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National Bank net profit drops 84pc on reduced lending

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National Bank chief executive Wilfred Musau. FILE PHOTO | NMG 

National Bank of Kenya’s #ticker:NBK (NBK) after-tax earnings in the first nine months of trading ended September 2018 dropped by 84 per cent to Sh21.97 million owing to reduced lending.

The decline, from the previous year’s Sh138 million, was mainly driven by reduced interest and non-interest income. While interest income shrunk by 10.5 per cent to Sh6.32 billion, non-interest income dropped by 16.3 per cent to Sh1.51 billion.

Loans and advances to customers dropped by Sh9.9 billion or 17 per cent to Sh48 billion when compared to last year’s nine month position of Sh57.88 billion. This knocked down its interest income from loans and advances by 18 per cent to Sh3.09 billion.

The 16.5 per cent drop in operating expenses to Sh5.17 billion, due to reduced level of provisioning for non-performing loans was not sufficient to cancel out the fall in operating income.

Total operating income for the period was Sh5.6 billion, a 12 per cent reduction from Sh6.3 billion recorded in the same period last year. The management attributed this to decline in lending rate and reduction in gross loan and advances.

The bank’s core capital stood at Sh2.34 billion at the end of September 2018, about four times thinner than the Sh9 billion it had in September last year.

At current position, the bank is Sh1.34 billion above minimum capital required, a situation that puts brakes on its ability to expand its loan book.

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