NIC Bank profits takes a 3.5pc hit on increased loan loss provision

March 8, 2017 (3 weeks ago)
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NIC Bank’s Group Managing Director, John Gachora, says the bank continues to drive business growth especially around Asset Finance. /FILE

, NAIROBI, Kenya, Mar 8 – NIC Bank has posted 3.5 percent drop in their net profit to Sh4.3billion in the full year that ended December 31, 2016 impaired by a significant loan loss provisions.

The bank says the additional provisions were taken to support the non-performing loans of a few large corporate customers that were impaired in 2015.

Loan loss provisions went up by 120 percent to hit Sh3.7 billion in the period under review from Sh1.6 billion reported in 2015.

The overall NPL ratio, however, declined year on year from 11.2 percent to 10.8 percent.

“2016 was a challenging year with various factors impacting our operating environment but our strategic shift to reach more retail and SME businesses, as well as branch expansion, continued to drive our performance,” said NIC Bank’s Group Managing Director, John Gachora.

“NIC Bank continued to roll out strategic partnerships over the course of the year to drive business growth especially around Asset Finance where we continue to be the clear leaders.”

Total assets increased by Sh3.7 billion, while customer deposits remained flat.

Loan portfolio went up by 8.5 percent to Sh15 billion from Sh13 billion same period in 2015.

In June 2016, the Kenya Deposit Insurance Corporation (KDIC) appointed NIC Bank to act as the Assets and Liabilities Consultant for Imperial Bank Limited (in Receivership).

The mandate included, amongst others, an assessment of the quality of Imperial Bank assets and liabilities, disbursement of funds to depositors and other advisory services to KDIC.

So far the bank has disbursed more than Sh10 billion to Imperial Bank depositors.

“The Bank is consolidating its business and relooking at our strategy on the back of the interest rate capping law. The Bank remains a strong institution and has fully complied with the new law, We are re-evaluating our business in this new operating environment and we will be rolling out new products and services to ensure we continue being competitive by investing more in our digital platforms,” Gachora added.

Gachora noted the full effects of the new law would start being felt in the first quarter of 2017 results.

The bank declared a first and final dividend of Sh1.25 per share.

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