INAUGURAL RESULTS

NCBA Group records 42 per cent profit decline in first results

High levels of credit provisions taken resulted in the drop

In Summary
  • This is the first time NCBA is announcing full year results as an entity following the merger of NIC Group PLC and CBA in October 2019.
  • The Group maintained strong operational performance, reporting an operating income growth of 38 per cent to Sh46.4 billion.
NCBA Bank Kenya PLC designate chairman Isaac Awuondo with group managing director John Gachora during the unveiling of NCBA group new logo at Raddison Blu Hotel,Nairobi,October 3rd 2019,/DOUGLAS OKIDDY
NCBA Bank Kenya PLC designate chairman Isaac Awuondo with group managing director John Gachora during the unveiling of NCBA group new logo at Raddison Blu Hotel,Nairobi,October 3rd 2019,/DOUGLAS OKIDDY

NCBA Group's net profit declined 42 per cent to Sh4.6billion in the financial year ended December 31 2020 on the back of high levels of credit provisions.

This is the first time NCBA is announcing full year results as an entity following the merger of NIC Group PLC and CBA in October 2019.

NCBA supported its customers throughout 2020 and disbursed over Sh432 billion in digital loans.

In addition, the Group also granted loan moratoriums and restructured loans amounting to over Sh78 billion to corporate and retail customers as at end of December 2020.

“The rate of impairments increased due to delayed repayments and an assessment of additional stress that could emerge in relation to Covid-19. The increase in impairment charges contributed to a decline in net earnings,” the Groups's financial statement read.

The Group's non-performing loans stood at Sh40.1 billion up 19 per cent while non-performing loan provision coverage was at 61 per cent up from 56 per cent.

NCBA  however maintained strong operational performance, reporting an operating income growth of 38 per cent to Sh46.4 billion.

Operating profit (before provisions and exceptional items) increased by 37 per cent to Sh26.8 billion.

“In a year of unprecedented challenges for our business, the banking sector and the economy at large, I am extremely proud of the results that the Group delivered,” said John Gachora, NCBA Group Managing Director.

Gachora noted that so as to cushion the business and  customers against the impact of Covid-19 they took unprecedented measures throughout the year for instance they restructured Sh78billion of loans and increased  credit provision reserves by Sh20 billion to address the uncertain economic environment.

“NCBA’s fundamentals however remained solid with total assets up Sh33billion to close at Sh528 billion and customer deposits up by Sh43 billion to close at Sh421.5 billion. We remain very well capitalized with core capital at Sh64.8 billion and have a robust liquidity of 55 per cent, allowing us to continue effectively serving our clients through these challenging times” Gachora added.

For the year 2020, the Board resolved to recommend to the shareholders for their approval at the Annual General Meeting scheduled to be held on June 9 2021, the payment of a final dividend for the year of Sh1.50 per share.

The dividend will be payable to the shareholders registered on the Company’s register at the close of business on 20th April 2021 (closing date for determination of entitlement to dividend).

“Our progress in managing through the pandemic over the last year confirms the strength of our merged business supported by a diverse and loyal customer base. As the new year begins, I am optimistic that we have established a solid foundation from which we will execute our strategic priorities,” Gachora concluded.

As a result of the pandemic, the economic outlook for 2020 was lowered substantially, due to slowdown in global trade, services and the continued uncertainties around the pandemic impacting exports, tourism and agribusiness sectors.