NIC Bank Group has posted a half-year performance with profit before tax growing by 10% to hit Shs 3.2 billion, on the back of increased lending to its Corporate and Retail customers. The Bank, which has historically focused on Corporate Banking, is now shifting focus on growing its Retail Business and has recently appointed a new Director to drive its growth efforts in the nascent Retail and SME Segment.
Operating income for the first half of this year grew by 21% to Shs 6.5 billion compared to Shs 5.4 billion for the same period last year. The growth was largely attributed to a number of initiatives which the Bank has implemented over the last few months to bolster their non-funded income lines. One of the Bank’s key strategies is to grow their fee income through cross selling across their existing customer base as well as investing in digital channels. By the end of H1 2015 the Bank had grown the number of active customers utilizing their award winning Internet Banking Platform and Mobile Banking application dubbed NIC NOW by close to 50% year on year.
Customer Deposits increased by 12%, to Shs 105 billion, compared to Shs 93 billion in June 2014, as a result of an increased branch network as well as the roll out of new banking propositions targeting the Retail and SME customer segments. The Bank has also recently rolled out Western Union, MoneyGram and MPESA Super Agent Services across all its branches in Kenya.
Group Managing Director John Gachora said, “The Bank has performed well over the last quarter and we are seeing good momentum in the business, especially our Retail and SME segments. Our Branch Expansion is on track and we plan to roll out an additional four new branches in H2 of this year. We have also recently bulked up our Executive Team and I am confident that we have the right team to deliver on our strategic ambitions”.
Net loans and advances grew by 18% over the period under review. This was as a result of concerted efforts by the bank to grow its loan book in the retail and corporate segments, whilst keenly managing risks and margins over the period. Segmented sales activities and product based marketing campaigns were cited as the growth catalyst on the loans portfolio which grew from Shs 92 billion in June 2014 to Shs 108 billion.
Operating expenses excluding loan loss provisions, have grown by 20% reflecting the Bank’s continued investment in talent and new technology in the period. The Bank, however, managed to maintain its Cost to Income ratio below 40%, one of the lowest in the industry.
Subsidiaries
The growth and development of the subsidiary companies remains a key strategic objective and 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 in the first half of 2015. It’s subsidiary in Tanzania recently received a USD 7 million Long Term Loan from Proparco, the private sector financing arm of Agence Francise de Development (AFD) for on-lending to Corporate and SME customers. While in Uganda, the Group has opened a new branch in Bugolobi and has injected an additional USD 3.3 million in capital to support future business growth.
Early in the year, the Group 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 especially in Asset Finance, in which it is currently the market leader.
Dividend Pay-out
The Group Managing Director, reported that the Board had recommended to pay an interim dividend of Shs. 0.25 per share amounting to Shs 160 million. The Bank did not pay an interim dividend in 2014 due to the Rights Issue.
Looking Forward
“For the second half of 2015, our focus remains on managing funding costs and operating expenses in addition to minimizing impairment costs through proactive risk management, “said Mr. Gachora. He further added that the bank will continue leveraging technology to enhance customer experience and work with Strategic Partners to aggressively grow both its product and customer base.
