NAIROBI, Kenya, Mar 19 – National Bank of Kenya’s pre-tax profit for 2011 dropped 9.4 percent last year to Sh2.44 billion compared to Sh2.69 billion in 2010, due to the rise in provisions for bad debts and a struggling global economy.
NBK’s Chief Executive Officer Reuben Marambii told a press briefing on Monday that earnings per share slid 23.7 percent to Sh3.19 in 2011 from Sh4.18 during the previous period, but remained optimistic that the bank would rebound in 2012.
“The outlook is that we shall perform better than last year,” he revealed.
“This we can say with confidence for two reasons. The issues that arose about taxation are not likely to arise this year and issues of bad debts is also under control… therefore we are likely to perform better or equal to 2011,” he explained.
Marambii, who is set to retire this year, linked the bank’s poor performance to increased taxes and un-audited debts.
“Taxation went up from Sh600 million to Sh800 million and because our loan portfolio increased by Sh8 billion, there was a corresponding increase in bank un-audited debts,” he said.
“As you lend, some loans become good and others become bad,” he added.
As its outlook for 2012, the bank plans to open 10 new branches, increase lending to customers, rationalise expenditure, increase the customer’s products range as well as strengthen their agency banking.
Despite the disappointing profit figures, NBK’s top line performance was in line with industry growth and Marambii said they would continue to increase their presence countrywide as the bank seeks to reduce its reliance on lending to the government.
“We want to be a true national bank by opening a branch everywhere in Kenya and even in neighbouring countries,” he disclosed.
“We are targeting many places because the need is becoming more urgent now with the formation of counties. We want to have a branch in every county,” he added.
The board of directors has recommended a final dividend payout of 65 cents per share to preference shareholders and 40 cents per share to ordinary and participating preference shareholders.
It’s the first time the bank is planning to pay a dividend to shareholders since 1997, as it used profits to pay off old debts accumulated by the political elite during Daniel Arap Moi’s presidency.
The government and the national pension fund, which are among the major shareholders in National, are in the process of selling a controlling stake in the bank to a strategic investor, but Marambii admitted that process could take a while as the parties negotiate the price.
“The process is still ongoing. Valuations will be quite a problem because the bank is not standing still,” he said.