NIC Bank net profit dips by 3.5pc, increases loan loss provision, lender

NIC Bank has posted a 3.5 per cent dip in its net profit to Sh4.3 billion for the full year which ended December 31, 2016, brought about by a significant loan loss provisions, the lender has told shareholders.

The lender says the additional provisions were taken to support the non-performing loans of a few large corporate customers that were impaired in the previous year, 2015.

Loan loss provisions swell by 120 per cent to its current Sh3.7 billion in the period under review from Sh1.6 billion reported previously (2015).

The overall non-performing loans (NPL) ratio, however, declined year on year from 11.2 per cent to 10.8 per cent.

“2016 was a challenging year with various factors impacting our operating environment but our strategic shift to reach more retail and SME businesses, as well as branch expansion, continued to drive our performance,” NIC Bank’s Group Managing Director, John Gachora, told shareholders in Nairobi.

He added: “NIC Bank continued to roll out strategic partnerships over the course of the year to drive business growth especially around Asset Finance where we continue to be the clear leaders.”

On flipside, the lender’s total assets increased by Sh3.7 billion, while customer deposits remained flat. The bank’s loan portfolio went up by 8.5 percent and now stands at Sh15 billion against a Sh13 billion mark last trading period.

Imperial bank depositors

In June 2016, the Kenya Deposit Insurance Corporation (KDIC) appointed NIC Bank to act as the Assets and Liabilities Consultant for Imperial Bank Limited (in Receivership).

The mandate included, amongst others, an assessment of the quality of Imperial Bank assets and liabilities, disbursement of funds to depositors and other advisory services to KDIC.

So far the bank has disbursed more than Sh10 billion to Imperial Bank depositors.

“The Bank is consolidating its business and relooking at our strategy on the back of the interest rate capping law. The Bank remains a strong institution and has fully complied with the new law, We are re-evaluating our business in this new operating environment and we will be rolling out new products and services to ensure we continue being competitive by investing more in our digital platforms,” Gachora said.

Gachora noted the full effects of the new law would start being felt in the first quarter of 2017 results. The bank declared a first and final dividend of Sh1.25 per share.