NCBA net profit surges 56% to Sh21Bn

NCBA Group has reported a 55.7 percent surge in net profit, rising to Kes21.5 billion for the year ended December 2023. The growth comes from a position of amplified revenue streams, stoked further by the easing of costs.

The regional lender’s operating income grew by 4.5 percent to Kes63.6 billion compared to the Kes60.9 billion reported previously.

NCBA experienced an 18.6 percent growth in assets to Kes735 billion, along with a 13 percent increase in net interest income to Kes34.6 billion. Customer deposits surged by 15.2 percent, reaching Kes579.4 billion from Kes502.6 billion previously even as loans and advances went up by 20.8 percent to Kes337 billion.

“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,” NCBA Group CEO John Gachora said during an investor briefing.

With the balance sheet expanding to Kes734.6 billion, Mr Gachora added, “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.”

The bank’s subsidiaries in Tanzania, Rwanda, and Uganda delivered a combined gross profit of Kes3 billion, a turnaround from Kes308 million loss suffered during a similar period in 2022.

NCBA’s higher net interest income during the period helped offset a 4 percent dip in non-funded income, which was mainly due to a slowdown in foreign exchange income.

Despite this, NCBA’s total operating expenses remained largely unchanged at Kes38.2 billion compared to Kes37.9 billion in 2022, following a 30 percent drop in the provision for non-performing loans.

Read also: NCBA empowers women traders in Homa Bay

Digital lending

Meanwhile, the lender’s digital lending surged to Kes930 billion for over 60 million customers across Africa, with mobile transactions increasing by 37 percent year-on-year. To enhance its digital offering, NCBA’s Loop Super App experienced significant growth with over 304,000 buyers and more than 10,000 merchants using the platform during the year.

The reduction in loan loss provisions occurred despite a 13.8 percent increase in gross non-performing loans (NPLs) to Kes44.5 billion, with the bank’s NPL ratio remaining below the industry average at 12 percent.

“Our cost of risk has decreased from 4.6 percent in 2020 to 1.2 percent in 2023, demonstrating our ability to lend and collect,” Mr Gachora explained.

The board of NCBA has declared a final dividend of Kes3 per share, bringing the total payout to Kes4.75 per share or a cumulative payout of Kes4.9 billion for the trading period. “This is a very strong return to our shareholders. Our underlying performance shows momentum in all our financial drivers,” noted NCBA Group Managing Director John Gachora.

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