NCBA Group reports 56% jump in net profit to $162.3 million

• The Kenyan lender with subsidiaries in Tanzania, Rwanda, and Uganda saw customer deposits close at $4.4 billion, 15.3 per cent, year-on-year.
• Assets grew to $5.5 billion, 18.6 per cent up year-on-year.
• During the year that ended December 31, 2023, NCBA’s loan book grew to $2.5 billion, up from $2.1 billion the previous year, signalling continued demand for credit.

Nairobi Security Exchange-listed bank–NCBA Group PLC has posted a profit after tax of $162.3 million in its full-year 2023, driven by positive operating income and a decline in loan impairment charges.

This was a 56 per cent increase compared to $104.2 million reported by the regional lender during a similar period in 2022.

The Kenyan lender with subsidiaries in Tanzania, Rwanda and Uganda saw customer deposits close at $4.4 billion, 15.3 per cent up year-on-year. Assets grew to $5.5 billion, 18.6 per cent up year-on-year.

During the year ended December 31, 2023, NCBA’s loan book grew to $2.5 billion from $2.1 billion the previous year, signalling continued demand for credit.

NCBA, which co-owns the M-shwari with telco Safaricom, a micro-credit product that offers mobile money loans, disbursed $7 billion in digital loans, a 27.5 per cent increase year-on-year.

Operating income was $480.8 million, 4.5 per cent up year-on-year, as the lender reduced provisions for credit losses by 20.9 per cent to $69.4 million.

“The business has sustained growth momentum in line with our five-year strategic plan, which has positively enhanced shareholder value while supporting customers amidst a challenging macro-economic environment,” Group Managing Director John Gachora said.

Read also: NCBA Bank Expansion into East Africa

Regional subsidiaries for the NCBA Group

The group’s regional subsidiaries (Tanzania, Rwanda and Uganda) collectively delivered a profit before tax of $22.6 million, a notable improvement from the loss of $2.3 million posted in the full year 2022.

“These outstanding results were driven by the Group’s turnaround strategy in Tanzania through recalibration of the business model and a rightsizing of the operating models in Uganda and Rwanda to accelerate growth,” said Gachora.

To build a stronger brand, the Group launched and trained its over 3,000 employees on the NCBA Way service behaviours.

The relaunch of NCBA’s Service Charter reiterated the commitment to deliver on customer promises, management noted during the release of the financial results in Nairobi.

NCBA continues its journey to increase customer accessibility across the regional markets in which it operates. The Group now boasts a branch network of 109, having opened eight branches in 2023.

The Group’s Asset Finance market share and leadership position reached 34 per cent while retail asset finance disbursements increased by 18 per cent, enabled by stronger relationships with distinctive strategic partnerships, according to management.

The partnerships were further scaled through the product launch of the logbook loans, among other partnerships in the automotive industry.

With the East African region recording continued growth in digital penetration, digital credit remained a key focus area for the lender to help customers manage their financial well-being.

The $7 billion in digital lending for the period saw over 60 million customers benefit in the region and beyond, with mobile transaction volumes growing 37 per cent year-on-year.

Read also: NCBA, State Agency roll out affordable mortgage facility

Sustainability

Through the “Change the Story” platform and together with multiple strategic partners, NCBA made progress on its 15 sustainability commitments.

More than 3,000 students and teachers were impacted through education programmes, over 344,000 trees were planted, 7,000 golfers participated in driving inclusive regional sports, and Electric Vehicle charging stations were installed.

On the commitment to mobilise $226.4 million of green and sustainable financing, NCBA joined forces with Proparco, a subsidiary of the AFD Group, to unlock a $50 million facility.

The funding aims to foster sustainable economic development and promote diversity, equity, and inclusion.

Read also: African Central Banks Unite to strengthen Intra-African Payment Systems

Bancassurance

With insurance increasingly becoming a basic financial need, NCBA announced its intention to acquire 100 per cent of AIG Kenya Insurance Company Limited, subject to regulatory approvals.

According to management, by bringing together NCBA’s physical and digital distribution platforms and AIG Kenya’s insurance capabilities, the transaction will unlock the Group`s ambition to become a universal bank and catalyse deeper market penetration of insurance in Kenya and the region.

“Looking ahead to 2024, we will continue to execute within the Group`s strategic framework cycle, which is now in its final year. The prevailing economic uncertainties will require increased investment in enhancing our customer experience and the collective strengths of our diversified business model to sustain shareholder return,” said Gachora.

The Group`s strong performance enabled the Board of Directors to recommend a final dividend declaration of Ksh3.00 ($0.023) per share, bringing the total dividend for the year to Ksh4.75 ($0.036) per share.

Apart from the EAC region, NCBA Group also has a presence in the Ivory Coast, serving over 60 million customers, making it the largest banking group in Africa in terms of customer numbers.

It offers a broad range of financial products and services to corporate, institutional, SME and consumer banking customers, with a network of over 100 branches. It continues to play a key role in supporting Africa’s economic ambitions.

Read also: East Africa’s largest insurance company seals Bancassurance deal

Kenya’s banking sector

Central Bank of Kenya has maintained that the country’s banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios.

The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.8 per cent in December 2023 compared to 15.3 per cent in October 2023.

Decreases in NPLs were noted in the energy and water, manufacturing, agriculture, building and construction and transport and communication sectors.

“Banks have continued to make adequate provisions for the NPLs,” CBK governor Kamau Thugge said during the recent Monetary Policy Committee, which revised upwards CBK’s base lending rate to from 13 per cent from 12.50 per cent, to tame the still high inflation in the country.

Commercial bank lending to the private sector grew to 13.9 per cent in December 2023 compared to 13.2 per cent in November.

Strong credit growth was observed in manufacturing (20.9 per cent), transport and communication (20.8 per cent), trade (13.1 per cent), and consumer durables (9.9 per cent).

“The number of loan applications and approvals remained resilient, reflecting sustained demand particularly for working capital requirements,” Thugge said.

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