NCBA Group #ticker:NCBA has posted the third biggest drop in profit among Tier I banks as lenders were forced to raise provisions for loan defaults in the wake of Covid-19 -induced economic difficulties facing borrowers.
Post-tax profit sunk 41.71 per cent to Sh4.57 billion for 2020 compared with a year earlier, the lender said on Monday when it released its first full-year performance following the successful merger of NIC Group and CBA in October 2019.
Provisions for bad loans more than tripled to Sh20.44 billion as borrowers faced economic hardships such as job losses and low consumer spending.
NCBA’s fall in profit for last year is the third sharpest after DTB Group’s #ticker:DTB 52.14 per cent plunge to Sh3.25 billion and Absa Kenya’s #ticker:ABSA 43.8 per cent to Sh4.2 billion.
Equity Group #ticker:EQTY has posted the softest drop in profit among the top banks at 11.6 per cent to Sh19.8 billion, while the largest bank by assets, KCB Group #rticker:KCB, reported a 22 per cent slide to Sh19.6 billion.
“In a year of unprecedented challenges for our business, the banking sector and the economy at large, 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,” NCBA Group managing director John Gachora said in a statement.
Net interest income nearly doubled to Sh25.49 billion, representing a 91 per cent jump, while non-interest income rose by three per cent to Sh20.94 billion.
The loan book largely remained flat at Sh248.50 billion compared with Sh249.36 billion a year earlier.
The board has proposed a dividend payout of Sh1.50 per share for 2020 after it reversed payouts for 2019 replacing them with bonus share of one for every 10 held, citing Covid-19 uncertainties.