NIC profit flat on Sh255m merger costs

NIC Group’s #ticker:NIC after-tax earnings for the six months of 2019 fell 4.2 percent to Sh1.9 billion, weighed down by Sh255.2 million incurred on the ongoing process to merge with Commercial Bank of Africa (CBA).

The bank booked the cost as an exceptional item on its income statement explaining that this was spent on integration, advisory and legal expenses related to the merger.

Its bottom-line is set to remain depressed, with the group expecting additional merger-related costs during the third quarter.

NIC Group managing director John Gachora said the merger with CBA was on course with significant progress having been made in securing the requisite approvals from various regulatory bodies in the markets they operate in.

“A comprehensive array of work streams have been set up and are working to get us ready for a successful day one. We are confident that when the new bank opens its doors we will not only meet, but exceed our customers’ expectations,” said Mr Gachora.

The Group’s half year performance was also impacted by increased impairments in its Tanzanian subsidiary, NIC bank Tanzania, where it recorded a loss before tax of Sh348 million.

The bank said the business environment in Tanzania remains challenging and it is working closely with its customers in the market to mitigate further deterioration of the loan book. During the review period, group interest income remained flat at Sh9.65 billion while non-interest income grew 24 percent to Sh2.66 billion driven by an increase in service and transaction fees.

Operating expenses rose 18 percent to Sh5.23 billion from previous similar half year’s Sh4.4 billion. This was driven by 30 percent rise in loan loss provision to Sh1.44 billion, reflecting challenges in markets such as Tanzania. In addition, staff costs grew nine percent to Sh1.85 billion.