Zachary Ochuodho @zachuodho

The NCBA Group’s non-performing loans (NPLs) jumped to 14.1 per cent for the quarter ending March 31 up from 12.1 per cent in the previous period mainly due to negative impact of Covid-19.

Among sectors that have encountered increased exposure include manufacturing (28%), trade (23%), personal household (16%), digital banking (15%) and transport (7%) sectors respectively.

Available data indicates gross loans of the group increased from Sh33 billion in first quarter in 2019 to Sh38 billion during the period thereby increasing the NPL ratio  from 12.1 per to 14.1 per cent.

Speaking while releasing the first quarter results yesterday, Group Managing Director, John Gachora said NPLs remain a major issue, adding that the stress was witnessed in the digital business due to a one-off increase in limits.

Digital business

The group, he added, expects the impairments seen in the digital business will normalise during the second quarter.

“However, we expect the overall NPL ratio to continue being impacted negatively by the ongoing challenges caused by the pandemic,” he said, adding that the disease has had profound impact on economies.

The financial results indicate that the group posted a net profit of Sh1.63 billion from Sh1.3 billion in a similar period in 2019.

It recorded a pre-tax profit of Sh2.4 billion for the quarter under review. The total operating income for the quarter was Sh10.9 billion and profit after tax was Sh1.6 billion.

The financial statements are prepared on a prospective basis (a continuation of CBA), representing three 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.

Results showed that 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 Sh509.6 billion.

The customer base stood at Sh54 million, deposits stood at Sh390.5 billion, while the net loan book closed at Sh245.9 billion.

Operating costs

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 per cent across the network placing it in a strong position to withstand the expected economic downturn as a result of the Covid-19 pandemic.