UBA net profit drops 75pc as bad loans rise

A UBA branch in Nairobi. file photo | nmg
A UBA branch in Nairobi. file photo | nmg  

UBA Bank Kenya’s net profit fell by three-quarters in nine months ended September 30, weighed down by increased provisions against bad debt and reduced non-interest earnings.

The local unit of Lagos-headquartered giant lender UBA Plc said profit after tax slid to Sh14.41 million from Sh57.62 million as transaction income dropped, while it continued to battle rising non-performing loans (NPLs).

The lender’s income from non-funded streams dropped by Sh82.91 million, or 26.57 per cent, year-on-year to Sh229.16 million, while allocations against loan defaults more than doubled to Sh26.43 million from Sh8.10 million a year earlier.

UBA Kenya, however, bucked the trend in the industry to grow its net interest income by 39.26 per cent to Sh223.01 million. The lender was voted the cheapest SME lender in Think Business Banking Tariff Survey 2017 in May.

Staff expenses in the review period dropped by Sh6.07 million to Sh195.16 million, an indication UBA Kenya joined the queue of lenders which reduced workers in the year ended September 30.

A number of lenders resorted to staff layoffs to manage spiralling costs and enhance efficiency by investing in digital and mobile banking channels in the face of interest rate caps slapped on the industry in September 2016.

Reduced staff costs helped UBA Kenya keep a tight lid on total operating expenses which rose by a modest 5.59 per cent to Sh437.76 million.

The bank loan book expanded by a marginal Sh140 million, or 4.46 per cent, in three months ended September 30 to Sh3.55 billion, with NPLs rising to Sh87.16 million from Sh83.89 million in June. UBA Kenya’s customer deposits, however, contracted by Sh10 million to Sh4.17 billion.