NIC harvests bumper profit

February 19, 2009
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, NAIROBI, Kenya, Feb 19 – NIC Bank has reported an after tax profit of Sh1.03 billion for the year ended December 31, 2008 representing a growth of 38 percent.

NIC Managing Director, James Macharia, attributed the growth to the efficient harnessing of synergies between the bank’s business units.

“Our customers saw the value of our ‘One Stop Shop’ proposition and hence we were able to offer value services from trading of stocks on the Nairobi Stock Exchange, to Forex trading, to personal accounts,” said Mr Macharia on Thursday.

He noted that the recent investment in new branches in Kisumu, Mombasa, Nakuru and Nairobi had paid off by significantly growing their corporate business. 

“In addition, we have consolidated our Personal Banking and Business Banking Divisions. This strategy is expected to enhance the bank’s profitability as our high net worth personal banking customers who also have small to mid-sized businesses are able to get value services conveniently at the same place,” said Mr Macharia. 

Total operating income rose by Sh797 million – an increase of 33 percent on the back of improved non-funded income by Sh422 million or 56 percent and net interest income by Sh375 million – an increase of 23 percent.

“Increased non-funded income contribution to the bottom line reveals the Bank’s continued success in its strategic and tactical initiatives to grow the non-funded income,” he said.

Operating expenses outside provisions for loan losses grew by 22 percent, which was attributed to the branch expansion program.

“The bank expanded its footprint to a total of 12 Branches and two Service Centres, having opened Nyali Nakumatt, Harambee, Prestige Plaza and Kisumu Branches by end of 2008. The City Centre Branch which is located in the capital’s Central Business District received a face lift which turned it into one of the Bank’s most aesthetic outlets.”

Year on year, the bank’s loan book recorded a 35 percent growth of Sh7.7 billion to Sh30 billion, primarily driven by the Bank’s expanding market share.

To fund this growth in advances, the deposit base closed at Sh35.2 billion, reflecting a 42 percent increase over that reported in December 2007.

The bank’s Chairman, James Ndegwa, announced a bonus issue of one share for every 10 ordinary shares held.

This is in addition to the final dividend of Sh74 million, which together with the interim dividend paid earlier of the same amount, brings the total dividend payout to Sh48 million.

“The high profit retention strategy is in line with the regional growth strategy of the Bank that has seen the acquisition of one of Tanzania’s mid-sized banks, Savings & Finance Commercial Bank Limited (S&F),” said Mr Ndegwa.

“Given the depressed level of the capital markets and our planned growth, we consider it prudent to maintain sufficient levels of capital reserves, through earnings retention,” he added.

NIC is acquiring a 51 percent stake in the equity of the S&F Bank, which has branches in Dar es Salaam, Mwanza and Arusha.
 
Mr Ndegwa expressed confidence that the regulatory authorities involved, and the shareholders through the planned AGM, would expeditiously grant the requisite approvals to facilitate completion of the transaction for acquisition.

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