NBK profits sours 18pc

August 3, 2009

, NAIROBI, Kenya Aug 3 – The National Bank of Kenya (NBK) on Monday reported an 18 percent increase in after tax profit for the first half of the year.

The bank announced a Sh702 million profit, up from Sh595 million reported during the same period last year.

NBK Managing Director Reuben Marambii attributed the improved performance to an increase in interest income which grew by 10 percent from Sh1.9 billion to Sh2.1 billion.

“Lending is what has spurred this growth especially through unsecured lending, which we also extended to businesses,” Mr Marambii said.

Loans and advances increased from Sh7.4 billion to Sh10.6 billion which represents a 43 percent growth while non-interest income grew by13 percent from Sh990 million to Sh1.123 billion due to an increase in transactional income.

Operating expenses rose by 11 percent from Sh1.6 billion to Sh1.8 billion which was attributed to the bank’s cautionary branch expansion and inflation.

On the other hand, Mr Marambii said that despite the bank’s increased lending to the private sector, the bank still has a lot of money in bonds something they hope to change in the future.

“While lending to the government is a safe option, growth is in the private sector and it is what we are targeting,” the bank’s boss said.

Mr Marambii however noted that despite the increased lending to the public the money market is very tight for commercial banks, despite Central Bank’s indications that there is a lot of liquidity.

At the same time Mr Marambii said the bank’s planned privatisation is still at its very early stages.

“The only thing that has been decided is that the government has determined to sell the bank which could be in the form of a Secondary Public Offering or an offer to strategic investors or a combination of both,” Mr Marambii said.

“These are possibilities being discussed now and we are nowhere near making a decision on the same. There are still a lot of open questions.”

He said the initial report on the proposed sale of the bank has been given but no recommendations have been made so far.

Mr Marambii said the first proper report on this sale could be ready in a year’s time.

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