NBK third quarter profit at Sh1.2 billion

November 15, 2011
NBK profit dips marginally due to high operating costs /FILE

, NAIROBI, Kenya, Nov 15- National Bank of Kenya (NBK) has announced a slight dip in its profit after tax to Sh1.2 billion for the third quarter ended September 30 2011.

This represented an 8.7 percent decline from the Sh1.3 billion posted in the same period last year.

Managing Director Reuben Marambii attributed the reduced profits to the rise in operating expenses, branch expansion costs and general rise in interest rates.

“Net-interest income increased from Sh3.2 billion to Sh4 billion a 27 increase over the same period last year while total operating expenses rose from Sh3.17 billion to Sh3.99 billion, over the same period last year,” he added.

During the period, customer deposits which rose by 5 percent from Sh53.8 billion as did the loans and advances to customers which went up from Sh17.3 billion to Sh26.4 billion.

Total assets went up from Sh67.4 billion to Sh70.2 billion.

Marambii said the bank has continued with its branch expansion programme and innovative product and service offering and plans to open new branches in both Machakos and Kitengela before the end of this year.

“The Bank commenced the implementation of a new Core Banking System (BankFusion Universal Banking- BFUB) in March 2011. The implementation has progressed as scheduled and the project is set to be completed by the end of first quarter of 2013,” Marambii disclosed.

At the same time, Citibank Kenya announced a pre-tax profit of Sh3.2 billion for the nine months to September this year, as earnings from loans increased.

Total loans grew by 26 percent to Sh33.3 billion compared to the first nine months of 2010 despite the prevailing economic challenges marked by high inflation, lower Gross Domestic Product growth and local currency weakness.

“This is largely due to our strong business fundamentals and higher fees and commission income. We saw significant progress in virtually every area of the bank during the third quarter,” Citibank Kenya CEO Daniel Connelly said.

Other positive factors that reflected in the third quarter results include robust loan production which reflects continued growth in customer numbers as well as additional borrowings by existing clients.

“Our strong loan originations, deposit growth and efficiency improvements are indicators of continued growth in profitability,” said Connelly.

Total operating income grew by 30 percent in the first nine months while net interest grew by five percent compared to the same period, a year earlier. The bank’s total assets topped Sh72 billion.

Citibank Kenya is well capitalised with the ratio of total capital to risk weighted assets standing at 26 percent – well above the Central Bank of Kenya (CBK) minimum statutory ratio of 12 percent.

Connelly said the bank would continue to serve all stakeholders well by sticking to the existing strategy, being careful about risk, and managing expenses while making the necessary business investments and continue to focus on building new customer relationships.

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