First family-linked bank Group NCBA has reported an 8.3 per cent rise in its half year profit to Sh.2.6 billion from Sh.2.4 billion last year.
The marginal growth in earnings is largely attributable to higher income streams from lending and other trading activities with both interest and non-interest income marking growth.
NCBA’s net interest income improved to Ksh.11.2 billion from a flat Ksh.5 billion as interest income surged by two-folds to Ksh.20.7 billion.
The lender’s non-interest funded income (NFI) meanwhile improved by 63 per cent to Ksh.10.1 billion on the back of greater flows from fees and Forex trading.
The bank has however been haunted by higher loan-loss provisions which have pushed total costs by 246 per cent to Ksh.17 billion from Ksh.6.9 billion last year.
The loan-loss provisions rose nearly six times to Ksh.7.6 billion from Ksh.1.3 billion driven in large part by uncertainties arising from COVID-19.
“The bank’s business is expected to be impacted by slow growth in lending and revenues in the short to medium term. The impact of the COVID-19 pandemic on bank’s results, including credit quality and provisions, remains uncertain and dependent on several factors including, the spread of COVID-19, further steps taken by the government and the Central Bank to mitigate the economic impact, steps taken by the bank and the time it takes for economic activities to resume to normal levels,” the lender said in a statement.
“The group’s capital and liquidity position is strong and will continue to be the focus area during this period.”
NCBA says it has restructured a total of Ksh.58 billion in customer loans to cushion against the pandemic in line with directives of the banking sector regulator.
The bank’s stock of non-performing loans have nevertheless expanded three-fold to Ksh.38.7 billion from Ksh.12.2 billion.
NCBA board has held back the declaration of an interim dividend for the period in line with its cash preservation stance.
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