NIC Bank Group posted a Net Profit of Sh3.4 billion for the period ending September 30, 2016 compared to Sh3.6 billion in 2015.
The Group posted a strong operating profit, which rose by 36 per cent during the period under review, demonstrating that the Bank’s fundamentals remained strong and that execution against the three-year strategy remains on track.
Total income for the period was Sh12.5 billion compared to Sh10.1 billion in 2015. This growth was driven by interest income arising from loans and advances to customers as well as income from Government securities.
Total operating expenses excluding provisions for bad debts, increased by 7 per cent to Sh4.5 billion, driven by branch expansion and continued investment in IT systems undertaken during the period.
The Group improved its cost to income ratio to 36 per cent, compared to 42 per cent in 2015, and continues to be one of the lowest in the market.
In the period under review, the Group’s net profit was weighed down by a significant increase in provisions to support the non performing facilities of a few large corporate customers that have been previously reported. The overall NPL ratio remains at the level reported in December 2015.
The Group reported an increase in total assets of Sh10 billion as a result of growth in customer deposits.
The Group’s capital base for the period closed at Sh29.5 billion, a growth of Sh5.2 billion over 2015, with key banking regulatory ratios in excess of the minimum thresholds set by the Central Bank of Kenya.
NIC Bank’s Group Managing Director John Gachora said the Bank’s strategy to grow its Retail and SME (Small and Medium Enterprise) segments in the past three years has borne fruit.
“By diversifying our product offering and channels we have been able to reach more customers and thereby boosting customer acquisition. Our subsidiaries across the region continue to do well and contribute positively to the business,” said Gachora.
Expanding the branch network remained integral in reaching more SME and retail customers in Kenya. The Bank saw its branch network grow from 27 at the end of 2015 to 33 at the end of quarter 3, and a total of 40 across the region.
The Bank’s management is cognisant of the changing operating environment following the new banking law. This has meant a review of business to maintain growth driven by operational efficiency across the business.
Gachora noted the Bank continued to review its internal processes, structures and business model to ensure it remains well-positioned to take advantage of emerging business opportunities.
Key will be enhancing the Bank’s digital banking platform to offer greater automation and digitisation of processes for an enhanced customer experience.
During the period under review the bank continued to aggressively migrate customers onto its digital platforms and plans to launch a number of innovative digital banking solutions in early 2017.
The Bank’s Gross non-performing loans remained steady during the third quarter and it continues to work closely with these customers to turnaround their businesses.
“Our fundamentals are sound and an interrogation of our business performance independent of the non-performing loans shows that our growth strategy is working and we remain confident in the future stability of the Bank,” said Gachora.