Companies

NCBA posts Sh2.5bn nine months net profit

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NCBA Group managing director John Gachora. PHOTO | DIANA NGILA

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Summary

  • NCBA warns of a deep fall in profits for the full year owing to Covid-19 economic hardships.

NCBA Group #ticker:NCBA has posted Sh2.52 billion net profit in the nine months to September 2020 and cautioned of a deep fall in profits for the full year owing to Covid-19 economic hardships.

This is the first full nine months of trading since NIC Group merged with Commercial Bank of Africa Limited (CBA) to form NCBA.

This makes it difficult to make a direct comparison with the preceding similar period’s performance when NIC and CBA were trading as separate entities until the October 1, 2019 merger.

However, CBA alone had posted a net profit of Sh4.61 billion in nine months to September 2019 meaning that the current net profit of NCBA is 45.3 per cent lower.

“The earnings for the current financial year are expected to be substantially lower than the earnings reported for the same period in 2019,” cautioned the lender.

NCBA net interest income during the review period was at Sh16.96 billion as net loans and advances to customers closed at Sh249.69 billion.

About Sh310 billion was disbursed as digital loans to small enterprises and individuals to manage their day-to-day needs and working capital.

The lender booked Sh661.88 million as exceptional costs. This was related to merger costs such as integration, advisory and legal services.

Loan loss provisions during the period were at Sh13.35 billion or 47 per cent of the Sh28.62 billion total operating expenses, reflecting the rise in expected loan defaults.

NCBA says loan defaults are rising given the persisting economic hardships such as job losses and slowed consumer spending.

“The trends show that the rate of impairments is increasing, due to delayed repayments and an assessment of additional stress that could emerge due to Covid-19,” said the lender.

NCBA says it has granted loan moratoriums and restructured loans amounting to Sh76 billion or 30.4 per cent of the loan book to corporate and retail customers as at end of September.