NCBA forex income up 147 percent to Sh12.5 billion

NCBA Group has reported a 147 percent increase in foreign exchange trading income to Kes12.5 billion for the year ending December 2022, a boon for the bank in a period when traders experienced a biting shortage of the US dollar in the markets.

In the 12-month period under focus, importers in Kenya have been grappling with an acute foreign exchange crunch, with Central Bank’s US dollar reserves dropping to their lowest in eight years amid a weakening of the shilling against major global currencies.

The tough market conditions saw Investments, Trade and Industry Cabinet Secretary Moses Kuria early this month come out saying some lenders were making as much as ten shillings from the rate of buying and selling dollars while holding huge reserves despite the shortages.

“We have to talk to the CBK Governor, I know of a bank that was making Kes1 billion from forex business, and last year they made Kes11 billion on FX. Our banks have currency spreads of Kes10, when have we ever had a Kes10 spread and one bank is holding billions of dollars. You should ask the Governor of the Central Bank to be tough on banks holding onto dollars,” Mr Kuria told the National Assembly Trade, Industry and Cooperatives committee.

Read also: Moses Kuria calls for controls on bank forex trading

Financial disclosures show the Group’s foreign exchange income segment posted the highest uptick, driving up NCBA’s profit which increased by 35.3 percent to Kes13.8 billion in the fiscal year from Kes10.2 billion in 2021.

The lender’s loans and advances increased by 14.3 percent or Kes34.9 billion to close at Kes278.9 billion even as earnings from securities increased by Kes4.4 billion to Kes24.8 billion.

In the year, mobile loan disbursements also edged up by 24.8 percent to close at Kes729 billion in a year when customer deposits saw a 7 percent increase to Kes503 billion from Kes470 billion previously.

NCBA has increased loan loss provision by 27 percent to Kes13 billion as gross non-performing loans closed at Kes31.8 billion, an improvement from Kes36 billion reported in 2021.

The rise in the bank’s profitability is also attributable to a higher income, which lifted the Group’s total operating earnings to Kes60.9 billion from Kes49.2 billion a year earlier.

Following the strong performance, NCBA Group has matched its 2021 dividend of Kes2.25 per share, raising the total dividend to shareholders for the trading period Kes4.25 apiece from Kes3 after the inclusion of the Kes2 per share interim dividend paid out in September last year.

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