NAIROBI, Kenya Mar 11 – The National Bank of Kenya on Thursday announced a 20 percent rise in profit before tax for the year ended December 31, 2009.
The bank posted a profit of Sh2.1 billion compared to Sh1.7 billion in 2008, marking the first time the bank has gone beyond the Sh2 billion mark in profit.
Commenting on the results, National Bank Managing Director Reuben Marambii attributed the rise to recovery of old debts that and an increase in loans and advances to Sh13 billion from Sh8 billion in 2008.
“I am happy to say we are almost through with our debt collection exercise,” he said.
The bank has been on a steady path of recovery after suffering massive losses in the 1990’s mainly due debts incurred from political interference.
Total operating income grew 13 percent to Sh5.7 billion from Sh5.1 billion in 2008 while operating expenses also grew by 10 percent to Sh3.6 billion, although Mr Marambii said it would have to grow slowly if the bank was to sustain its profitability.
During the period under review, the bank grew its lending to customers by Sh4.2 billion as customer deposits grew by 24 percent to Sh42 billion from Sh34 billion.
Profit after tax stood at Sh1.46 billion eliminating the accumulated deficit of Sh1.4 billion leaving a surplus of Sh54 million as at December 31st 2009.
Despite the bank’s recovery, Mr Marambii said no dividends would be paid out to shareholders but instead proposed issuing bonus shares as the bank lines up to issue dividends in the future.
He said subject to regulatory approval, a bonus issue in the proportion of two new ordinary shares for every five shares held will be issued to shareholders who register by April 9, this year.
“Shareholders should be happy they have recouped everything they had lost. Their capital is intact now trading can continue in the normal way. From now on, any profit we make we will have to call our shareholders and ask them how much they want back,” Mr Marambii.
The bank’s shareholders have had to put up with years of no dividends coming their way despite the steady path of recovery the bank has been on. As part of its expansion program, the bank intends to open up 20 new branches this year after years of dormant expansion. Mr Marambii said the exercise would target areas the bank has the least presence in the country such as Thika and Taveta before considering an expansion into the East African region.
“In our plan we have about 80 branches we would like to open up but it all depends on how much we can do this year. Already all the other banks are way ahead of us even going into the region and we would like to catch up,” he said.
At the same time, the MD revealed the lengthy privatisation process for the bank could be complete by December this year.
The Government owns a 22.5 percent stake in the bank and 48 percent through National Social Security Fund (NSSF).
“The two principal shareholder have to agree before anything can go. It was planned to be finished by June but this may spill over to December,” he said.