NIC continues to rely heavily on Kenya for its earnings besides pursuing an aggressive regional expansion. PHOTO | FILE
What you need to know:
NIC Bank’s net profit rose 8.9 per cent to Sh4.4 billion in the period compared to Sh4.1 billion reported in 2014.
This came as loan loss provisions rose sharply to Sh1.6 billion from Sh329.1 million.
The loan loss provisions were the main driver of the 38.1 per cent jump in total operating expenses to Sh7.3 billion.
NIC Bank’s bad debts more than doubled to Sh14.3 billion in the year ended December, weighing down the lender’s profit as provisions for loan losses jumped five-fold.
The bank’s net profit rose 8.9 per cent to Sh4.4 billion in the period compared to Sh4.1 billion reported in 2014.
This came as loan loss provisions rose sharply to Sh1.6 billion from Sh329.1 million.
The Nairobi Securities Exchange-listed firm has declared a final dividend of Sh1 per share to be paid on May 17, which will add up to a total payout of Sh1.25 having paid an interim dividend of Sh0.25 per share.
The lender paid a first and final dividend of Sh1 per share on the results of the previous year.
The loan loss provisions were the main driver of the 38.1 per cent jump in total operating expenses to Sh7.3 billion.
NIC’s loan book expanded by Sh13.9 billion to Sh116 billion, which helped to raise total interest income 24 per cent to Sh17 billion.
Non-interest income, including commissions and forex trading, rose 12.8 per cent to Sh4 billion.
Interest expenses increased 27.2 per cent to Sh7.2 billion, partly reflecting the 11.8 per cent rise in customer deposits to Sh112.3 billion.
Interest rates in Kenya, its most important market, also rose in the second half of last year to reach highs of 27 per cent.
The interest rate jump is expected to have raised income from loans but also funding costs for lenders such as NIC that rely heavily on deposits from cash-rich firms that have the muscle to negotiate for better rates.
Besides loan loss provisions, most other operating expenses also rose, including staff costs that increased 20.3 per cent to Sh476.3 million.
NIC continues to rely heavily on Kenya for its earnings besides pursuing an aggressive regional expansion over the past few years. The home market still accounted for 97.9 per cent of its net profit in the review period.
The bank has subsidiaries in Uganda and Tanzania, whose contribution to the consolidated net income stood at Sh94 million.
NIC, however, booked a Sh316.4 million forex loss from translating the foreign units’ assets and liabilities into local currency. This partly contributed to the comprehensive income dropping six per cent to Sh3.8 billion.
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