NIC Bank profit rises by 60%
Despite increased competition in the banking industry, NIC Bank reported a 60 per cent increase in pre-tax profits for 2006. This was attributed to the Bank's new focus on Corporate Banking and Treasury business, in addition to its continued leadership in certain niche markets i.e. Hire Purchase and Insurance Premium Financing.

This new focus has resulted in a significant growth in both interest and non-interest income, with foreign currency trading income growing by 229 per cent. The pre-tax profits grew from Kshs.425 million in 2005 to Kshs. 678 million in 2006. The Bank's Managing Director, Mr. James Macharia, said during an investor briefing today that the Bank reported favorable performance on all key financial indicators. Interest and non-interest income grew by 22 and 42 percent respectively, while net interest income went up by 24 percent.

Total deposits were up by 33 percent and lending up by 18per cent, resulting in an overall balance sheet growth of 26 percent. "Overall, the positive growth in profitability was supported by improved prospects across most sectors of the economy and the Bank's enhanced capacity for business development. The gross loan portfolio significantly increased by 18 percent to Kshs 17.3 billion from Kshs 14.7 billion recorded in 2005 due to increased lending to the productive sectors of the economy", Mr Macharia added.

Releasing the financial results at the Intercontinental Hotel, Mr. Macharia explained that the Bank's asset book recorded an across-the-board growth. Specifically, loans and overdrafts increased by Ksh 1.3billion representing a 20 percent growth and the hire purchase business was up by Ksh 1 billion, an 18 percent growth. The Bank also booked significant business by way of foreign currency advances, which grew by 12 percent from Kshs 1.9 billion to Kshs 2.2 billion. Mr.Macharia announced that the total funding base had also gone up reaching 21.9billion.

Further, the funding mix also improved significantly with a 63 percent increase in the relatively cheaper current accounts, from Kshs.3.9 billion to Kshs. 6.34 billion. This was mainly due to the launch of a wide spectrum of personal and business banking accounts such as 'Young Movers', 'Mazao'and 'Business Advantage' in addition to the growth in the historic portfolio of 'Vintage' and 'Orchard' accounts.

"These new products and services have given the Bank a major boost in the specific market segments and have contributed significantly towards the reduction in cost of funds". On corporate governance and the underlying efficiency/balance sheet risk, the Bank continued to receive good ratings from rating agencies, such as the renowned Fitch Rating Agency, and was voted Winner of the Corporate Citizenship Award in the 2006 FiRe (Financial Reporting) Awards. The FiRe Awards are sponsored by the Institute of Certified Public Accountants of Kenya, the Nairobi Stock Exchange and the Capital Markets Authority.

The Board of Directors has approved a dividend payout of Kshs.2.70 per share compared to Kshs.2.50 per share from the previous year. "There are good prospects for enhanced growth and profitability due to the strong shareholder support, diversity in product offerings, unique heritage, leadership in niche markets and enhanced strategic alliances with key players in both the banking and business sectors.

With an enhanced resource base, clear strategic focus and the on-going expansion in footprint and delivery channels, NIC Bank will realize a sustained growth in both the balance sheet and profitability." Mr. Macharia explained.