National Bank quarter one profit falls 82pc to Sh59 million

National Bank of Kenya CEO Wilfred Musau. FILE PHOTO | NMG 

By BRIAN NGUGI

More by this Author

Summary

• National Bank’s net earnings dipped to Sh59.45 million in the period from Sh334.57 million last year even as its bad debts shot up by Sh12 billion.
• The bank recorded a 12.35 per cent or Sh8.18 billion drop in its loan book to Sh58.12 billion during the period.
• NBK’s gross non-performing loans increased by 70.95 per cent to stand at Sh29 billion.

The National Bank of Kenya’s (NBK)

net profit for the period ended March 2017 fell 82.23 per cent with both interest and non-funded incomes heading south.

The mid-tier lender’s net earnings dipped to Sh59.45 million in the period from Sh334.57 million last year even as its bad debts shot up by Sh12 billion.

The lender’s net interest income from customer loans decreased by 36.4 per cent in the period to Sh1.44 billion compared to Sh2.27 billion last year.

Chief executive Wilfred Mutuku Musau had earlier projected flat growth in its interest income for this fiscal year, attributing the gloomy outlook to the interest rates cap law which has narrowed profit margins for several other lenders.

The bank recorded a 12.35 per cent or Sh8.18 billion drop in its loan book to Sh58.12 billion during the period. NBK’s gross non-performing loans increased by 70.95 per cent to stand at Sh29 billion.

The lender’s loan loss provision that directly eats into its profitability, however, stood at Sh131.15 million representing a year-on-year decrease of 81.18 per cent as the value of securities held rose by Sh8 billion.

The lender’s non-interest income went down 14.34 per cent to Sh630.3 million, further compounding its revenue decline.

NBK, which is 22.5 per cent owned by taxpayers through the Treasury, said its assets stood at Sh115.65 billion (an increase of 84.3 million from last year’s Sh115.57 billion) in the period while its total liabilities increased marginally by 0.29 per cent to stand at Sh104.48 billion.

Customer deposits in the period stood at Sh92.77 billion, representing a drop of Sh6.6 billion from Sh99.44 billion the lender registered in 2015.

The lender, which has in the past resorted to selling assets such as buildings to funds its operations, still finds itself below the regulatory capital adequacy ratios for a tier two bank.

The NBK’s total capital to total risk-weighted assets ratio stood at 11.6 per cent as at now, which is 2.9 percentage points below the Central Bank of Kenya statutory minimum of 14.5 per cent.