Lower interest income cuts NIC profit to Sh952m

NIC Bank Group Managing Director John Gachora. FILE PHOTO | NMG
NIC Bank Group Managing Director John Gachora. FILE PHOTO | NMG  

NIC Bank #ticker:NIC has announced a 3.9 per cent dip in first quarter net earnings attributed to lower interest income.

The mid-sized bank said net profit stood at Sh952.03 million in the three months to March 2017 compared to Sh990.7 million in a similar period last year.

Net interest earnings tanked by 247 million to Sh2.7 billion, despite a Sh4.3 billion jump in loan book growth to Sh116.3 billion as at March 2017.

Group managing director John Gachora attributed the performance to the “impact of the interest rate capping law as well as reduced non funded income as a result of lower bond trading activity in 2017.”

NIC becomes the first lender to release first quarter results for 2017 – reflecting impact of last year’s law which capped interest rates at four percentage points above the Central Bank of Kenya signal rate – compared to Q1 last year when the law was not in place yet.

Non-interest income from fees and commissions dropped 13 per cent to Sh988.9 million in the period under review.

The bank’s investment in government securities topped Sh25 billion from Sh18 billion in quarter one of 2016.

The group’s provisions for bad loans dropped by a third to Sh875 million from Sh1.3 billion in March 2016.

Staff costs increased by Sh80 million in the quarter, which Mr Gachora attributed to staffing to support the seven new branches opened over the course of 2016.