Steve Umidha @Umidhasteve

NCBA Group has announced a profit after tax of Sh4.6 billion for the financial year ending December 31, 2020, in a 42 per cent dip attributed to pandemic knocks.

The virus led to a slowdown in global trade, services and uncertainties which impacted key economic environments including exports, tourism and agribusiness sectors.

It is, however, important to note that this is the first time the lender is announcing full year results as an entity following the successful merger of NIC Group PLC and CBA in October 2019.

During the period under review, the group maintained a strong operational performance, with an operating income growth of 38 per cent to Sh46.4 billion.

Operating profit, before provisions and exceptional items, increased by 37 per cent to Sh26.8 billion.

Total assets grew by Sh33billion to close at Sh528 billion while customer deposits went up by Sh43 billion to close at Sh421.5 billion.

During the period, the bank remained well capitalized with core capital of Sh64.8 billion with a liquidity ratio of 55 per cent.

Containment plan

“I am extremely proud of the results that the group delivered. Despite the massive economic impact of COVID-19, our operating income increased 38 per cent to close the year at Sh46.4 billion,” said NCBA Group Managing Director, John Gachora.

“To cushion our business and our customers against the impact of COVID-19, we took unprecedented measures throughout the year.

We implemented a robust cost containment plan that reduced operating expenses and contributed to the operating profit increase.”

The lender Nairobi Securities Exchange (NSE) registered lender, the third largest in the country by asset, restructured Sh78 billion of loans and increased our credit provision reserves by Sh20 billion to address the uncertain economic environment that continues to persist.

“The high levels of credit provisions taken resulted in a year over year drop in profit after tax of 42 per cent,” said Gachora.

NCBA disbursed over Sh432 billion in digital loans for working capital, while also granting loan moratoriums and restructured loans amounting to over Sh78 billion to corporate and retail customers as at end of December 2020.

Merger Conclusion

However, the rate of impairments by the lender increased due to delayed repayments and an assessment of additional stress that was expected as a result of the pandemic which hugely contributed to a decline in net earnings.

During the period under review, the bank rationalised 14 branches that were co-located or in close proximity following the successful conclusion of the merger.