National Bank of Kenya bounces back to profitability

KCB Group’s subsidiary- the National Bank of Kenya (NBK) has rallied back into profitability for the full year period ending in December 2020 as its business turnaround continues.

The lender acquired by KCB in 2019 has posted a Ksh.177.7 million profit in the period reversing a Ksh.337 million loss booked a year earlier.

The improved tidings by the lender have been anchored on balance sheet growth and revenue generation.

NBK’s saw net interest income in the period rise by 11.1 per cent to Ksh.7 billion from Ksh.6.3 billion while total operating income was up 7.2 per cent to Ksh.8.9 billion.

The lender’s assets rose to Ksh.126.8 billion in the period from Ksh.112 billion with loans and customer deposits growing by 20.9 and 13.9 per cent respectively to Ksh.55.2 billion and Ksh.99.2 billion.

At the same time, NBK has continued to trim costs with non-deposit interest expenses falling by 6.5 per cent to Ksh.8.6 billion on the back of lower loan-loss provisioning in the year.

“We’ve seen a good performance in 2020, we are seeing a good increase in income at about 32 per cent year on year and that really tells you whether the fundamentals are working and stable,” KCB Group Chief Finance Officer (CFO) who also doubles up as the Group’s head of subsidiaries Lawrence Kimathi said.

Nevertheless, NBK marked a squeeze in non-interest funded (NFI) income the period which slacked slightly to Ksh.1.9 billion which the bank’s stock of non performing loans (NPLs) rose by 4.8 per cent to Ksh.26.4 billion.

KCB which recapitalized the bank at the end of 2019 expect the effective utilization of funds, cost-management and loan recoveries to yield in the subsidiary’s healthy profitability.

“Going forward, we will focus a lot on ensuring the recovery of NBK’s large non-performing book which is currently in top gear,” added Mr. Kimathi.

At the acquisition, KCB deemed NBK as a strategic asset in spite of its balance sheet carrying a burden of NPLs with CEO Joshua Oigara likening it buying a thin cow and working to fatten it to derive value.

NBK composes of a majority government payment accounts.