NCBA first quarter net profit up 4.6pc to Sh5.3bn

NCBA Group Managing Director and CEO John Gachora at a past media briefing on August 24, 2023.  

Photo credit: File photo | Lucy Wanjiru | Nation Media Group

NCBA Group has posted a 4.6 percent growth in net profit to Sh5.3 billion in the first quarter ended March 2024 on increased non-interest income and reduced tax expense.

Financial results published Thursday showed net earnings grew from Sh5.07 billion posted in a similar period last year, following the trend of increasing earnings by tier I lenders, including KCB, Equity and Co-operative Bank of Kenya.

“Despite a challenging operating environment, our diversified business model continued to demonstrate growth and resilience with a strong contribution from our digital business and stable performance from our regional banking subsidiaries,” said John Gachora, group managing director at NCBA.

NCBA posted a 1.2 percent decline in net interest income to Sh8.27 billion after interest expense on customer deposits hit Sh10.28 billion, marking a near doubling from Sh5.9 billion paid on deposits in the preceding similar quarter.

Non-interest income, however, rose 7.4 percent during the review period. The rise in non-interest income, combined with a slowed rise in operating expenses and a lower effective tax rate, helped NCBA to post a growth in the bottom line.

Operating expenses rose 3.1 percent to Sh9.44 billion, even as NCBA cut its provisioning for loan defaults by 30 percent to Sh1.35 billion.

NCBA tax expense fell to Sh1.93 billion or 29.4 percent of the pre-tax earnings compared with Sh2.56 billion or 40 percent of the pre-tax earnings in a similar quarter in 2023.

The lender’s regional subsidiaries in Uganda, Tanzania and Rwanda delivered a combined Sh705 million, representing 11 percent of the group’s pre-tax profit. Non-banking subsidiaries including the investment bank, bancassurance and leasing business took up four percent of the gross earnings.

Commenting on the outlook, Mr Gachora said: “The challenging business environment will benefit from the positive outcomes outlined in ongoing public and private sector economic policy interventions. We remain committed to deliver against the Group's strategic cycle now in its final year, which will drive sustainable growth and create value for shareholders.” 

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Note: The results are not exact but very close to the actual.