NBK, however, reported a 32.4 per cent drop in its first quarter profit from the Sh495 million earned in the first three months of last year.
The National Bank of Kenya (NBK) has bounced back to profitability, posting Sh334.6 million net profit between January and March after closing last year with a shocking after-tax a massive jump in provisions for non-performing loans.
The lender, however, reported a 32.4 per cent drop in its first quarter profit from the Sh495 million earned in the first three months of last year.
The performance is an improvement on the bank’s full-year loss of Sh1.2 billion, which marked a dip from the after-tax profit of Sh870.7 million in 2014 and went down as one of its worst performance in recent history.
“The bank enhanced its efforts to recover certain personal and business loans that were non-performing and therefore not earning us interest,” said NBK’s acting managing director Wilfred Musau in an interview.
Net interest income increased to Sh2.3 billion in the period compared to Sh1.9 billion last year.
“The result of our efforts was that some of the loans were fully paid, others are ongoing while another portion was written off. Some of the facilities were also priced up hence the growth in interest income.”
This boost from interest income made up for the 5.3 per cent dip in net loans and advances to customers as the bank closed the three months with a loan book of Sh66.3 billion.
NBK is however still not yet out of the woods as its gross non-performing loans now stand at Sh16.97 billion, representing a Sh10 billion increase from last year’s figure.
In the past three months alone, this figure has jumped by Sh5.2 billion, a pointer to the unhealthy loan book whose provisioning weighed on the bank’s performance last year.
NBK’s loan loss provision, which directly eats into its profitability, now stands at Sh696.9 million, representing a year-on-year growth of 80.5 per cent.
NBK’s board on March 29 sent home six top managers, including the CEO, following a series of multi-pronged audits that the CBK and the Capital Markets Authority ordered-- unearthing gaps in the bank’s books.
“There has been enhanced focus and efforts across the sector to prudently provision for facilities immediately they fall due,” said Mr Musau.
NBK, which is 22.5 per cent owned by taxpayers through the Treasury, says its assets, stood at Sh115.6 billion (a drop from last year’s Sh116.9 billion) while its total liabilities remained flat at Sh104.2 billion.
Customer deposits after the three months stood at Sh99.4 billion, representing a jump from the Sh85.3 billion the lender registered in the corresponding quarter in 2015.
The lender, which last year resorted to selling assets such as buildings to fund its operations, still finds itself below the regulatory capital adequacy ratios for a tier two bank.
NBK’s ratio of its total capital to total risk-weighted assets currently stands at 13.1 per cent which is perilously below the Central Bank of Kenya’s requirement of 14.5 per cent.
“National Bank is in need of raising capital in order to meet the threshold as well as continue growing its loan book,” analysts at the Standard Investment Bank (SIB) said in a note to investors.
The bank will at its upcoming AGM seek shareholders’ approval to pursue several capital-raising options besides a rights issue which is still on the cards.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
