NIC Bank Group first half results show that the Bank’s fundamentals are strong and execution against its strategy remains on track. The Group has posted a Net Profit of KES 2.3 billion for the period ending June 30, 2016, representing a growth of 3% year on year. The group recorded a strong operating profit which was up 41% year over year.
Total operating income grew by 26% to KES 8.2 billion compared to KES 6.5 billion the same period last year. NIC Bank’s Group Managing Director, John Gachora attributed the Bank’s performance to concerted efforts by management to focus on growing the retail segments, channels and product offering in line with the Bank’s long term strategy. He said, “The Bank’s strategy to grow its Retail and SME (Small and Medium Enterprises) segments is bearing fruit, with customer accounts growing by 17% and profitability of the Retail division tripling year on year.”
The Bank’s loan book grew by 4% from KES 108 billion to KES 112 billion during the period while the deposit base increased to KES 112 billion, reflecting a 6% growth from KES 105 billion.
During the period, the Bank’s profitability continued to be impacted by provisions for bad debts relating to non-performing loans.
Total operating expenses including provisions for bad debts, stood at KES 5.0 billion up from KES 3.3 billion, mainly driven by the branch expansion and related staff costs undertaken during the period. The Group opened 6 branches during the period under review. The Group’s cost to income ratio which improved from 42% to 35% remains one of the lowest in the industry.
The Group’s total capital increased to KES 34 billion from KES 30 billion last year resulting in improved capital adequacy and liquidity ratios.
In the period under review, the Bank opened six new branches to bring the Group’s total across the region to 41. This is in line with the Bank’s strategy to increase its footprint to support more Retail and SME customers across the region. The branches opened were in Kisii, Kitengela and Nairobi Counties. The Nairobi branches are located in Upper Hill, Ruaraka, Ongata Rongai and Buruburu.
In a bid to retain its market dominance in the Asset Finance space the Bank entered into partnerships with several leading dealers, namely, Simba Colt Motors, Nissan Kenya, CMC Motors, Transport and Lifting (TNL) and General Motors (GM) to offer consumers competitive financing to acquire their assets. In line with the Bank’s strategy to diversify into other non-traditional forms of Asset Financing, the bank was able to grow its financing of Plant and Machinery, Construction Equipment and Farm Equipment by 23%, 22% and 25% respectively.
The Bank continues to also aggressively migrate customers onto digital platforms and has recorded a 32% and 17% growth in Mobile and Internet Banking Users respectively.
In May, the Bank launched a fully automated online platform, the “Scheme Online Application Portal” which enables employees of corporate organisations to apply for loans online. This innovative new offering, the first in the Kenyan market, has seen loan application time reduce by more than 50%.
The Bank, which was recognized for providing the Best Customer Service in Kenya and East Africa by the Banker East Africa Awards, remains committed to the growth and development of all the subsidiary companies. This is a key strategic objective which 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 Insurance Agents (Bancassurance) and NIC Securities (Brokerage) all contributed positively to the Group’s financial performance in the period under review.
The Board has recommended to pay an interim dividend of KES 0.25 per share amounting to KES 160 million, maintaining the interim dividend pay-out at the same levels as of 2015.
The Board of Directors have also announced a reorganization to create a Non-Operating Holding Company.
The reorganization which is subject to Regulatory and Shareholder approval will see NIC Bank converting into a non-operating holding company for the Group and it being renamed “NIC Group PLC”. The Reorganization will also include the creation of new wholly owned subsidiary company of the Group, to be named “NIC Bank Kenya PLC”.
“This reorganisation is strategic to support the Group’s medium and long term strategy through supporting a structure that facilitates optimal use of capital, more effective use of strategic and risk management, and improved governance of our subsidiaries,” said Mr. Gachora.
Mr. Gachora added that the board is of the view that the Reorganization of NIC Bank will have minimal impact on shareholders, customers, employees and regulators while presenting the opportunity to secure the Group’s future growth by allowing sufficient investment of the Group’s capital as is needed to establish and grow subsidiaries engaged in providing complementary services to the Group’s core banking business.
NIC Bank is optimistic about the future and positioning itself to continue growing its Retail and SME Banking alongside its strong Corporate Banking business and Asset Financing. Mr. Gachora also noted that the appointment of NIC Bank by KDIC as the Asset and Liability Consultant of Imperial Bank Limited (in Receivership) and disbursing agent for depositor funds was progressing well. He said more than 5,000 customers had opened claim accounts since the process commenced on July 27th and over KES 3 Billion has been disbursed by KDIC. He further added that the Bank will continue to provide support to IBLIR customers to access their funds.