Inside Politics

NCBA Group posts 77pc jump in half-year profit

Tuesday, August 31st, 2021 00:00 |
NCBA Group managing director John Gachora during an investor briefing in Nairobi yesterday. Photo/PD/Alice Mburu

NCBA Group has posted a Sh4.7 billion after tax profit for the period ended June 30, driven by higher customer activity and a drop in provisions for bad debt.

The profits represents a 77 per cent growth, up from Sh2.6 billion posted in a similar period last year.

Group managing director John Gachora attributed the growth in profitability to an increase in operating income by Sh2.8 billion, driven by higher customer activity and a decline in loan impairment charges by Sh1.7 billion.

He said the strong financial results were also the outcomes of a steadily improving economic environment and early outcomes of the group’s focus on its strategic initiatives anchored on customer experience.

“Our operating results in the first half of the year demonstrates that the actions we have taken to strengthen and enhance the group’s performance are bearing fruit.

We have made a concerted effort to reduce the risk in our credit portfolio while balancing the need to support our customers during this Covid-19 period,” said Gachora.

During the period in review, the group posted a profit before tax of Sh7.4 billion representing a 90 per cent increase compared to the Sh3.9 billion reported at a similar period in 2020.

The group’s asset base rose by 6 per cent to Sh542 billion year on year, attributed to the signing of several partnerships to solidify its strength in asset finance and growing its property finance business. 

Asset finance solutions

The partnerships are with motor vehicle dealers, Simba Corp, DT Dobie, Tata Africa Holdings, Isuzu East Africa where it now offers asset finance solutions.

NCBA has also partnered with MySafe Vaults and Kenya Association of Manufacturers (KAM) to offer safe deposit facilities to customers and to support the SME sector respectively, in addition to collaborating with Strathmore University to support the Entrepreneurship Development Programme.

Customer deposits closed at Sh437 billion, 12 per cent up year on year, while Sh272 billion worth of digital loans were disbursed, representing a 16 per cent increase year on year in line.

Year on year operating income increased by 13 per cent to Sh24.1 billion, while operating profit before loan loss provision also went up by 16 per cent to Sh5.9 billion.

Loan impairments charges, which Gathora said was a lag on the bank’s performance last year, reduced by 22 per cent to Sh5.9 billion, while non performing loans coverage ratio increased to 68 per cent from 55 per cent the previous year. 

The group has announced an interim dividend of Sh0.75 per ordinary share held.

“Over the last year, we have taken the bold step to restructure 35 per cent of our credit portfolio and we have seen a positive outcome of those actions as 82 per cent of that restructured portfolio is now performing,” said Gathora.

He said the group’s cost to income ratio has also improved through realisation of cost synergies from the merger with the Commercial Bank of Africa in 2019, setting the stage for continued strong bottom line growth in the near-term to medium term.

Business outlook

Since the beginning of the year, NCBA has opened eight branches, with plans to open an additional nine by the end of the year. 

On business outlook, Gachora said he anticipates that the ongoing roll-out of the vaccination program across the country will have a tremendous impact in enhancing the health of our communities and in restoring the state of our economy.

“This period has shown that we have an enduring and resilient business. Our customers are beginning to see real recovery and are investing in capital projects to grow their businesses.

We remain focused on backing their ambitions as we collectively work to emerge from the impact of this pandemic,” he said.

More on Inside Politics