National Bank of Kenya (NBK) cut its non-performing loan book by 20% during the 2019 financial year ending December, signaling strong recovery for the business following its acquisition by KCB Group Plc in September.
According to financials released on Thursday, the stock of non-performing loans (NPL) stood at Ksh25 billion, down from Ksh31 billion in 2018, as a result of an aggressive recovery strategy during the period.
Recovery yet to take-off
The gains were, however, diluted by higher provisions for loan loss, at Ksh1.9 billion, compared to Ksh185 million the previous year, effectively hurting the bottom-line. Consequently, the Bank posted a loss after tax of Ksh302 million for the period.
“We spent the last quarter of the last financial year, following the acquisition, building a firm foundation for the bank’s recovery and takeoff. We have also been on an aggressive loan recovery drive. We are optimistic of a better year ahead,” said NBK Managing Director Paul Russo while releasing the results.
NBK financial results show total operating income for the year grew by 5% to Ksh8.4 billion, driven by increased interest income from loans and advances and higher in non-interest income from innovations, launch of new products and strategic partnerships.
Cost management strategies delivered a 3% drop in total operating expenses (excluding loan provisions) from Ksh7.3 billion to Ksh7.1 billion.
From a balance sheet perspective, assets stood at Ksh111.9 billion. Customer deposits stood at Ksh86 billion, while net loans and advances, on the other hand, reduced marginally by four per cent over the same period as a result of reduced loan book and increased provisioning.
Following the acquisition, KCB Group injected Ksh5 billion in fresh capital which has significantly improved NBK’s capital buffers and enhanced capacity to underwrite new loans and mobilize more deposits.
NBK new branches
“This has further boosted our optimism about the future of the Bank. We see a brighter outlook going forward with a strong growth pipeline across business segments” said Mr Russo, who is also the Group International Business Director at KCB Group Plc.
According to NBK financial results, liquidity position improved to 46.1%, compared to 43.1% the previous year.
Earlier in the week, National Bank opened a new branch in Gikomba, to tap into the micro, small and medium enterprises market. The outlet was the 83rd in the bank’s network across the country and is one of four new branches being set up this quarter.