This archive report was first published on 21 May 2020.
May 20, 2020 - National Bank of Kenya (NBK) has achieved a significant milestone in its recovery journey, posting a Sh155 million profit after tax for the first quarter of 2020. This represents a 134 percent increase compared to a similar period last year.
The bank's performance was driven by a growth in the loan book and cost management initiatives, according to Managing Director Paul Russo. He noted that the recovery momentum has been slowed down by the COVID-19 pandemic, but the bank is continually innovating to mitigate its impact.
During the quarter, the bank's total operating income grew by 6.7 percent to Sh2.3 billion, driven by increased interest income and fees and commissions. Operating costs remained relatively flat, with prudent cost management absorbing further investments in new branches, digital channels, and systems for operational efficiency.
The bank's balance sheet strengthened, with customer deposits growing to Sh92 billion compared to Sh89.5 billion in Q1 2019. Loans and advances also increased by Sh1.9 billion to Sh47.8 billion, with the boost in operations from the Sh5 billion capital injection from KCB Group Plc.
The financial results indicate a strong recovery by the bank, following its acquisition by KCB Group Plc in September 2019. The Non-Performing Loan (NPL) book shrank by 20 percent for the period ending March 31, 2020, with the bank's total NPL stock standing at Sh25.1 billion compared to Sh31.5 billion last year.
Core capital improved significantly, following the injection of new capital from KCB Group Plc. While this has boosted capital ratios, they still remain marginally below regulatory requirements. The bank's liquidity position improved to 45.7 percent, compared to 40.4 percent the previous year.
Managing Director Paul Russo expressed optimism about the long-term future and sustainability of the bank, stating that the main priority is cushioning customers from the effects of the COVID-19 pandemic while pursuing innovations across offerings, revamping digital channels, and exploring strategic partnerships.
