National Bank managing director and CEO Wilfred Musau (left) and
Chairman Mohamed Abdirahman Hassan during the lender's AGM on May 19,
2017. PHOTO | DIANA NGILA | NMG
Summary
- NBK’s earnings drop to Sh138 million as the lender takes a hit from the rate capping law.
- Rate caps have hurt banks’ business this year with most of them reporting lower or marginal growth in profitability.
- The embattled State-owned lender is also an acquisition target by KCB Group, which is also has significant government shareholding.
National Bank of Kenya's (NBK) after-tax profit plunged 73.5 per cent in the nine months to September after its interest income from loans was halved.
NBK’s
net earnings dropped to Sh138 million from Sh521 million in a similar
period last year, as a rate capping law regime slashed its earnings from
loan interest by half to Sh3.77 billion.
The year-old
interest rate caps, coupled with a drought and prolonged electioneering,
has hurt banks’ business this year with most of them reporting lower or
marginal growth in profitability.
NBK has, however,
had its fair share of financial woes preceding the rate caps that hurt
its capitalization and forced it to seek a Sh2.9 billion shareholder
loan from the National Social Security Fund (NSSF).
NSSF holds a 48.05 per cent stake in the bank.
The embattled State-owned lender is also an acquisition target by KCB Group
, which also has a significant government shareholding.
KCB,
the largest bank by assets in Kenya with operations in neighbouring
countries, said in June that it was looking to take up a majority stake
in the lender but the deal is yet to be concluded.
In
the nine months to September, NBK posted a 6.9 per cent drop in customer
loans to Sh57.9 billion, while customer deposits inched up 1.8 per cent
to Sh97.4 billion.
The bank’s volume of net non-performing loans st
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