NCBA profit up 20pc as Family Bank earnings dip to Sh1.4b

NCBA Group Managing Director John Gachora. [Jonah Onyango, Standard]

NCBA Bank has reported a 20.3 per cent growth in after-tax profit for the half year to June 30, shrugging off a drop in the revenues that the bank raked in from the Fuliza loan facility after a reduction in daily charges to borrowers.

This is as its rival Family Bank reported a drop in its profit, which it said was due to higher interest expenses.

NCBA said its net profit rose to Sh9.3 billion over the first half of this year, up from Sh7.8 billion last year.

Its assets grew nine per cent year on year to Sh660 billion, while customer deposits rose 10 per cent to Sh517 billion.

The bank’s earnings from its digital lending services suffered following the lowering of charges on the Fuliza overdraft facility it operates together with Safaricom and KCB Bank. 

Following a push by President William Ruto, the firms lowered the daily charges for Fuliza loans between Sh100 and Sh500 to Sh3 from Sh5. It also lowered the daily fees for loans between Sh500 and Sh1,000 to Sh6 from Sh10.

NCBA Thursday said its earnings from its digital business in Kenya, which includes Fuliza and M-Shwari, dropped to Sh821 million in the first half of this year from Sh1.8 billion over a similar half last year.

“There were changes that were made to Fuliza, which we talked about at the end of last year, based on conversations about the tough economic period,” said NCBA Group Managing Director John Gachora.

He added that while there was a decline in earnings from digital loans, the disbursements remained high, with the bank disbursing Sh457 billion in digital loans, a 35 per cent increase year on year.

The bank’s board has recommended an interim dividend payout of Sh1.75 per share. 

At the same time, Family Bank reported a decline in profit after tax for the six-month period to Sh1.4 billion from Sh1.6 billion in the first half of last year.

This was despite the bank’s rise in interest income, which was dented by higher operating costs and rising interest income.

Interest income rose by 18.7 per cent to Sh7.3 billion, which Chief Executive Rebecca Mbithi said was on account of increased lending customers across all business segments and placements with other banking institutions.

The bank, however, saw a rise in interest expense, which grew by 38.9 per cent to Sh2.8 billion. Ms Mbithi said this was due to higher funding costs for deposits and borrowings on account of the tightening liquidity in the market.  

“Our focus as a Group in the first half of the year has been to support on-ward lending to our customers across diverse sectors of our economy given the tough economic conditions,” she said.