NCBA Group Posts Ksh 6.5 Bn Q3 Profit; Concerns on Asset Quality

NCBA Group PLC has posted a profit before tax (PBT) of KES 11.1 billion in its quarter three results ending September 30th 2021.

NCBA Group PLC  says it’s quarter three results ending September 30th 2021 recorded a Ksh 6.5 billion in Profit After Tax (PAT), a 159 per cent increase compared to Ksh 2.5 billion the same period in 2020.

Growth in profitability was attributed to an increase in operating income to Ksh 36 billion (up Ksh 3.2 billion), driven by higher customer activity and a decline in loan impairment charges of Ksh 4.2 billion year over year.

Key Summary Highlights  

  • Asset base rose to Ksh 563 billion, 8% up year on year  Customer deposits closed at Ksh 447 billion, 11% up year on year 
  • Operating income of Ksh 36 billion, 10% up year on year  
  • Cost to income ratio of 43%, an improvement from 46% in the same period last year 
  • Operating profit before loan loss provisions of Ksh 20 billion, 17% up year on year  
  • Loan impairment charges for the period at Ksh 9.2 billion, 31% down year on year  
  • Non-Performing loans coverage ratio increased to 70%, from 58% in the same period last year  

“Our operating results since the beginning of the year demonstrate that the actions we have taken to strengthen and enhance the Group’s performance are well on track. We continue to exercise a conservative approach towards credit risk management,” NCBA Group Managing Director, John Gachora said.

However, Sterling Capital Analysts say the Group continues to show negligible growth in operating income which is in the single digits and of greater concern, shrinkage in its loan book.

“Further, the continual growth in its NPL’s, even while the loan book is shrinking, points to rapidly deteriorating asset quality which will necessitate the need to increase loan loss provisions further going forward,” Sterling Capital emphasised.