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NBK Announces Sh106m First Quarter Net Profit

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National Bank of Kenya (NBK) has posted a Sh106.3 million net profit for the first quarter ended March 31, 2019, effectively rebounding from a net loss of Sh278.5 million incurred last year.

This improved performance is attributed to higher interest funded income and a reduction in interest expenses.

“This is in line with our strategy of improving our net interest margin by lowering the cost of funding and accelerating recoveries and remediation of the NPL book,” said NBK Managing Director and CEO Wilfred Musau.

Investment in government debt paper was the main contributor to the increase in interest income from Sh1.9 billion to Sh2.3 billion. Meanwhile, interest expense dropped by 17.8 percent to Sh632.6 million from Sh769.4 million.

However, the lender’s non-interest income, earned mainly from fees and commissions on advances and loans, fell 9.2 percent to stand at Sh501.7 million.

The bank saw operating expenses rise for Sh1.7 billion to Sh2 billion over the quarter attributed to a sharp increase in asset devaluation.

NBK remains in breach of regulatory ratios after key shareholders – National Social Security Fund and National Treasury failed to honor their pledge to inject Sh4.2 billion into the lender by September last year.

Nevertheless, the bank’s capital crisis is expected to be resolved by the upcoming takeover by KCB.

The proposed takeover which still requires NBK shareholder and regulatory approval will see NBK operate as a short term KCB subsidiary before incorporation into KCB Group.

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