NIC Bank Group pre-tax profit remained flat at Ksh1.37 billion, for the first quarter of 2017, compared to Ksh1.40 billion the previous year.

NIC Bank,  the group’s flagship, however posted an increase of 5% in profit before tax to close the quarter at Ksh1.3 billion.

Interest capping law

This growth was despite the impact of the interest rate capping law as well as reduced non-funded income as a result of lower bond trading activity in 2017.

Group Managing Director John Gachora said in the period under review, the Group’s net profit was weighed down by provisions taken to support non-performing facilities of a few large corporate customers that were impaired in 2015.

“The Group’s overall NPL ratio dropped to 11.3% from 11.4% in 2016, as a result of sustained efforts to improve the quality of its loan book,” he said noting that the group’s cost of income ratio increased to 39.3% as the Group continued to invest in systems and infrastructure to enhance efficiency.

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“The group is on course with its reorganization strategy and awaits final approval from regulators. The process is expected to be completed by mid-2017 and will have minimal impact on shareholders, customers and employees,” he said.

Gachora added that bank expects the challenges faced in the first quarter to continue into the second quarter of the year although the Loan book expansion in the industry will experience muted growth as a direct consequence of the interest rate caps.

“Nevertheless, the Bank will continue deepening its value proposition to its customers by forging strategic partnership in order to expand is product offering. In this respect, the Bank plans to announce a number of new initiatives during the quarter,” he noted.