…Shareholders to earn an interim dividend of Shs 0.25 per share

NIC Bank Group has reported an 18% increase in its half-year Profit Before Tax of Shs 784 million, up from Shs 664 million registered during the same period last year.

Announcing the results today, Mr. James Macharia, the Group Managing Director, said: “Despite the challenging operating environment and depressed markets arising from the global financial crisis and the sluggish economy, the Group reported satisfactory performance on all the key financial indicators”.

Total operating income grew by 27% to Shs 1.8b, an increase of Shs 393m, with non-funded income increasing by 26% to Shs 681m. The net interest income which has grown by 28% to Shs 1.2b, an increase of Shs 253m, has been favorably impacted by the improved return on earning assets and a relatively stable cost of funds.

“The non-funded income at Shs 681m is 37% of the total operating income and continues to contribute significantly to the overall profitability of the Group. At this level, it is an indicator of a reduction in the overall underlying risk of the Bank,” said Mr. Macharia.

The Group MD noted that the Group’s total assets had recorded a growth of 22% to reach Shs 46b, with the loan book recording a 15% growth from Shs 25.7b to Shs 29.6b by June 2009. To fund this growth in advances, the Bank’s deposit base as at June 2009 stood at Shs 37.8b, reflecting a 26% increase over that reported in June 2008.

Total operating expenses excluding provision for loan losses increased by 32% to Shs 219m mainly due to increased staff costs on account of branch and regional expansion.

Branch Expansion
On the branch expansion programme, Mr Macharia explained that the Bank will continue to establish its presence in new, strategic and commercially viable locations.
In the past six months, the Bank successfully expanded its footprint countrywide by opening 2 additional branches in Kisumu and Thika as part of its endeavors to improve service delivery and accessibility by customers. Plans are underway to open a branch in Meru later in the year.

NIC’s Investment in Technology and Delivery Channels
At NIC Bank, we are adding further choices or channels to serve our customers by making the banking experience more convenient. We also want to reach customer segments in a more efficient way, and embracing modern Information Technology is the way to go.

With the arrival of the first fibre optic cable along the East African Coast, the Bank is optimistic that its integrated internet banking service – NIC Online – and its soon to be launched mobile banking solution, will offer the Bank a competitive edge in the market.

“We are expanding our IT-based products in order to increase their capabilities and flexibility. This is in line with our core promise to be a ‘One Stop Shop’ for our customers – we want to ensure that customers get the variety of financial services from current accounts, insurance, stock brokerage services etc with ease and convenience – facilitated by our modern technological channels,” said Mr. James Wainaina, Director, Personal Banking.

Regional Expansion
As part of our strategic initiative to grow regionally, the shareholders at the last AGM held on 29th April, 2009, approved the acquisition of 51% equity stake in Savings & Finance Commercial Bank [S&F] in Tanzania. The acquisition was effective from 1st May, 2009 and it is expected that S&F will, going forward, significantly contribute to NIC Bank’s bottom line.

“The Tanzanian market offers good growth potential for the group and will facilitate improved service delivery to our customers who are already operating regionally,” noted Mr. Macharia.

NIC Positioning in the Capital Markets
Mr. Macharia added that NIC Capital Securities, the brokerage subsidiary of the Group, has been repositioned and operations streamlined to ensure that services exceed customer expectations. The brokerage has continued to increase its market share at the NSE and has progressively grown its clients’ investment portfolio.

NIC Capital, the Group’s investment banking arm, has also been revamped with a focus to establishing a regionally focused investment bank to support both local and regional aspirations of our clients. NIC Capital recently partnered with the Johannesburg-based, Pan-African financial services group, Imara Group, to enhance capacity for corporate finance advisory services, securities trading and research. “Imara is positioned internationally and across Africa as a financial services group that is close to developments in all key Sub-Saharan markets” added Mr. Macharia.

In recognition of the Bank’s improved performance, the Board has declared an interim dividend of Shs 0.25 for every ordinary share of Shs.5 held. Dividend warrants will be posted on or about 2nd October, 2009 to all members on the register at the close of business on 16th September, 2009. The register of members will therefore be closed on 17th September, 2009 for purposes of preparing dividend warrants.