NAIROBI, KENYA, NOVEMBER 30 — National Bank of Kenya (NBK) net profit for the year to September reduced by 84.1 per cent to Ksh21.9 million, as the lender recorded low operating income on the back of a shrinking loan book.
The after-tax earnings is a drop from Ksh138.1 million the lender posted in a similar period last year.
During the period under review, total operating income reduced by 12.5 per cent to close at Ksh5.6 billion compared to Ksh6.4 billion it had last year.
The Nairobi Security Exchange (NSE) listed bank had a total interest income of Ksh6.3 billion in the nine months, an 11.3 per cent drop from Ksh7.1 billion last year.
Interest income from loans and advances shrunk 18 per cent to Ksh3.08 billion from Ksh3.76 billion, as the lender reduced lending to customers where the loan book closed the period at Ksh48 billion.
This is a 17.1 per cent drop from Ksh57.9 billion the bank advanced to customers in a similar period last year. Interest from government securities also dropped to Ksh3.18 billion from Ksh3.21 billion.
During the period, customer deposits reduced to Ksh92.8 billion from Ksh97.4 billion, a 4.7 per cent drop.
NBK which has been facing financial challenges managed to reduce its total operating expenses by 16.1 per cent to Ksh5.2 billion from Ksh6.2 billion, supported by reduced provisioning for Non-Performing Loans(NPLs).
Staff costs, directors emoluments and rental charges were however on the rise closing at Ksh2.91 billion, Ksh36.7 million and Ksh310.1 million respectively. This is up from Ksh2.89 billion, Ksh26.3 million and Ksh291.7 million respectively.
Gross NPLs rose 4.4 per cent to Ksh30.9 billion from Ksh29.6 billion a period that also witnessed an increase in insider loans which grew to Ksh5.03 billion from Ksh4.65 billion.
Employees accounted for Ksh5.0 billion compared to Ksh4.6 billion last year while directors, shareholders and associates borrowed Ksh24 million.
The bank’s core capital closed at Ksh2.34 billion, slightly above the minimum required capital by about Ksh1.3 billion, a move that tames its lending.
“The adjusted Capital Ratios includes the expected credit loss provisions added back to Capital in line with the CBK Guidance Note issued in April 2018 on implementation of IFRS 9 In March 2018, the principal shareholders gave formal commitment for a comprehensive capital solution, the Board notes that this process is on-going,” the lender reported in its financials through the NSE on Friday.