NIC bank posts Sh803m profit

May 12, 2011

, NAIROBI, Kenya, May 12 – NIC Bank Group has reported a 52 percent increase in pre-tax profit to Sh803 million for the three months ended March 31, this year compared to Sh529 million reported for the similar period last year.

The bank\’s subsidiaries contributed 10 percent of the year-on-year increase in the profit before tax.

Announcing the results on Thursday, the Group Managing Director James Macharia attributed the growth to interest earnings from loans-which grew to Sh1.3 billion from Sh1.1 billion in March 2010.

According to Mr Macharia, NIC Bank Group\’s performance was also driven by the overall growth in various income lines as well as better cost management.

Total operating expenses increased marginally by seven percent to Sh627 million, notwithstanding the expansion of the branch network.

The Group has a cost income ratio of 40 percent which is one of the lowest in the industry.  Provisions for bad debts reduced by 82 percent from Sh49 million to Sh9 million, reflecting the robust credit selection, appraisal and approval processes.

See the full financial statement here.

Mr Macharia explained that the Group\’s branch expansion program is on course, with three additional branches; Galleria on Langata Road, Village Market and Eldoret branches having opened in the first quarter of this year. The reception from the bank\’s customers has been favourable and plans are underway to open more branches in Nairobi and its environs later in the year.

Mr Macharia added that the bank would continue to evaluate the capacity of its core technology systems to meet the emerging trends in the banking industry. "We will continue to ensure that our technology platform enables us to diversify our product offerings, and to increase our flexibility and outreach in a secure environment.  This is in line with our core promise to be a one-stop-chop for our customers."

The branch expansion initiative was supplemented with new products and in this regard Mr Macharia said that the agency banking partnership with Postbank to enable NIC Bank provide collection and disbursement services was now underway and customers would now be able to use the Postbank network of 103 branches nationwide.

On products and customer offering, the MD said; "We continue to review our offering to be in step with our customer needs. The new Entrepreneur Account which is complemented by the Entrepreneur Club is now up and running and to date a number of workshops have been held throughout the country with the aim of empowering budding Entrepreneurs within our target market with business relevant information." 

The subsidiaries, NIC Bank Tanzania, NIC Capital [Investment Banking], NIC Insurance Agents [Bancassurance] and NIC Securities [Brokerage] contributed 10 percent of the year on year increase in the pre-tax profit.

"The Group\’s Investment Banking arm, NIC Capital, is now a key player in both equity and debt capital markets" added Mr. Macharia. 

NIC Capital has been retained as the transactional advisor in a number of significant mandates, whilst NIC Bank Tanzania has enabled us to serve our Kenyan customers with operations in Tanzania.

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