The National Bank of Kenya (NBK) emerged from a Sh3 billion loss to post a 1.2 billion net profit in the first nine months to September, attributed to prudent cost management, enhanced operational efficiency and strategic revenue stream diversification.
The 142 per cent growth in earnings is likely to ignite a beam of hope for shareholders of the capital-pressed lender who are crossing their fingers to earn a premium from the sale of the bank to a Nigerian giant, Acess Group.
In March, KCB Group, the mother company of NBK revealed to investors that it was planning to sell the subsidiary at 1.25 times book value.
“We are proud of the upward trend in our performance, which underscores the success of our strategic initiatives focused on operational efficiency, diversified income generation, and robust risk management,’’ NBK boss George Odhiambo said in a financial statement.
He added that they have introduced innovative products and services tailored to customers’ evolving needs, reinforcing their commitment to delivering value to stakeholders.
The bank’s total operating income increased by 16 per cent to Sh9.8 billion, with non-funded income contributing 26 per cent of the total operating income, demonstrating the bank’s success in diversifying its revenue streams.
The net interest income grew by a robust 22 per cent year-on-year, supported by increased lending activities and strong customer engagement.
Total operating expenses declined by 30 per cent compared to Q3 2023 optimisation, largely due to significant one-off expenses in the previous financial year that did not recur in the current year and successes registered in ongoing cost optimisation initiatives.
Provisions for loan impairments were reduced by six per cent, largely due to a reduction in the cost of risk compared to the previous financial year.
Even so, customer deposits declined by 12 per cent while loans and advances remained steady year-on-year, indicating stability in the bank’s core lending activities.
This saw shareholders’ funds increase by 13 per cent, driven by improved profitability.
The lender, however, failed to meet key regulatory capital requirements with the core capital risk-weighted asset ratio sinking to 6.9 per cent, way below the minimum requirement of 10.5 per cent.
