NBK posts Sh729 million profit on improved customer deposits

By Monica Muema

National Bank of Kenya (NBK) has posted profit after tax of Sh 729 million in half-year results ending June 2022, a relatively flat position compared to a similar period in 2021 coupled with the growth in income that’s subdued by an increase in operating cost and loan loss provisions.

Commenting on the results, NBK Acting Managing Director, Peter Kioko said that there was steady growth in interest income which the bank expects to increase in future periods when benefits from our current digitisation and operational investments are realised.

“Our loan loss provision increased highlighting the challenging lending environment from the tough economic period. However, the bank’s loan book continued to increase as deposits grew moderately. We maintained a strong balance sheet growth supported by a 14% percent increase in customer loans and advances,” added Mr. Kioko.

During the period, net interest income grew by 18% from the previous year to Kshs. 4.8 billion. This was contributed by interest income, which grew by 17% to Kshs. 6.8 billion owing to increased volumes of loans and advances as well as improved level of recoveries. During the same period, there was a 15% growth in interest expense to Kshs. 2.0 billion on increased interbank borrowing to shove up the funding requirements of the Bank.

Total operating costs excluding provisions are at Kshs. 4.3 billion, an increase of 11% from H1 2021 driven majorly by increased investments in cybersecurity, strategic bank projects to enhance operational excellence and customer experience such as Internet and agency banking platforms.

On the balance sheet side, total assets grew by 4% to Kshs. 139 billion, majorly from net loans and advances, which were up by Kshs. 9 billion to Kshs. 69 billion.

The Bank is implementing other internal strategies aimed at raising organic capital including rigorous bad debt collection and balance sheet growth to boost profitability which will ensure full compliance with the capital ratios.

Commenting on the bank’s focus, the Acting MD said, “We are on a steady growth trajectory and anticipate continued growth by supporting our clients and finding opportunities within the current environment. The Bank has a strong capital and liquidity base to support the growth of business and especially through our digital offering. We have, therefore, embarked on a calculated strategy towards ensuring that we provide customer-centric and timely solutions to our client segments.”