National Bank’s net earnings hit Sh1.02bn

National Bank’s net earnings in the first nine months of this year grew by nearly a fifth to Sh1.02 billion, even as the lender’s volume of bad loans increased sharply.

The mid-sized lender reported a net profit growth of Sh140 million in the three quarters to September, 2014, a growth of 16 per cent.

NBK’s stock of gross non-performing loans (NPLs) surged to Sh6.04 billion from Sh3.7 billion in September 2013 and Sh5.1 million in June this year.

The bank’s managing director Munir Sheikh Ahmed attributed the growth in profitability to higher interest margins and transactional income due to increased business volumes.

The nine-month period saw NBK’s interest income grow by a quarter to Sh7.6 billion while non-interest income surged by a third to Sh2.2 billion.

Mr Ahmed declined to comment on the bank’s growing mountain of bad loans but said in a statement that NBK would continue to actively manage emerging risks across the businesses.

NBK’s ratio of gross NPLs to gross loans increased to 10.4 per cent in September 2014 from 9.3 per cent, defying an industry-wide decline in the load of bad debt.

Its loan book also grew substantially by Sh26.1 billion to Sh57.5 billion in September from Sh31.4 billion in September 2013.

The Central Bank of Kenya (CBK) said the ratio of bad loans in the banking industry dropped to 5.4 per cent from 5.7 per cent over a similar period.