NBK says assets growing at 33 per cent, clears air on Chief Finance Officer

National Bank of Kenya CEO Munir Ahmed

NAIROBI, KENYA: National Bank of Kenya said on Thursday its assets are growing at a rate of 33 per cent, and profits at 45 per cent- which is faster than the target set by the strategy responsible for its ongoing transformation to get the bank into the Tier1 bank club by 2017.

The transformation strategy being implemented requires National Bank to deliver a 25 per cent compounded annual growth rate (CAGR) on balance sheet and 30 per cent on profits year on year respectively to achieve its goal of being a top 5 Tier 1 bank. The strategy was drafted by McKinsey and Company.

Banking investment expert Mr Mohammed Hassan who is Chairman of the Board said National Bank of Kenya is surpassing strategy targets year on year since 2012, with its balance sheet doubling from 67 billion in 2012 to 123 billion in 2014. 

“It is noteworthy that whereas in the period of 2009-2012, the bank relied on Recoveries of Bad Debt to report profits which have since dried up, today, the Bank’s current profits and growth are being driven by new business lines, newly introduced bank and credit products as well as  savings from technology driven cost cutting, ” he said.

National Bank’s key ratios have all registered significant improvements. The Cost income ratio came down from 75 per cent in 2012 to 65 per cent and is expected to further come down to 60 per cent this year. It is expected to be at 50 per cent by 2017. Productivity ratios are up by 15 per cent and, Non-Performing Loans down from 12 per cent to 8.7 per cent.

“We are impressed to see that new loan products such as the National Amanah are recording zero non-performing loans thanks to new credit control structures. These ratios are going to get better as we continue to see improved performance from each of our business units,” he said.

“The bank is growing faster than the targets we set. National Bank made one-off investment towards reorganising the bank structure, technology platforms and modernisation of operations but even with that, the bank continued to be profitable achieving the highest returns and growth year on year in the last 2 years,” said Mr. Francis Atwoli, who sits in the board as a non executive director. He said the bank now had a clear strategy and an effective business oriented structure noting that the bank’s new  Business divisions:  Retail, Corporate, Treasury, SME, Chinese business and Islamic business unit were excelling

Meanwhile, the bank has clarified that Chris Kisire, who was formerly Mumias Sugar Chief Financial Officer (CFO) and who had been hired by the bank through a competitive process, is serving suspension. “When he came to National Bank, the bank was looking for an experienced CFO - with experience working with listed companies - to support our transformation agenda. We reviewed his work at The Standard group, DHL, Mumias among other blues chip companies and he had the qualifications we sought. He has been doing his job well before this Mumias saga broke,” the bank said.  National Bank said as a responsible employer, it consulted with the Central Bank of Kenya, the government, its lawyers and Mr. Kisire before sending him on compulsory suspension to allow him time clear to his name. The bank said Mr. Kesire served well and that they wished him all the best in clearing his name.

Capital Adequacy

National Bank says main challenge has been the delayed approval of the Rights Issue which, according to the strategic plan was to inject Sh13 Billion by July 2014 into the bank to further support its rapid growth.

Shareholders approved the resolution in its June 2013 AGM and CMA is awaiting Treasury’s approval.