NCBA GROUP PROFIT INCREASES

NCBA Group PLC reports an after-tax profit of KES 2.84 billion in quarter one 2021

 

 

 

By Douglas Muriithi

 

 

 

NCBA Group PLC recorded an after tax profit of KES 2.84 billion for

the quarter ending March 31, 2021. This was an increase of

74% compared to KES 1.6 billion that NCBA Group posted during a

similar period in 2020.

 

 

 

Key Highlights

 

 

• Assets grew to KES 542.1Bn, 6% up year on year.

 

• Customer deposits closed at KES 432.2Bn, 11% up year on year.

 

• NCBA Group disbursed KES 134Bn in digital loans, 22% increase year on year in line with its digitization agenda and its commitment to supporting small businesses and individual customers during this period.

 

• Operating income increased to KES 11.8Bn, 8.3% up year on year.

 

• Provision for credit losses for the quarter was KES 2.6Bn as NCBA Group continues to mitigate against the impact of COVID-19.

 

• NPL coverage ratio improved to 65%, from 54% in the same period last year.

 

• Profit before tax of KES 3.9Bn.

 

• Profit after tax of KES 2.8Bn.

 

 

 

Commenting on the results, NCBA Group Managing Director, John

Gachora said the results reflect strong underlying performance

across all areas of the business and a slowly improving economy.

 

 

 

“We are immensely proud of our strong financial results during the

first quarter, NCBA Group has demonstrated the ability to tightly

balance strong credit discipline with its commitment to support its

customers during this period. These actions have further

strengthened the balance sheet and made the business even more

resilient to navigate the unfolding impact of COVID-19,” said Mr.

Gachora.

 

 

 

He continued: “We view 2021, as our transition year following the

finalization of the merger and consolidation of all entities, systems

and processes of CBA Group and NIC Group across the region in

2020. With the conclusion of this phase, the NCBA Group now has a

solid foundation from which to springboard and boldly pursue its

long-term strategy”.

 

 

 

In Q1 2021, total assets increased to KES 542 billion, representing a

strong growth of 6% year on year. Customer deposits in the period

also increased by 11% year on year fuelled by strong business

development efforts that have attracted new customers to the

Group.

 

 

 

Net interest income recorded a 20% increase year on year due to

growth in interest income from treasury investments and a

reduction in interest expense following the retirement of NCBA

Group’s medium term note in Q3 2020. The overall effect was that,

operating income in the period closed at KES 11.8 Billion

representing 8% growth against prior year performance.

 

 

 

The company gross loans stood at KES 283 billion, representing 2%

year on year growth in all banking subsidiaries. Digital bank

disbursements however, increased significantly by 26% to KES 134

billion from KES 108 billion during the same period. This is in line

with NCBA Group’s digitization agenda and its commitment to

supporting small businesses and individual customers during this

period.

 

 

 

NCBA Group’s non-performing loan ratio stands at 13.99% in line

with industry-wide levels given the impact of COVID-19. In Q1 2021,

NCBA Group further built its credit impairment coverage to

mitigate against continued adverse impact, improving the NPL

coverage ratio to 65% from 54% in the same period last year.

Additionally, NCBA Group’s concerted recovery efforts, particularly

in the digital lending business have begun to bear fruit in

stabilizing the credit portfolio.

 

 

 

NCBA Group’s capital and liquidity levels remain very strong, with

liquidity at 58.7% and Total capital / Total risk weighted assets at

18.34%. Both indicators are well above the required regulatory

thresholds and place the group in a strong position to withstand the

current economic downturn triggered by the COVID-19 pandemic.

 

 

Group Strategy & Outlook

 

 

NCBA Group has embarked on an ambitious growth strategy, which

will include expanding its branch network, rolling out new

innovative digital products and services and doubling down on its

core strengths of Corporate Banking and Asset Finance.

 

 

 

 

While remarking on the execution of the NCBA Group’s strategy,

Gachora stated, “We have kicked off the year with a strong start and

already made significant investments in new products, technology

and distribution, to position the business for a period of sustained

growth.”

 

 

 

During the first quarter, NCBA Group opened a new branch at Jomo

Kenyatta International Airport, Cargo Handling Terminal, and has

plans in place to open an additional 15 branches across the country

throughout the year.

 

 

 

In Q1 2021, NCBA Group’s Asset Finance division signed strategic

partnerships with Tata and Isuzu to entrench its leadership in the

market. The Group also partnered with Shelter Afrique to position

NCBA Group as the go to Affordable Housing Property Finance

partner.  Furthermore, the Group has launched a Government

Employee lending scheme that will provide eligible government

employees access to unsecured lending facilities over an extended

loan repayment period.

 

 

 

 

“While we are cautiously optimistic about economic recovery this

year, we believe that we have put in place the building blocks to

unlock the opportunities that will emerge from this recovery

period,” said Gachora.