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NCBA nets Sh1.6b quarter one profit

By Peter Theuri | May 21st 2020

NCBA Group has announced a net profit of Sh1.6 billion in the first quarter of the year ending March 31.

The bank, borne out of a merger between NIC Group and Commercial Bank of Africa in November last year, had a total operating income of Sh10.9 billion in the quarter under review.

The lender ended the period with a total asset base of Sh509.6 billion, while the customer base stood at 54 million, with deposits at Sh390.5 billion and the net loan book closing at Sh245.9 billion.

“The year started strong with promising growth driven by the optimism in the East African economies. However, the Covid-19 pandemic impacted business performance towards the end of the quarter where we saw reduced transaction volumes and credit demand,” said NCBA Group Managing Director John Gachora.

He said there was also a notable increase in the level of non-performing loans (NPLs), especially in the transport and manufacturing sectors and on the mobile loan portfolio.

“NPLs remain a major issue from legacy accounts for which we continue to provide. Further stress was seen in the digital business as a result of a one-off increase in limits. We expect that the impairments seen in the digital business will normalise during the second quarter. However, we expect the overall NPL ratio will continue to be impacted negatively by the ongoing challenges in the market caused by the pandemic,” Mr Gachora added.

He said the bank had, however, moved to cushion customers by restructuring loans worth over Sh30 billion.

“We remain steadfast in our commitment to support our customers to weather this challenge and are supporting their requests with a clear view to ensuring recovery post-crisis,” he said. 

At the end of the 2019 financial year, the board had resolved to recommend to shareholders the approval of a final dividend of Sh1.50 per ordinary share, bringing the total dividend to Sh1.75 per ordinary share.

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The performance was mainly driven by growth in interest income, particularly in the small and medium enterprises.