NCBA merger could be paying off as profit shoot to 74 pc

NCBA merger could be paying off as profit shoot to 74 pc. The NCBA Group reported a 74 per cent jump in net earnings in the first quarter ended March, helped by higher interest income and lower provisions for bad loans.

The lender’s net profit stood at Kes 2.8 billion in the review period compared to Kes 1.6 billion a year earlier.

It marks the highest profit growth among the major banks that have announced their results so far and is followed by Absa Bank’s 23.7 earnings jump to Kes 2.4 billion in the same period.

The bank’s provision for defaults declined by Kes 1.1 billion to Kes 2.6 billion despite non-performing loans rising by Kes 722.3 million to Kes 39.5 billion.

Interest income from loans and investment in government debt securities rose 8.1 per cent to Kes 11 billion as the lender increased its purchase of the risk-free assets.

Its stock of government bonds and T-bills expanded by Kes 20.6 billion to Kes 157.1 billion while the loan book shrunk by Kes 2.7 billion to Kes 243.1 billion.

Most banks have increased their investments in the debt instruments at a faster pace compared to ordinary loans in an environment where the risk of default has increased in the wake of the economic fallout brought by the Covid-19 pandemic.

NCBA’s bottom-line was also boosted by a Kes 479.1 million deferred tax in the review period.

Deferred taxes are obligations arising in the current period but which will be paid in the future.

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