NIC Group’s after-tax earnings for the six months of 2019 fell 4.2 percent to Sh1.9
billion, weighed down by Sh255.2 million incurred on the ongoing
process to merge with Commercial Bank of Africa (CBA).
The
bank booked the cost as an exceptional item on its income statement
explaining that this was spent on integration, advisory and legal
expenses related to the merger.
Its bottom-line is set to remain depressed, with the group expecting additional merger-related costs during the third quarter.
NIC
Group managing director John Gachora said the merger with CBA was on
course with significant progress having been made in securing the
requisite approvals from various regulatory bodies in the markets they
operate in.
“A comprehensive array of work streams
have been set up and are working to get us ready for a successful day
one. We are confident that when the new bank opens its doors we will not
only meet, but exceed our customers’ expectations,” said Mr Gachora.
The Group’s half year performance was also impacted by increased
impairments in its Tanzanian subsidiary, NIC bank Tanzania, where it
recorded a loss before tax of Sh348 million.
The bank
said the business environment in Tanzania remains challenging and it is
working closely with its customers in the market to mitigate further
deterioration of the loan book. During the review period, group interest
income remained flat at Sh9.65 billion while non-interest income grew
24 percent to Sh2.66 billion driven by an increase in service and
transaction fees.
Operating expenses rose 18 percent to
Sh5.23 billion from previous similar half year’s Sh4.4 billion. This
was driven by 30 percent rise in loan loss provision to Sh1.44 billion,
reflecting challenges in markets such as Tanzania. In addition, staff
costs grew nine percent to Sh1.85 billion.
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