News Column

NIC Bank net profit up 6.6pc to Sh3.2 billion

February 28, 2014

David Herbling -1

NIC Bank has posted a 6.6 per cent jump in full-year net profit impacted by higher provisions for bad loans and growing operating expenses.

The Nairobi bourse listed lender said after-tax profit stood at Sh3.2 billion in the year ended December 2013 compared to Sh3 billion a year earlier—thanks to a one third growth in net interest income to Sh7.2 billion.

NIC's loan losses provisions increased nearly fourfold to Sh1.1 billion from Sh297 million in 2012 after its volume of non-performing loans tripled to Sh1.9 billion last year.

Total operating expenses ballooned 40 per cent or Sh1.6 billion to Sh5.4 billion on the back of increases staff costs and expenses set aside as an allowance for bad loans.

The bank has however moved to appease shareholders with a bonus issue in the ratio of one new share for every 10 held – and kept total dividend payout at Sh1 a share.

NIC saw its deposit costs drop to Sh4 billion from Sh5.7 billion, translating to savings of Sh2.6 billion that is higher than the additional profit of Sh1.7 billion.

The regional lender has operations in Uganda and Tanzania as well as an investment banking arm NIC Capital.

ALSO READ: NIC Bank puts on hold expansion outside E. Africa

NIC, closely watched by the family of the late Philip Ndegwa, in September last year hired John Gachora as managing director to succeed James Macharia who is Health secretary.

Mr Gachora has put on hold NIC's plans to open foreign subsidiaries saying he wants to consolidate its present operations.

The bank's loan book grew by Sh11.9 billion last year to Sh83.4 billion while customer deposits was Sh91.5 billion as at December 2013.

NIC Bank stock was quoted at Sh62.50 on Friday 0930 GMT at the Nairobi bourse, up Sh0.50 from Thursday's closing price and has gained 5.0 per cent since the beginning of the year.

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Source: Business Daily (Kenya)

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