NBK Q3 Profit Shrinks as Economy Slows Down

National Bank of Kenya (NBK) has posted Ksh87million in profit after tax for the nine months ending September 2020, one year after being acquired by KCB Group. This represents a 77% decline over a similar period last year due to the effects of the COVID-19 pandemic.

The bank recorded a profit before tax of Ksh535million, representing a 7% increase over a similar period in 2019.

The corporate and retail franchises remained resilient, amid a subdued economy and reduced activity across sectors, due to the Covid-19 crisis.   

“These results demonstrate the bank’s resilience, in the face of a very challenging operating environment. They have been buoyed by ongoing efforts to turnaround this institution that has however been slowed down by effects of the COVID-19 pandemic,” said NBK Managing Director Paul Russo.

Non-funded income grew by 5% from the previous year, on increased focus on digital banking. Interest income stood at Ksh7.2billion, a growth of 9% due to increased volumes in loans and advances as well as sustained recoveries. Comparatively, interest expense remained relatively flat at Ksh2 billion.

Total operating costs increased by 14%, largely driven by increased provisioning to cover for higher credit risks due to the pandemic in a period that also saw the bank continue to drive cost management initiatives.

On the balance sheet side, total assets grew by 21% to Ksh129.5 billion from Ksh107 billion, majorly from net loans and advances which were up 12% to Ksh53billion. This was also supported by increased customers and deposits which grew by 24% to Ksh102billion. Total non-performing loans and advances stood at Ksh23.3billion, a 15% drop from Ksh27billion year on year.

Nation Bank recorded improvements in key ratios such as the capital position. Liquidity ratio was at 47.3%, compared to 35.7% in 2019.

“We remain cautiously optimistic about the future of the bank,” Mr Russo said. “We continue to invest in revamping our channels and delivering an unmatched experience to our customers.”

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