NCBA posts 42 per cent dip in net profit for full year 2020

NCBA Group has announced a profit after tax of Sh 4.6 billion for the financial year ending December 31, 2020, a drop of 42 percent, which it attributed to global pandemic.

As a result, the economic outlook for 2020 was lowered substantially, due to slowdown in global trade, services and the continued uncertainties around the pandemic impacting key economic environments including exports, tourism and agribusiness sectors.

It is the first time the lender is announcing full year results as an entity following the successful merger of NIC Group PLC and CBA in October 2019.

During the period under review, the Group maintained a strong operational performance, with an operating income growth of 38 per cent to Sh 46.4 billion. Operating profit (before provisions and exceptional items) increased by 37 per cent to Sh 26.8 billion.

The Group’s total assets grew by Sh 33 billion to close at Sh528 billion while customer deposits went up by Sh 43 billion to close at Sh 421.5 billion. During the period under review, the bank remained well capitalized with core capital of Sh 64.8 billion with a liquidity ratio of 55 per cent.

“In a year of unprecedented challenges for our business, the banking sector and the economy at large, I am extremely proud of the results that the Group delivered. Despite the massive economic impact of COVID-19, our operating income increased 38 per cent to close the year at Sh 46.4 billion.

To cushion our business and our customers against the impact of COVID-19, we took unprecedented measures throughout the year. We implemented a robust cost containment plan that reduced operating expenses and contributed to the operating profit increase,” said NCBA Group Managing Director, John Gachora.

The lender, the third largest in the country by asset, restructured Sh78 billion of loans and increased our credit provision reserves by Sh 20 billion to address the uncertain economic environment that continues to persist.

“The high levels of credit provisions taken resulted in a year over year drop in profit after tax of 42 per cent,” said Gachora.

NCBA disbursed over Sh 432 billion in digital loans for working capital, while also granting loan moratoriums and restructured loans amounting to over Sh 78 billion to corporate and retail customers as at end of December 2020.

However, the rate of impairments by the lender increased due to delayed repayments and an assessment of additional stress that was expected as a result of the pandemic which hugely contributed to a decline in net earnings.

During the period under review, the bank rationalized 14 branches that were co-located or in close proximity following the successful conclusion of the merger. In Q4 2020. The Group also executed a Voluntary Exit Program and realigned its organization structure to match its strategic objectives

The bank’s Board equally resolved to recommend to the shareholders for their approval at the Annual General Meeting scheduled to be held on 9th June 2021, the payment of a final dividend for the year of Sh 1.50 per share.

Editing By Steve Umidha