National Bank to pay dividends despite profit dip
By James Anyanzwa
National Bank of Kenya (NBK) suffered a nine per cent drop in profitability last year but has pledged to pay dividends to shareholders.
The State-owned firm blamed taxation on realised bond earnings and increased provisions for bad debts for its financial misery.
The bank’s profit before tax (PBT) fell to Sh2.4 billion during the year ended December 31, 2011 compared with Sh2.6 billion the previous year.
And when ranked against its peers in the industry, which posted double digit full-year growth, NBK appears to be wading through turbulent waters.
"All indicators show last year was not as good as 2010," Reuben Marambii, the bank’s out-going managing director and chief executive told an investor briefing in Nairobi on Monday
"We expect our results this year to be better because taxation issues are not likely to recur and provisions for bad debts are under control."
But even as NBK’s management pondered over the bank’s performance and its future prospects, only one thing remained clear: appeasing shareholders who had been starved of cash dividends for 12 years.
This was due to bad debts associated with politically connected individuals, which pushed the bank into massive losses in the late 1990s.
The bank announced that the board had recommended a dividend of Sh0.15 per share to preference shareholders and Sh0.4 per share to ordinary and participating shareholders subject to shareholders approval in the 42nd annual general meeting scheduled for June 8.
The government holds a 22.5 percent stake in NBK directly and a further 48.06 per cent through the National Social Security Fund.
According to NBK’s audited financial statements, the bank’s total operating income grew 10 per cent to Sh7.8 billion from Sh7.1 billion while total-operating expenses increased 15 per cent to Sh4.7 billion from Sh4 billion in a similar period. Fees and Commission on loans and advances rose 25 per cent to Sh312.6 million from Sh250.4 million while foreign exchange trading income went up nine per cent to Sh310 million from Sh282.7 million
Net loans and advances to customers grew by 35 per cent to Sh28 billion from Sh20.8 billion wile customer deposits rose by 19 per cent to Sh56.7 billion from Sh47.8 billion in a similar period.
Africa urged to tap into Indian marketAfrican countries have been urged to tap into the Indian market of about 1.2 billion people, by increasing exports to the country and seeking more investment opportunities if they are to correct the balance of trade heavily skewed in favour of the Asian sub-continent.
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