NIC net profit up 25.7 pc on increased lending, lower expenses

NIC Bank raised its dividend pay-out 17 per cent for the year ended December after its net profit jumped 25.7 per cent on the back of increased lending and lower expenses.

The bank declared a dividend of Sh1 per share for the period amounting to Sh639.9 million. This represents a 17 per cent absolute increase compared to Sh1 per share paid for the previous year when the bank had a smaller outstanding ordinary share volume of Sh542.9 million.

NIC last year implemented a bonus issue of one for every ten held and followed it up with a rights issue in which it created 42.6 million new shares in a transaction that raised Sh2.1 billion.

This expanded its ordinary shares to the current level, a move that will see the bank pay higher dividends though the rate remains unchanged at Sh1 per share.

Its net profit stood at Sh4.1 billion in the year ended December 2014, representing a 25.7 per cent increase from Sh3.2 billion the year before. This came as the loan book expanded 22.2 per cent to Sh102 billion, helping to raise interest income 17.7 per cent to Sh13.7 billion.

NIC also benefitted from lower operating expenses that declined 2.4 per cent to Sh5.3 billion, effectively boosting its margins. The lower operating expenses were driven by a smaller loan loss provision of Sh329.1 million in the period, down from Sh1 billion the previous year.

The bank’s interest expenses jumped 30.5 per cent to Sh5.7 billion, partly reflecting the increase in customer deposits from Sh91.5 billion to Sh100.4 billion.

NIC’s chief executive John Gachora said the bank’s subsidiaries, including banking, securities brokerage, and insurance agency units in Kenya, Uganda and Tanzania were all profitable in the period.

He added that the total of Sh7.1 billion raised from the bond and rights issue will be used to lend more and open new branches across the region.

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