NCBA has reported a 121 percent rise in net profit for the year ended Dec 2021 to Kes10.2 billion from Kes4.6 billion on lower provisions for bad loans.  

The lender has cut its cost base by 16.5 percent to Kes33.4 billion from Kes40 billion primarily from a 37.7 percent slash to loan loss provisions which now stand at Kes12.7 billion from Kes20.4 billion a year ago.

"While there is still much more to do, it is clear that our merger is paying dividends," said NCBA Group managing director John Gachora.

Asset quality concerns persist given that the stock of bad loans increased by 12.05 percent year on year to Kes44.34 billion, impacting on non-performing loan ratio that increased by 134 basis points to 16.02 percent compared to 14.68 percent in 2020 well above the current industry average of 13.10 percent.

In the period, NCBA's operating income has meanwhile improved by 6 percent to Kes49.2 billion compared to Kes46.4 billion reported in 2020.

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Subsequent to the impressive performance print, the board has recommended the payment of a Kes2.25 final dividend taking the bank's total payout to Kes3 per ordinary share after Kes0.75 interim dividend payment.

This year, the bank plans to open 12 new branches as it continues to firm up its countrywide presence. At the same time, however, the lender is set to consolidate five of its branches located in similar areas.

"One significant thing customers consider when opening an account is proximity to a branch. It is the most significant factor," said Mr Gachora.

"We also observed the bank going against industry trend of doing away with brick and mortar through opening 13 new branches in 2021 with plans to open 11 more in 2022," analysts at AIB-AXYS said.

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