NIC Bank records 2pc profit growth weighed down by rising bad loans

Corporate News

NIC Bank branch. The lender has recorded a two per cent profit growth in the first quarter, weighed down by a sharp increase in bad debts. FILE PHOTO |   NATION MEDIA GROUP

By VICTOR JUMA

In Summary

• NIC net profit in the period stood at Sh993.8 million compared to Sh973.9 million the year before, with provisioning for bad loans more than tripling to Sh421.1 million from Sh118.9 million.

NIC Bank recorded a two per cent profit growth in the first quarter, weighed down by a sharp increase in bad debts.

The lender’s net profit in the period stood at Sh993.8 million compared to Sh973.9 million the year before, with provisioning for bad loans more than tripling to Sh421.1 million from Sh118.9 million.

NIC’s gross non-performing loans rose by Sh3 billion to Sh9.1 billion, causing the lender to increase its provision for potential losses from the bad debts.

The provisions were the main driver of the 43.2 per cent jump in total operating expenses to Sh1.7 billion.

Loan book grew 23.5 per cent to Sh105.5 billion, a move that helped to raise total interest income 17.9 per cent to Sh3.7 billion.

Its interest expenses increased 7.8 per cent to Sh1.5 billion, partly reflecting the four per cent rise in customer deposits to Sh96.1 billion. Non-interest income, including fees and commissions, rose 16.9 per cent to Sh986.5 million.

Standard Investment Bank (SIB) noted that the bank is now in a position to grow its business significantly without breaching minimum capital ratios after its multibillion-shilling fundraising last year.

NIC last year implemented a bonus issue of one for every ten held and followed it up with a rights issue in which it created 42.6 million new shares in a transaction that raised Sh2.1 billion.

READ: NIC Bank gets more than double Sh2.1bn sought in cash call

The bank, which also operates in Uganda and Tanzania, said it will use the funds to open more branches and deepen its presence in retail and SME lending segments. NIC has focused on asset finance.

“Our focus will be to deepen our penetration in the retail and SME segments, as well as increase our footprint with new branches across the region,” John Gachora, the CEO said earlier