March 4, 2015
Listed lender NIC Bank Limited has posted a 27 percent rise in profit after tax to Shs 4.1 billion, for the year ending December 31, 2014 compared to Shs 3.2 billion in 2013.
Profitability was driven by robust growth in the balance sheet, enhanced business efficiencies and strengthened performance from the bank subsidiaries. “We are delighted with our results and remain optimistic that we will continue with this momentum into 2015. Our focus going forward will be to deepen our penetration in the Retail and SME segments, as well as increase our footprint with new branches across the region,” said Group Managing Director, Mr John Gachora.
“We anticipate the macro-economic fundamentals will remain fairly stable in 2015 with healthy GDP growth rates in Kenya, Uganda and Tanzania.”
Total operating income grew to Shs 11.6 billion compared to Shs 10.5 billion the same period last year, largely driven by increase in interest income and non-funded income.
Growth in the loan book saw interest income grow by 18 percent to Shs 11.4 billion, compared to Shs 9.6 billion the previous year. The loan book grew by 22 percent, from Shs 83.4 billion in December 2013 to 102.0 billion in December 2014.
To fund this growth in advances, the deposit base increased to Shs100.4 billion as at December 2014, reflecting a 10 percent growth from Shs 91.5 billion in December 2013.
Non funded income also grew by 11 percent to Shs 3.5 billion from Shs 3.2 billion in line with the Group’s strategy to diversify its revenue sources.
Total operating expenses excluding provisions for loan losses increased by 14 percent to Shs 5.0 billion. Despite the increase in expenses, the Group’s cost income ratio increased marginally to 43 percent compared to 42 percent in 2013 and remains one of the lowest in the market.
The growth and development of the subsidiary companies remains a key strategic objective and one that is aimed at broadening both the range of financial services offered to customers and enhancing diversity within NIC Bank Group.
NIC Bank Tanzania, NC Bank Uganda, NIC Capital (Investment Banking), NIC Insurance Agents (Bancassurance) and NIC Securities (Brokerage) all contributed positively to the Group’s financial performance.
Capital Raising and Growth
Last year the group concluded its successful Capital Raising Program, which saw it issue a bond and a Rights Issue. The successful conclusion of the Capital raising effort is viewed as a vote of confidence on the Bank’s long term growth strategy.
“The money will go towards strengthening our capital base so as to support growth in our loan book for both the SME and corporate segment. It will also help us roll out our ambitious strategy that will see us open new branches across the region to cater for our retail and SME clients.” said Mr Gachora.
In February, the Bank launched a new branch in Machakos, this is the first of many to be rolled out in the course of the next few years in a bid to grow its customer base.
The Group Managing Director, reported that the Board had resolved to recommend a first and final dividend of Shs. 1 (one) amounting to Shs 639 million compared to Shs 543 million in 2013 representing a growth in dividend pay-out of 17 percent. The profit retention is in line with the growth strategy of the Bank to maintain sufficient levels of capital reserves through retained earnings.
NIC Bank is optimistic about the future and positioning itself to grow its Retail and SME segments alongside its already strong Corporate Banking and Asset Finance businesses.
The Bank continues to strongly drive its innovation agenda in a highly competitive region. In 2014, the Bank launched its MOVE TO NOW strategic platform. It is on this platform, the Bank launched its mobile app, NIC NOW, which allows customers to do their banking at their convenience. NIC continued to leverage on the advancement of technology and was the first bank to launch a share trading feature on NIC NOW which allows customers to trade their shares from the palm of their hands.
Last month the Group also launched a new leasing subsidiary, NIC Leasing LLP, the first for a Kenyan bank. This fits into the banks long term strategic plan which is anchored on an aggressive growth strategy across all areas of the bank especially Asset Finance, in which it is currently the market leader.
“We are focused on building our customer base while reducing the cost of funds and introducing new products into the business and the market,” said Mr Gachora.