FINANCIALS

NCBA's three month profit up 20% to Sh1.6 billion

The lender is the third biggest in Kenya with total assets growing to Sh509.6 billion in March from Sh494.8 billion in December.

In Summary
  • The Group recorded a gross profit of Sh2.4 billion, with a total operating income of Sh10.9 billion.
  • The Group expects the overall NPL ratio to continue to be impacted negatively by the on-going challenges in the market caused by Covid-19.
NCBA Bank Kenya PLC designate chairman Isaac Awuondo and group MD John Gachora
NCBA Bank Kenya PLC designate chairman Isaac Awuondo and group MD John Gachora
Image: Douglas Okiddy

The NCBA Group Plc (NCBA) net profit has grown by 20 percent to Sh1.63 billion for the quarter ended March 31, 2020.

The merged entity between NIC Bank and CBA Bank reported Sh1.29 billion in profits after tax in Q1 2019.

NCBA Group managing director, John Gachora attributed the results to integration efficiencies and synergies that have raised customer revenue while stabilising operation costs.

 
 

''The underlying trends of the income statement remained solid, with customer revenue growing, operating costs, on the other hand, remained stable compared to the last quarter of 2019. The Group continues to pursue integration efficiencies and synergies,’’ Gachora said.

The Group recorded a gross profit of Sh2.4 billion, while the total operating income was Sh10.9 billion.

On 1 October 2019 NIC Group PLC (NIC) and Commercial Bank of Africa Limited (CBA) merged. The transaction was accounted for in accordance with IFRS 3 - Business Combinations.

The Group’s results are therefore prepared on a prospective basis, representing three months' performance of NCBA Bank; prior year comparatives are those of CBA Bank.

The consolidated financial statements are also a continuation of the financial statements of CBA with an adjustment to capital to reflect the legal capital of NIC. The prior year comparatives are those of CBA. 

The Group ended the quarter with a total assets base at Sh509.6 billion, compared to Sh494.8 billion in December last year.

The customer base stood at 54 million, with deposits surging to Sh390.5 billion. The Group’s net loan book closed the quarter at Sh245.9 billion.

 
 

There was however an increase in levels of non-performing loans especially in the transport and manufacturing sectors and on the mobile loan portfolio.

“Non-performing loans remain a major issue from legacy accounts for which we continue to provide. Further stress was seen in the digital business as a result of a one-off increase in limits. We expect that the impairments seen in the digital business will normalise during the second quarter,’’ Gachora said.

He, however, said the Group expects the overall NPL ratio to continue to be impacted negatively by the on-going challenges in the market caused by Covid-19.

The bank, he said, is taking capital conservation measures including replacing an earlier proposed cash dividend with a bonus share issuance for the financial year 2019.

The board announced a dividend payout of Sh1.75 per ordinary share and a bonus share issue of one share for every 10 shares held.