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NBK earnings drop 42pc as funding delays

NBK

National Bank Chief Executive Wilfred Musau. FILE PHOTO | NMG

National Bank’s #ticker:NBK net earnings for the six months to June dropped 42 per cent with the lender’s key capital ratio slipping further below regulatory requirements as fundraising plans continue to delay.

NBK, in which KCB Group #ticker:KCB reportedly plans to acquire a majority stake, said its half-year net profit had tumbled to Sh179.8 million in the period from Sh311.2 million a year earlier.

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This is attributed to lower earnings from loans, with net interest income dropping by a third to Sh2.8 billion in June 2017 compared to Sh4.4 billion the previous year, as the interest rate caps regime narrowed the lenders’ interest rate spreads.

NBK’s total capital to total risk-weighted assets ratio stood at 11.8 per cent as at June 2017, which is 2.7 percentage points below the Central Bank of Kenya’s statutory minimum of 14.5 per cent.

The bank’s ratio was 13.2 per cent in June 2016.

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Chief executive Wilfred Mutuku Musau on Wednesday said the bank is yet to receive a shareholder loan from the National Social Security Fund (NSSF).

NBK had on June 12, 2017 said it had received approval for a Sh2.9 billion shareholder loan from NSSF, which has a 48.05 per cent stake in the bank. The bank said the bailout would help shore up its capital ratios.

“NSSF capital inflow is at an advanced stage. The bank is deploying all avenues to comply with the capital requirements,” Mr Musau said in an interview with the Business Daily.

“What we got was an approval by the shareholder as per the bank’s request. The actual cash follows a process and we’re at the midst of that process. Our statement was based on actual approval,” he said.

The lender’s volume of non-performing loans stood at Sh26.1 billion – nearly half of NBK’s loan book which stood at Sh57.02 billion in the period under review.

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