Market News

Unpacking The Numbers In NCBA’s 92% Profit Growth

BY Soko Directory Team · November 24, 2022 12:11 pm

KEY POINTS

Net interest income went up by 15.1 percent y-o-y to 23.2 million shillings following a 13.3 percent y-o-y increase in interest income to 38.8 billion shillings which offset a 10.8 percent y-o-y rise in interest expense to 15.5 billion shillings.

KEY TAKEAWAYS

Operating expenses (less loan loss provisions) rose by 19.5 percent y-o-y to 18.5 billion shillings mainly on account of a 25.0 percent y-o-y advancement in other expenses to 9.0 billion shillings and a 19.5 percent y-o-y increase in staff costs to 7.1 billion shillings. The cost-to-income ratio eased by 225 bps y-oy to 40.5 percent (3Q21: 42.7 percent).

NCBA Group released its 3Q22 results reporting a 96.2 percent y-o-y upswing in after-tax profits to 12.8 billion shillings.

The profits were steered by a 40.1 percent y-o-y growth in non-funded income to 22.5 billion shillings, a 15.1 percent y-o-y increase in net interest income to 23.2 billion shillings, and a 9.2 percent y-o-y decline in loan loss provisions to 8.3 billion shillings

Non-funded income inched higher by 40.1 percent y-o-y to 22.5 billion shillings. This improvement was occasioned by a 162.9 percent y-o-y upsurge in net income from forex dealings to 9.2 billion shillings, a 4.0 percent y-o-y rise in fees and commissions on loans to 8.5 billion shillings, an 8.6 percent y-o-y growth in other fees and commissions to 2.9 billion shillings and an increase in other operating income by 11.2 percent y-o-y to 1.9 billion shillings.

Total operating income edged up by 26.2% y-o-y to KES 45.8 BN. The contribution of non-funded income to the total operating income came in at 49.2%, 490 bps up y-o-y.

Loan loss provision expense declined by 9.2 percent y-o-y to 8.3 billion shillings placing the annualized cost of risk at 4.2 percent, 96 bps lower y-o-y. Gross NPLs contracted by 20.9 percent y-o-y to 36.4 billion shillings, pivoting the NPL ratio to 12.0 percent (3Q21: 16.2 percent).

Customer loans and advances scaled by 11.7 percent y-o-y to 266.1 billion shillings (+6.2 percent q-o-q) while investment securities rose by 10.4 percent y-o-y to 233.4 billion shillings (+0.2 percent q-o-q). On the funding side, customer deposits edged up by 3.2 percent y-o-y to 462.1 billion shillings (-1.4 percent q-o-q) while borrowed funds dwindled by 37.5 percent y-o-y to KES 4.5 BN (+52.5 percent q-o-q).

On a trailing basis, NCBA is trading at a P/E multiple of 3.0x against an industry median of 3.7x and a P/B multiple of 0.6x against an industry median of 0.7x. Its ROE stands at 20.4 percent while its ROA stands at 2.8 percent.

Related Content: NCBA Kenya’s Net Income For Q3 Grows 96.2%

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory