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NCBA’s first-quarter profit rose to Sh5 billion
Wednesday, May 24, 2023
The NCBA headquarters is on Upper Hill in Nairobi. file image | Abel Evans | NMG
The NCBA Group reported a 48.5 per cent increase in net profit for the first three months of the year, with profit increasing to Sh5.1 billion from Sh3.4 billion in the previous corresponding quarter.
Underpinning the improved performance of the lender was higher interest income, with non-interest funded earnings rising to Sh7.2 billion from Sh6.1 billion. Foreign exchange trading brought in 2.7 billion shillings.
Net interest income increased by 18 per cent to Sh8.4 billion despite a jump in interest expense.
The bank spent an additional NIS 1.3 billion to hold customer deposits in the three months, with interest expense at Sh6.3 billion.
During the quarter, NCB recorded a growth of 7.3 per cent in backlog of customer deposits, which topped Sh499.7 billion from Sh465.5 billion last March.
Loans and advances to customers expanded to Sh287.2 billion from Sh243.9 billion as the bank continued to walk away from a drain on its recent loan book, which was caused by higher rate digital loan products.
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The lender’s operating expenses rose to Sh9.2 billion from Sh8.1 billion, a growth of 12.76 percent.
The US central bank’s provision for expected credit losses bucked the trend, falling 22.6 percent to Sh1.95 billion from Sh2.53 billion in March last year.
The decrease in loan loss provisioning costs was partly supported by an 11.9 percent drop in total non-performing loans, to NIS 39.7 billion.
The National Commercial Bank of America increased its holdings of government securities in the first quarter of the year to Sh207.1 billion from Sh194.7 billion.
The slower pace of accumulation of government securities as opposed to lending to the private sector reflects an industry-wide trend that has seen commercial banks restructure their asset portfolios in order to increase lending to businesses and households.
At the end of the quarter, the combined growth of government securities investments and loan book pushed NCB’s asset base to Sh628.8 billion from Sh587.4 billion in the same period last year.
Meanwhile, total shareholder funds in the bank grew to Sh87.9 billion from Sh80.3 billion.
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