NCBA Group’s conservative provisioning for loan losses has seen the bank’s loan loss provisions increase by 75% in just three months to KSh13.4 billion in September from KSh7.6 billion in June this year. As a result, the bank’s net profit declined to KSh2.52 billion in the third quarter from KSh2.63 billion in the second quarter of 2020.
The tier-one lender says, “….trends show that the rate of impairments is increasing, due to delayed repayments and an assessment of additional stress that could emerge due to COVID-19. The Group will continue to take a conservative provisioning outlook.”
NCBA has disbursed KSh 310 billion in digital loans to small and medium-sized enterprises and individuals in need during the pandemic season. It has also granted loan moratoriums and restructured loans amounting to KSh 76 billion to corporate and retail customers as at end of September 2020.
Customer deposits increased by 3% in the 3 months period to KSh402.6 billion from KSh390.5 billion at the end of June.
NCBA expects a big drop in the 2020 full year earnings compared to the full year earnings reported in 2019. Nonetheless, the lender is confident about its long-term strategy and expects improved performance in the future.
“The earnings for the current financial year are expected to be substantially lower than the earnings reported for the same period in 2019, based on the un-audited financial statements for the 9 months ended 30th September 2020, and projected full-year financial forecasts,” says the bank in the financial report.
NCBA came into existence on 1st October 2019 following the merger of NIC Group Plc and Commercial Bank of Africa Limited.