National Bank of Kenya posts 19 percent net profit growth in first quarter

NBK Managing Director Paul Russo. [Courtesy]

National Bank of Kenya (NBK) has reported Sh184 million in profit after tax for the first quarter ending March 31, 2021.

This was a 19 per cent growth compared to a similar period last year, driven by increased income from loan interest and foreign exchange trading, and lower loan loss provisions.

NBK Managing Director Paul Russo said the quarter was marked by pockets of slow recovery from the effects of the Covid-19 pandemic following the gradual reopening of the economy after a period of subdued activity.

“Having received a boost in Tier 2 Capital from the KCB Group, we are now well-positioned to continue growing the business and supporting our customers to weather effects of the pandemic," he said in a statement.

"Further, the capital injection enhances our compliance with regulatory ratios.”

KCB Group injected $30 million (Sh3.2 billion) in additional debt capital to NBK in April to enhance the bank’s capital buffers.

During the quarter, net interest income grew by five per cent from the previous year to stand at Sh1.9 billion.

The bank said interest income grew by 11 per cent to Sh2.7 billion due to increased volumes of loans and advances as well as sustained recoveries.

There was also a 28 per cent growth in interest paid on increased customer deposits, from transactions on the revamped digital channels.

Total operating costs during the quarter remained relatively flat at Sh2.09 billion, compared to Sh2.11 billion over a similar period in 2020.

This was despite increased investments in enhanced cybersecurity measures and revamp of the core banking system.

“We remain optimistic about prospects for this year in our efforts to turnaround the bank and deliver value for our customers," Mr Russo said.

"As economic activity picks up, the bank’s enhanced capital position puts us in good stead to help our customers walk the path to recovery after the slowdown due to the pandemic."

On the balance sheet side, total assets grew by 14 per cent to Sh114 billion, majorly from net loans and advances, which were up 20 per cent to Sh58 billion.

This was also supported by increased customer deposits which grew by eight per cent to Sh99 billion due to increased flows among existing clients and new accounts in corporate and retail franchises of the bank.