NBK First Bank to Post Loss in a Profit Rich Industry

NBK Managing Director George Odhiambo reveals key causes of a major decline in earnings

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NBK financial results - George Odhiambo NBK
NBK Managing Director, Mr George Odhiambo, says despite challenging market conditions causing monetary and fiscal pressure, the bank remains optimistic. (PHOTO: NBK)

National Bank of Kenya (NBK) has posted Ksh2.97 billion in loss after tax for the period ending 30th September 2023, representing a 436% decline over a similar period in 2022. The decline in profitability resulted mainly from one-off costs associated with legal matters, staff voluntary early retirement program in the first half of the year and an increase in loan loss provisions.

However, the underlying performance (excluding the one-off items) for Q3 2023 is positive. Non-funded income increased by 49% year on year to Ksh2.5 billion. The growth was driven by increased revenues from foreign exchange trading coupled with increased volumes derived from the current digitization journey, launch of new products and strategic partnerships.

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Total interest income for the period remained relatively flat YoY at Ksh9.9 Billion. On the other hand, interest expense stood at Ksh3.9 billion, a growth of 31% mainly on elevated funding costs on both short-term and long-term deposits in the market.

Customer deposits grew to Ksh116 billion representing a 7% increase over a similar period in 2022. Net loans and advances grew by 12% year on year to Ksh78.2 billion.

NBK Managing Director, Mr George Odhiambo said despite the challenging market conditions and geopolitical dynamics all of which continue to cause monetary and fiscal pressure, the bank remained optimistic. The loss goes against a strong profitability trend in banking, with major banks having already announced huge profits.

“Commitment to our strategic objectives and focus on prudent risk management, digital innovation and customer-centricity continue to position us for sustained growth,” Mr Odhiambo said. “Our performance in Q3 also underscores the resilience of our business model and the dedication of our team in delivering value to our shareholders and customers.”

Business Highlights

He said NBK continued to embrace strategic partnerships whilst adopting a comprehensive approach to transform the MSMEs business. In this regard, the bank has partnered with The Leadership Group and Ashitiva LLP, in a program aimed at empowering SMEs in the country.

This is a member-based initiative that aims to support business leaders to sustainably grow their organizations through capacity building, access to a network of experienced business leaders and access to financial resources required to transform their respective businesses.

Outlook

“As NBK we remain optimistic about our prospects and we are committed to delivering sustained value to our shareholders, customers, and other stakeholders,” Mr Odhiambo said.

“We are especially focused on continued investment in cutting-edge technology to enhance our digital banking offerings, strengthening our customer relationships by tailoring our innovative products and services to meet the evolving needs of our diverse clientele, achieving balanced and sustainable growth while maintaining a disciplined approach to risk management.”

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