mr. Russo, who is also the Group International Business Director at KCB Group Plc.

The Bank’s liquidity position improved to 46.1 percent, compared to 43.1 percent the previous year.

Earlier in the week, National Bank opened a new branch in Gikomba, to tap into the micro, small and medium enterprises in the market. The outlet becomes the 83^rd in the Bank’s network across the country and is one of four new branches that the Bank is setting up this quarter.