NAIROBI, Kenya, Aug 13 – NIC Bank Group has reported an 18 percent increase in its half-year profit before tax at Sh784 million, up from Sh664 million registered during the same period last year.
Speaking while releasing the results on Thursday, Group Managing Director James Macharia attributed the rise in profitability to improved return on earning assets and a relatively stable cost of funds, which saw the net interest income grow to Sh1.2 billion.
He said: “Despite the challenging operating environment and depressed markets arising from the global financial crisis and the sluggish economy, the Group reported satisfactory performance on all the key financial indicators.”
Total operating income grew by 27 percent to Sh1.8 billion, an increase of Sh393m, with non-funded income increasing by 26 percent to Sh681million.
The net interest income, which has grown by 28 percent to Sh1.2 billion in an increase of Sh253 million, has been favourably impacted by the improved return on earning assets and a relatively stable cost of funds.
“The non-funded income at Sh681 million is 37 percent of the total operating income and continues to contribute significantly to the overall profitability of the Group. At this level, it is an indicator of a reduction in the overall underlying risk of the bank,” Mr Macharia explained.
The bank’s profitability comes with good tidings for shareholders amid a declaration of an interim dividend of Sh0.25 for every ordinary share of Sh5 held.
“Dividend warrants will be posted on or about October 2 to all members on the register at the close of business on September 16. The register of members will therefore be closed on September 17 for purposes of preparing dividend warrants,” Mr Macharia said.
He added that the Group’s total assets had recorded a growth of 22 percent to reach Sh46 billion with the loan book recording a 15 percent growth from Sh25.7 billion to Sh29.6 billion by June 2009. To fund this growth in advances, the Bank’s deposit base as at June 2009 stood at Sh37.8 billion, reflecting a 26 percent increase over that reported in June 2008.
Total operating expenses excluding provision for loan losses increased by 32 percent to Sh219 million, mainly due to increased staff costs on account of branch and regional expansion.
Going forward, Mr Macharia said that the bank is looking to expand its branch network in new, strategic and commercially viable locations to ensure the bank’s continuous success.
“In the past six months, the Bank successfully expanded its footprint countrywide by opening two additional branches in Kisumu and Thika as part of its endeavours to improve service delivery and accessibility by customers. Plans are underway to open a branch in Meru later in the year,” the Group MD said.
With the arrival of the first fibre optic cable along the East African Coast, the Bank is optimistic that its integrated internet banking service – NIC Online – and its soon to be launched mobile banking solution, will offer it a competitive edge in the market.
“We are expanding our IT-based products in order to increase their capabilities and flexibility. This is in line with our core promise to be a ‘One Stop Shop’ for our customers – we want to ensure that customers get the variety of financial services from current accounts, insurance, stock brokerage services etc with ease and convenience – facilitated by our modern technological channels,” said James Wainaina, Director, Personal Banking.