National Bank of Kenya (NBK) cut its non-performing loan book by 20 percent during the 2019 financial year ending December, signaling strong recovery for the business following its acquisition by KCB Group Plc in September.
According to financials released on Thursday, the stock of NPL stood at KES25 billion, down from KES31 billion in 2018, as a result of an aggressive recovery strategy during the period.
The gains were however diluted by higher provisions for loan loss, at KES1.9billion, compared to KES185 million the previous year, effectively hurting the bottom-line. Consequently, the Bank posted a loss after tax of KES 302 million for the period.
“We spent the last quarter of the last financial year, following the acquisition, building a firm foundation for the bank’s recovery and takeoff. We have also been on an aggressive loan recovery drive. We are optimistic of a better year ahead,” said NBK Managing Director Paul Russo while releasing the results.
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The Bank’s total operating income for the year grew by 5% to KES8.4 billion, driven by increased interest income from loans and advances and higher in non-interest income from innovations, launch of new products and strategic partnerships.
Cost management strategies delivered a 3% drop in total operating expenses (excluding loan provisions) from KES7.3 billion to KES7.1 billion.
From a balance sheet perspective, assets stood at KES111.9 billion. Customer deposits stood at KES 86 billion, while net loans and advances, on the other hand, reduced marginally by four per cent over the same period as a result of reduced loan book and increased provisioning.
Following the acquisition, KCB Group injected KES5 billion in fresh capital which has significantly improved NBK’s capital buffers and enhanced capacity to underwrite new loans and mobilize more deposits.
“This has further boosted our optimism about the future of the Bank. We see a brighter outlook going forward with a strong growth pipeline across business segments” said Mr Russo, who is also the Group International Business Director at KCB Group Plc.
The Bank’s liquidity position improved to 46.1 per cent, compared to 43.1 per cent the previous year.