NCBA CEO John Gachora makes remarks during a past briefing. The bank on Thursday announced the exit of two boardroom stalwarts.

NCBA Bank on Thursday reported an 11% increase in its profits for the half-year ended June 30, 2020, to Ksh2.6 billion compared to the Ksh2.4 billion posted at the same juncture the previous year. The group’s unaudited results show.

This marks a win for NCBA which joins Family Bank in the exclusive list of lenders that have reported increased profits at a time all other lenders are posting reduced earnings due to the impact of COVID-19 on the larger economy.

The increase in profits is attributable to growth in both interest and non-interest income.

NCBA nonetheless joined the bandwagon in predicting that a huge percentage of customers are likely to default on their loans and as a result accounted for a larger loan loss provision almost six times more than what it did at the same juncture last year. This year the group has accounted for a loan loss provision of Ksh7.6 billion versus the Ksh1.3 billion reflected in the group’s half-year results in 2019.

During the period under review, NCBA’s balance sheet grew by 96% to Ksh514 billion from the Ksh261.9 billion posted at the end of the first half of 2019. A huge chunk of the first half 2020 assets are listed as loans and advances to customers which stood at Ksh248.3 billion at the end of the first half of 2020 (H1, 2020).

The group’s interest income stood at Ksh20.7 billion at the end of H1 2020 up from Ksh9.8 billion lifted by loans and advances which yielded Ksh12 billion in interest compared to the Ksh5.9 billion raked in the previous year. Interest income from government paper stood at Ksh8.1 billion up from Ksh3.6 billion.

On the other hand, non-interest income stood at Ksh10 billion at the end of June 2020 from the Ksh6.1 billion posted the previous year.

The huge non-interest income was lifted by an uptick in earnings from fees and commissions on loans and advances which closed H1 2020 at Ksh4.7 billion from Ksh3.1 billion.

Forex income stood at Ksh1.9 billion up from Ksh1.1 billion.

“The bank’s business is expected to be impacted by slow growth in lending and revenues in the short to medium term. The impact of the COVID-19 pandemic on bank’s results, including credit quality and provisions, remains uncertain and dependent on several factors including, the spread of COVID-19,” the group said in a statement.

“The group’s capital and liquidity position is strong and will continue to be the focus area during this period.” It further stated in its statement.

Earnings Per Share (EPS) plunged to Ksh1.76 from Ksh8.22.

NCBA’s board declined to recommend payment of an interim dividend preferring to conserve cash just like it did at the end of the first quarter of 2020.

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