NCBA profit rises 73pc on high interest income

NCBA branch in Nairobi. FILE PHOTO | NMG

By VICTOR JUMA
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Summary

• The lender’s net profit stood at Sh2.8 billion in the review period compared to Sh1.6 billion a year earlier.
• It marks the highest profit growth among the major banks that have announced their results so far.

NCBA Group #ticker:NCBA reported a 73.8 percent jump in net earnings in the first quarter ended March, helped by higher interest income and lower provisions for bad loans.

The lender’s net profit stood at Sh2.8 billion in the review period compared to Sh1.6 billion a year earlier.

It marks the highest profit growth among the major banks that have announced their results so far and is followed by Absa Bank’s 23.7 earnings jump to Sh2.4 billion in the same period.

The bank’s provision for defaults declined by Sh1.1 billion to Sh2.6 billion despite non-performing loans rising by Sh722.3 million to Sh39.5 billion.

Interest income from loans and investment in government debt securities rose 8.1 percent to Sh11 billion as the lender increased its purchase of the risk-free assets.

Its stock of government bonds and T-bills expanded by Sh20.6 billion to Sh157.1 billion while the loan book shrunk by Sh2.7 billion to Sh243.1 billion.

Most banks have increased their investments in the debt instruments at a faster pace compared to ordinary loans in an environment where the risk of default has increased in the wake of the economic fallout brought by the Covid-19 pandemic.

NCBA’s bottom-line was also boosted by a Sh479.1 million deferred tax in the review period.

Deferred taxes are obligations arising in the current period but which will be paid in the future.