NAIROBI, Kenya, May 23 – The National Bank of Kenya (NBK) has announced a profit before tax of Sh467 million for the first quarter ended March 31 2011.
This represented a four percent drop compared to what was registered in the first quarter of 2010.
Managing Director Reuben Marambii attributed the reduction to the decline in the value of government bonds which are held for trading purposes.
"The decline in bonds values is a direct result of rising interest rates and inflation," he explained.
Despite the dip, the bank\’s net-interest income increased from Sh915 million to Sh1.3 billion while customer deposits went up by 17 percent to Sh53 billion.
Loans and advances to customers also grew from Sh15 billion in the previous year to Sh24 billion which translated into a 61 percent increase while total assets increased by 20 percent to Sh68 billion.
Total operating expenses were also on an upward trend having risen from Sh992 million to Sh1.4 billion, over the same period last year.
"Included in the expenses is an impairment of Sh269 million arising from the decline in the value of the bonds held for dealing purposes," Mr Marambii reported.
The MD however reiterated that the bank would continue with its branch expansion programme with the ultimate aim of having branches in all the 47 counties. This exercise that will see about 20 outlets opened is expected to cost an estimated Sh700 million.
He further disclosed that the bank was in the process of introducing new products on the mobile banking platform in the next quarter and will also be installing a core banking system which should be operational by the end of the year.
The bank\’s 42nd Annual General Meeting is slated for June 3 at the Kenyatta International Conference Centre, where shareholders are expected to approve payment of a first and final dividend for the year.
This will be the first time in 12 years that the National Bank will be paying a dividend despite returning on the profitability path in 2002.
A quasi-owned government bank, NBK is one of the institutions that have been earmarked for privatisation and the government has already picked two advisers for the transaction.
The government holds a 22.5 percent stake in the bank and a further 48.06 percent through the state-run NSSF. The remainder is with the public through the Nairobi Stock Exchange.