NCBA Group PLC has recorded a pre-tax profit of KES 2.4 billion for the quarter ending March 31, 2020.
Total operating income for the quarter was KES 10.9 billion and profit after tax was KES 1.6 billion.
“The year started strong with promising growth driven by the optimisms in the East African economies, however the COVID-19 pandemic impacted business performance towards the end of the quarter where we saw reduced transaction volumes and credit demand,” said NCBA Group Managing Director, John Gachora.
“NPLs remain a major issue from legacy accounts for which we continue to provide. Further stress was seen in the digital business as a result of a one off increase in limits. We expect that the impairments seen in the digital business will normalize during the second quarter. However, we expect the overall NPL ratio will continue to be impacted negatively by the ongoing challenges in the market caused by the pandemic,” he added.
The bank’s net loan book closed at Kes 245.9 billion.
Mr Gachora noted the Bank has led the way in taking capital conservation measures including replacing an earlier proposed cash dividend with a bonus share issuance for the financial year 2019.
On October 1, 2019 NIC Group PLC (NIC) and Commercial Bank of Africa Limited (CBA) completed the merger of both institutions, the transaction was accounted for in accordance with IFRS 3 – Business Combinations.
The Q1 2020 financial statements of the bank are prepared on a prospective basis (a continuation of CBA), representing 3 months performance of NCBA Bank (merged bank); prior year comparatives are those of CBA Bank. The consolidated financial statements are also a continuation of the financial statements of CBA with an adjustment to capital to reflect the legal capital of NIC. The prior year comparatives are those of CBA.
The Group’s fundamentals remained strong in the first quarter of the year with overall positive volume increases, ending the quarter with a total assets base at Ksh. 509.6billion.
The customer base stood at 54 million, deposits stood at Ksh. 390.5billion, while the net loan book closed at Ksh. 245.9billion.
The underlying trends of the income statement remained solid, with customer revenue growing, operating costs on the other hand remained stable compared to the last quarter of 2019.
The Group continues to pursue integration efficiencies and synergies.
The Group notes the increase in levels of non-performing loans especially in the transport and manufacturing sectors and on the mobile loan portfolio and has taken proactive steps to increase provisions coverage through an increase in its impairment provisions.
The Bank continues to maintain a high liquidity profile of 55% across the network placing it in a strong position to withstand the expected economic downturn as a result of the COVID-19 pandemic.
At the end of the FY19 the Board had resolved to recommend to the shareholders the approval of a final dividend for the year of Ksh. 1.50 per ordinary share bringing the total dividend to be paid for the year to Ksh.1.75 per ordinary share (2018: Ksh. 1.25).
As part of conserving capital, the Group instead opted to offer shareholders a bonus share issue of one share for every 10 shares held.