NIC Bank Group saw its Pre-tax profit remain flat year on year at KES 1.37 billion, for the first quarter of 2017, compared to KES 1.40 billion the prior year.
The Bank in Kenya, the Group’s flagship, however posted an increase of 5% in profit before tax to close the quarter at KES 1.3 billion. This growth was despite the impact of the interest rate capping law as well as reduced Non-Funded Income as a result of lower Bond Trading activity in 2017.
In the period under review, the Group’s net profit was weighed down by provisions taken to support non-performing facilities of a few large corporate customers that were impaired in 2015.
The Group’s overall NPL ratio dropped to 11.3% from 11.4% in 2016, as a result of sustained efforts to improve the quality of its loan book.
The Group cost to income ratio increased to 39.3% as the Group continued to invest in systems and infrastructure to enhance efficiency. The cost to income ratio continues be one of the lowest in the industry. During this period, the Group also increased its operating expenses by KES 74m, a 5% change, as it increased its staffing to support the 7 new branches opened over the course of 2016.
Total assets closed the period at KES 173.8 billion compared with KES 160.9 billion a year ago, funded by a KES 7.5 billion increase in customers deposits and KES 5.5 billion increase in long term borrowings drawn in December 2016.
During the period under review, the Bank saw its customer account numbers increase by approximately 7,000 accounts with more focus being put on customer retention and deepening value proposition to existing customers.
In February, the Bank reaffirmed its commitment to reach more SME and retail customers by opening up its 34th branch in Rosslyn Riviera Mall, Limuru Road. The Bank has plans to open a new branch in Kiambu, at Ciata City Mall, in May 2017.
In the first quarter, the Bank continued with its various Citizenship initiatives and sponsored close to 50 financially disadvantaged children to attend various academic programs across the country. Education through empowering youth is a key pillar of NIC Bank’s Citizenship programme.
The Bank also rolled out a revamped version of its mobile platform, NIC NOW, which offers customers a better user experience with additional functionalities. The Bank plans to further invest in its digital platforms over the course of the year in line with its strategy to migrate more of its customers onto its digital channels.
The regional banking subsidiaries in Tanzania and Uganda, as well as the non-banking subsidiaries in Kenya, NIC Leasing LLP and NIC Insurance Agents (Bancassurance) all contributed positively to the Group’s financial performance in the period under review.
The Group is on course with its reorganisation strategy and awaits final approval from regulators. The process is expected to be completed by mid-2017 and will have minimal impact on shareholders, customers and employees.
The Bank expects the challenges faced in the first quarter to continue into the second quarter of the year. Loan book expansion in the industry will experience muted growth as a direct consequence of the interest rate caps. Nevertheless, the Bank will continue deepening its value proposition to its customers by forging strategic partnership in order to expand is product offering. In this respect, the Bank plans to announce a number of new initiatives during the quarter.