NCBA reaps benefits of merger in double profits
NCBA Group has started reaping the gains of post-merger with net profit more than doubling to hit Sh10.22 billion for the year ending December 2021, representing 124 per cent increase from Sh4.6 billion registered in 2020.
The lender attributed the profit growth to strong operational performance, recording Sh2.7 billion growth in operating income and significant decline in loan impairment charges of Sh7.7 billion at the back of its successful NIC Group Plc and CBA Bank merger in 2019.
“While there is still much more to do, it is clear that our merger is paying dividends. The results are a reflection that we are delivering on our strategy despite the headwinds introduced by Covid-19,” Group Managing Director John Gachora said.
Shareholders have also not been behind with the board proposing a total dividend of Sh3 per share for the year 2021, which is part of the interim dividend of Sh0.75 per share, following the strong performance.
The closing date for the determination of entitlement to dividend is slated for April 13, 2022, the group said in a statement. During the period under review, the company’s total assets surged by 12 per cent year on year to Sh591.1 billion from Sh528 billion recorded in the previous financial year.
This is the second time the group is announcing its full financial year results, attracting 11 per cent increase in customer deposits to Sh470 billion from Sh422 billion in 2020.
Banking channels
As the lender finalised the post-merger consolidation of its mobile banking channels, NCBA supported its customers by disbursing total digital loans of Sh584 billion, by 35 per cent increase from the previous Sh432 billion.
“This exercise was intended to deliver merger cost synergies and to provide a unified platform from which to elevate customer experiences,” the group stated.
Gachora, however, noted that the massive closure of businesses due to Covid dealt a huge blow to the company’s Stawi, a digital credit product designed for the micro, small and medium enterprises (MSMEs) as credit uptake downsized in 2020/21.
It reported a cost to income ratio of 42.2 per cent, a flat rate in the same period last year and operating profit before loan loss provisions of Sh28.4 billion, 6 per cent up year on year. The lender’s loan impairment charges fell to Sh12.7 billion, 38 percent drop during the assessment period attributed to loan repayments during the post-lockdown economic activities.
Digitisation disruption
However, non-performing loans coverage ratio surged to 73.6 per cent, from 60.9 per cent witnessed previously.
The company is targeting to open additional 12-15 branches this year despite digitisation disruption that has seen most banks move away from the traditional banking systems.
This will be in addition to 13 branches opened in 2021 across Mombasa Nyeri, Karatina, Embu, Naivasha, Ngong, Ruiru, Kakamega, Bungoma, Kiambu, and Kericho.
In terms of regions, the lender’s Tanzania subsidiary performed poorly, recording a loss of Sh940 million in 2021.
Uganda’s two-year lockdown that interrupted the country’s cash-based economy left the bank with Sh765 million loss. The lender is, however, focusing on its strategic initiatives anchored on customer experience, retail banking, deepened market leadership in corporate banking and asset fiance, enable digital transformation, and environmental protection.
It has signed various partnerships to strengthen its asset finance, bolster property businesses, facilitating customer deposits and providing support to SMEs. These include Isuzu, DT Dobie, Toyota, Simba Corp, and CMC Motors, among others .
