NCBA Group PLC announced a 14 per cent increase in its net profit for the third quarter of 2023, driven by strong growth in customer deposits, digital lending, and lower loan loss provisions.
The group posted a profit after tax of KES 14.6 billion for the period ending September 30th, 2023, compared to KES 12.8 billion in the same period last year.
The lender’s profit before tax was KES 18.6 billion, a 2 per cent increase from KES 18.2 billion in Q3 2022.
The group’s operating income rose by 2 per cent to KES 46.7 billion, from KES 45.9 billion in Q3 2022, despite the challenging economic environment caused by the COVID-19 pandemic.
Net interest income increased by 4 per cent to KES 29.5 billion, from KES 28.4 billion in Q3 2022, while the non-interest income decreased by 2 per cent to KES 17.2 billion, from KES 17.5 billion in Q3 2022.
Total assets grew by 14 per cent to KES 679 billion, from KES 596 billion in Q3 2022, mainly due to a 19 per cent increase in customer deposits, which closed at KES 548 billion, from KES 461 billion in Q3 2022.
The loan book expanded by 9 per cent to KES 375 billion, from KES 343 billion in Q3 2022, reflecting the group’s focus on supporting its customers during the pandemic.
The group’s digital lending platform, M-Shwari, continued to be a key driver of financial inclusion and innovation, disbursing KES 695 billion in digital loans, a 33 per cent increase from KES 523 billion in Q3 2022.
In addition, its mobile customers increased by 11 per cent to 35.6 million, from 32.1 million in Q3 2022.
NCBA Group’s provision for credit losses decreased by 27 per cent to KES 6.1 billion, from KES 8.4 billion in Q3 2022, reflecting the improved quality of the loan portfolio and the impact of the debt relief measures implemented by the group in response to the pandemic.
Its non-performing loans ratio improved to 10.8 per cent, from 13.1 per cent in Q3 2022, while the loan loss coverage ratio increased to 67.4 per cent, from 59.8 per cent in Q3 2022.
The group’s capital and liquidity ratios remained above the regulatory minimums, with a total capital adequacy ratio of 17.8 per cent, a core capital adequacy ratio of 15.9 per cent, and a liquidity ratio of 41.9 per cent.
The group’s CEO, John Gachora, said that the Q3 2023 results are attributable to a laser focus on their key strategic priorities to support customers and grow shareholder returns.
“Our Q3 performance continued to be buoyed by the significant contributions of the regional subsidiaries (Tanzania, Rwanda and Uganda) which collectively delivered a profit before tax of KES 2.3 billion (a notable improvement from the loss of KES 312 million posted in Q3 2022),” said Gachora.
On prospects, Gachora commented, “Overall, we remain optimistic on full-year performance prospects. The risks to this outlook, of course, are many but largely stem from an even more uncertain external environment, notably the expectation that interest rates will remain “higher for longer” to bring inflation within target.
