NIC Bank grew its profit 17.5 per cent in the nine months to September on cheap deposits. The lender’s net profit stood at Sh2.8 billion in the period compared to Sh2.3 billion the year before.
The profits were boosted by Sh1.6 billion savings in deposit costs, which offset the 2.2 per cent drop in lending income to Sh8.5 billion.
The lower interest income is linked to the drop in lending rates given NIC’s loan book grew to Sh76.6 billion in September from Sh71 billion in December.
At 17.5 per cent, NIC’s profit growth is above the industry average of 14.4 per cent as captured by the Central Bank.
The mid-tier lender, which also operates in Tanzania and Uganda, only said the outlook for 2014 was “promising”, without elaborating.
NIC recently hired a former Barclays Bank executive, John Gachora, as CEO to replace James Macharia, who was appointed the Health Cabinet Secretary.
Mr Gachora’s experience in mainstream and investment banking is expected to help deepen NIC’s financial supermarket model that includes trading shares, selling insurance products and offering loans.
The combined earnings of the non-banking unit and those of its foreign subsidiaries dropped to Sh92 million in the nine months to September compared to Sh154 million a year earlier.
Mr Gachora is also expected to step up expansion into foreign markets, especially within East Africa.
NIC’s share price has gained nine per cent over the past six months to trade at Sh60.
Most lenders in Kenya have reported a rise in profits due to a drop in deposit costs, which boosted demand for loans and cut interest expenses.