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NIC profit jumps to Sh2.6b

NAIROBI, Kenya, Feb 24 – NIC Bank has announced that its pre-tax profit jumped 71 percent to stand at Sh2.6 billion in 2010 up from Sh1.5 billion in the previous year.

During the period under review, revenues also jumped by 36 percent to Sh5.2 billion while assets under management stood at Sh59 billion.

Briefing investors on Thursday, NIC Bank Group Managing Director James Macharia attributed the growth to favorable results of the bank’s subsidiaries as well as recovery in key economic sectors.

“We did some restructuring some time back and we can see that paying dividends. All the bank\’s subsidiaries were profitable in 2010, Mr Macharia told investors.

Last year the bank ventured into Tanzania acquiring Savings & Finance Commercial Bank. Mr Macharia said the subsidiary, NIC Bank Tanzania had recorded significant turnaround in performance.

“The bank contributed 14 percent of the profit before tax,” he said.

NIC\’s loan book grew to Sh40.8 billion shillings while net interest income rose 41 percent at Sh985 million.

“To fund this growth in advances, the bank’s deposit base grew from Sh39.5 billion in 2009 to Sh48.5 billion in 2010, an increase of 23 percent,” Mr Macharia said.

Despite the expansion in the outlets, total operating expenses were well contained growing by 13 percent over the previous year to Shs2.6 billion.  This compares well with the growth in total income, which increased by 36 percent, from Sh3.8 billion in 2009 to Sh5.2 billion in 2010.

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Mr Macharia said going forward the bank was looking to diversify its business offerings, there by spreading its risk across its business lines.

“We have to diversify the risk because if three is a major down time in the economy and customers were unable to pay back then the interest income will shrink. So that’s why we have to be robust,” Mr Macharia said.

NIC runs an investment banking business through NIC Capital and a brokerage business through NIC Securities.

“The outlook for Kenya’s economic growth for 2011 and beyond is positive as most of the preconditions for take off are being addressed pragmatically,” he said.

On regional expansion, the bank is looking to venture into two new markets. Without giving much detail, the MD said one would be in East Africa while the other would be in Central Africa.

“We are being driven by opportunities rather than following the bandwagon by following the crowd and missing out of better prospects,” he said.  

The bank recommended a bonus issue of one share for every 10 ordinary shares held. This is in addition to the final dividend of Sh89 million, which together with the interim dividend paid earlier of the same amount, brings the total dividend payout to Sh178 million.

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