The National Bank of Kenya (NBK) will continue running on constrained capital after the Treasury and National Social Security Fund (NSSF) missed own-imposed deadline of injecting Sh4.2 billion fresh capital.
NBK on Sunday said that it was still awaiting the money that ought to have come in by end of September, according to the formal commitments made by the Treasury and NSSF in March.
“In March 2018, the principal shareholders gave formal commitment for a comprehensive capital solution. The board notes that this process is ongoing,” said CEO Wilfred Musau.
“The capital injection will unlock and bolster the key pillars of our growth and place the bank in even a better probability path in the long-term.”
But the delay leaves NBK in the dark given that the same government has for long been mulling over merging the bank with other state-owned lenders- Development Bank of Kenya and Consolidated Bank of Kenya.
NBK’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, leaving it significantly in breach of regulatory capital ratios and therefore constrained in its ability to lend.
It is in breach of three regulatory ratios. The bank has now accumulated a loss of Sh5 billion, eating into the capital.
NBK directors were expecting government to inject in tier II capital of Sh4.2 billion through subordinated debt by end of third quarter.
NSSF owns 48.1 per cent of NBK while Treasury holds 22.5 per cent stake, making them the two principal shareholders.
NBK’s nine-month profit has dipped by 84 per cent to Sh21.97 million owing to reduced lending. 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.