The National Bank of Kenya (NBK) has reported a staggering full-year loss of Sh1.2 billion, results that not only reverse the after-tax profit of Sh870.7 million it made in 2014 but also go down as it worst performance in recent history.
NBK, which is majority owned by Treasury and the NSSF, has seen its profits dip 234.4 per cent into a loss predominantly due to loan loss provisions which increased from 525.3 million to Sh3.72 billion.
The listed lender, which on Wednesday issued a profit warning, has announced that its gross non-performing loans jumped 63 per cent to Sh11.76 billion, laying bare the gravity of the bank’s financial problems.
NBK’s substantial bad loans and their provisions wiped out an otherwise normal performance of its income and expenses, given the prevailing economic environment.
The bank’s total interest income grew by 14.4 per cent to Sh12.2 billion, mostly on higher customer loans and advances.
Its interest expenses on the other hand grew by Sh2 billion to Sh5.9 billion, a jump attributable to interest paid on customer deposits which increased 41.1 per cent to Sh5.1 billion.
The bank’s net loans and advances to customers grew from Sh65.6 billion to Sh67.8 billion while their deposits from customers stood at Sh110.6 billion at the end of the year, having grown 5.6 per cent.
The NSE-listed lender, which sold off several assets last year to fund its business, closed the year with total assets worth Sh125.4 billion while its total liabilities stood at Sh114.4 billion.
The shocking turn in fortunes raises questions on the validity of the bank’s numbers before the appointment of Central Bank of Kenya’s governor Patrick Njoroge who has demanded close scrutiny of bank’s financial statements.
The lender’s full-year results have been released just two days after its board sent its managing director Munir Sheikh Ahmed and five top managers on compulsory leave pending investigations into alleged breach of fiduciary duty and failure to adhere to corporate governance rules.
The bank’s board did not recommend the payment of any dividends for the financial year under review.