NIC Group has posted a profit after tax of KES 4.5 billion, for the year ending 31 December 2015, compared to KES 4.1 billion in 2014, representing a year on year growth of 9%. The Bank’s operating profit was up by 23%, representing strong growth in the bank’s core business. Net Profit however was weighed down by a significant increase in loan loss provisions which the Bank attributed to a few large names.
NIC Bank’s Group Managing Director, John Gachora attributed the growth in profit to concerted efforts by the management to focus on growing the retail segments, channels and transactional products offering in line with the Bank’s long term strategy.
Total operating income for the year grew by 19% to KES 13.8 billion compared to KES 11.6 billion the same period the previous year. The growth was largely attributed to a number of initiatives the Bank undertook during the year to bolster non-funded income lines.
Total Operating expenses, excluding loan loss provision, grew 14% to KES 5.7 billion reflecting the Bank’s continued investment in talent, technology and new branches.
Net loans and advances grew by 14% in the period under review to KES 116 billion from KES 102 billion in 2014.
To fund this growth in advances, customer deposits increased by 12% to KES 112.4 billion compared to KES 100.4 billion the prior year as a result of an increased branch network and introduction of attractive new products.
During the year, the bank grew its branch network to 27 in Kenya with the opening of 3 new branches in Machakos, Lunga Lunga in Nairobi’s Industrial Area, and Sifa Towers in the Kilimani area of Nairobi. The Branch expansion plan is part of the Bank’s proposition to target retail and SME customer segments. The Bank is planning to open several new branches to support its growing customer base.
“The bank rolled out an ambitious strategic plan in 2015, to target more retail and SME business and we have started reaping the fruits of our investments. Of our various business lines Retail Banking experienced the biggest growth in profitability.” said Mr Gachora.
Despite increased investments owing to its branch expansion, the bank managed to maintain its Cost to Income ratio below 42%.
In December 2015, the bank concluded agreements towards a KES 5.56 billion (€50 million) credit line from the European Investment Bank (EIB) to support the private sector in Kenya through lending to Small and Medium Enterprises (SMEs).
During the year under review, the bank won top accolades in a number of different areas. It was awarded the Best Online Banking platform by Banker Africa. It also emerged the winner in the Corporate Governance category of the 14th Edition of the Financial Reporting (FiRe) Awards, and overall winner at the Champions of Governance Awards.
The bank continued to focus on growth and development of its subsidiary companies in order to offer a wide range of financial services to customers across the region.
NIC Bank, the Group’s flagship banking business in Kenya reported a Profit before Tax of KES 6.3 billion over the same period.
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 period under review. NC Bank Uganda opened its second branch in May 2015 and received a capital injection worth US$ 3.3 million to finance expansion from the Group.
In July, NIC Tanzania received a long term loan of US$ 7 million from Proparco, a private sector financing arm of Agence Francise de Development (AFD), towards strengthening the Bank’s position in Corporate and SME segments in Tanzania.
Earlier in the year under review, the Group launched a new leasing subsidiary, NIC Leasing LLP, the first for a Kenyan bank. This fits into the Bank’s long term strategic plan which is anchored on an aggressive growth strategy especially in Asset Finance, in which it is currently the market leader.
The Board has recommended a final dividend of KES 1, bringing the total dividend for the year to KES 1.25. This amounts to a total dividend pay-out of KES 800 million for the year under review compared to KES 640 million in 2014, representing a growth in dividend pay-out of 25%.
The dividend pay-out is in line with the Bank’s strategy to maintain sufficient levels of capital reserves through retained earnings.
NIC bank will continue rolling out its strategic shift of the business towards the retail and SME space, a move that is aimed at ensuring future sustainable growth and returns.
“Our branch expansion will continue in 2016 to ensure we offer our customers with more points of access to the bank. By 2018, our target is to have 50 branches across Kenya,” said Mr Gachora. “We are also focused on increasing the product holding per customer and introducing new innovative products into the market to cater for them.”
He added the bank will continue leveraging technology to enhance customer experience and work with strategic partners to grow both its product and customer base.