A National Bank of Kenya (NBK) branch
A National Bank of Kenya (NBK) branch. [Photo/ Courtesy]

National Bank of Kenya (NBK) has posted Ksh1.1 billion in profit after tax for full year 2021.

This represents a 431 percent increase from 2020, driven by increased income from loan interest and foreign exchange trading, coupled with lower loan loss provisions.

NBK Managing Director, Paul Russo attributed the strong financial results to the Bank’s deliberate focus on its strategic initiatives which are anchored on customer experience.

“Our strong performance was also supported by improving macro-economic environment and improved quality of credit. We maintained a strong balance sheet growth as evidenced by increase in customer deposits and 21 per cent growth in customer loans and advances,” said Russo.

Operating income increased by 15 percent to Ksh10.2 billion. The low levels of credit provisions also resulted in an increase in profit before tax of 330 percent. During the year, net interest income grew by 18 percent from the previous year to Ksh8.3 billion. This was contributed by interest income, which grew by 26 percent to Ksh12.2 billion due to increased volumes of loans and advances as well as improved level of recoveries.

The year was marked by a 47 percent growth in interest expense to Ksh4.0 billion on increased customer deposits, from transactions on the revamped digital channels, increased bank deposits as well as subordinated debt to shore up the capital requirements of the Bank.

Total operating costs excluding provisions are at Ksh7.8 billion, a seven percent increase from 2020 driven by increased investments in cybersecurity, strategic bank projects to enhance operational excellence and customer experience such as Internet and agency banking platforms.

The balance sheet continued to expand, with total assets growing by 16 percent to Ksh146 billion, majorly from net loans and advances, which were up by Ksh12 billion to Ksh67 billion. The growth in assets was supported by a corresponding increase in customer deposits by Ksh6.7 billion to Ksh105.8 billion and deposits from banks by Ksh8.1 billion to Ksh21.5 billion as at December 31, 2021.

The year witnessed deposits sustained at the high levels due to increased inflows from both existing and new clients in Corporate and Retail Banking businesses (including National Amanah – The Bank’s Islamic Banking business) franchises of the Bank.

During the year, the parent company KCB Group PLC approved the conversion of subordinated debt (Ksh3.45 billion), which was classified as Tier II capital to equity. The conversion resulted in the Bank complying with regulatory ratios with regards to core capital as at December 31, 2021.

The Bank is implementing other internal strategies aimed at raising organic capital including rigorous bad debt collection and balance sheet growth to boost profitability which will ensure full compliance with the capital ratios.

The Bank continues to maintain a high liquidity profile of 42 percent placing it in a strong position to continue supporting its customers during the ongoing economic recovery following the COVID-19 pandemic.

 “We are on a steady growth trajectory and anticipate continued growth by supporting our clients and finding opportunities within the current environment. The Bank has a strong capital and liquidity base to support growth of business and especially through our digital offering. We have therefore, embarked on a calculated strategy towards ensuring that we provide customer centric and timely solutions to our client segments especially in the SME sector,” said Mr Russo.

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