The NCBA Group today posted a 56 percent growth in profit after tax for the period ending December 2019 to Kes.7.8 billion from merger gains. The results incorporated the nine months results of the Commercial Bank of Africa Limited (CBA) plus the fourth quarter results of the merged entity.
The lender’s total operating income grew by 59 per cent to Kes.33.7 billion from Kes.21.2 billion posted in the previous year. The bank also realised a Kes.4.1 billion windfall from a bargain purchase resulting from the merger between CBA and NIC completed in October last year.
“Our operating income in the fourth quarter totalled Kes11.6 billion. We have continued to register very impressive growth in advances and deposits over the last two quarters despite being in a merger process,” said NCBA Managing Director John Gachora.
Net interest income rose to Kes.13.3 billion from Kes.9.7 billion in 2018 with net loans and advances to customers doubling to Kes.249.4 billion shillings. Merger costs in the period topped Kes.2.1 billion from the amortization of intangible assets and good-will write-offs.
The merger costs are expected to remain as a recurring item in 2020 as the Group seeks to complete the transition process in its subsidiaries.
“In Rwanda we received regulatory approval at the end of December 2019 but went live as NCBA Rwanda at the beginning of February. The mergers in Uganda and Tanzania will be going live in Q2 2020,” added Gachora.
The Group’s highlighted strategic priorities for the year include the scaling up of its retail banking and deepening its strength in corporate banking and asset finance. Impairment provisions at the bank level increased to Sh5.9 billion from Sh2.1 billion. NCBA said the jump in provisions was driven by higher non-performing loans in the transport and manufacturing sectors and on the mobile loan portfolio.
“Now that we have concluded the merger and established a much stronger bank, I am positive and confident in the business growth prospects going forward.” Added Gachora
NCBA has an asset base of Kes.494.8 billion in the post-merger and a core capital base and liquidity ratio of Kes.63.8 billion from Kes.24 billion and 51.8 percent respectively.
The Group has raised its dividend pay-out by 40 per cent to Kes.1.75 from a 22 per cent growth in earnings per share to Kes.8.69.