NIC Bank announced Q1 2016 results marking a marginal 0.3% decline in Profit After Tax mainly weighed down by a jump in loan loss provisions which stood at stood at KES 1.3 Billion from Ksh 421 Million in Q1 2015. Loan loss provisions were mainly attributed to 5 large clients who accounted for over 70% of provisions. Excluding loan loss provision, operating income jumped 46.8%.
Non Performing Loans ratio stood at 7.3%, sustaining NIC Bank’s higher than Tier 2 average NPL ratio. NPLs were split mainly in trade sector (49.7% of NPLs), manufacturing (19.5%) and personal (10.8%). Overall, with regards to balance sheet, NIC bank has now centralized its deposit pricing but individualized asset pricing in a bid to increase its pricing efficiency.
Foreign exchange income was up a marginal 0.3%y/y, though the bank noted positive performance in the Kenya unit (FOREX income up 17.5%y/y) mainly due to increased volumes from its trade customers. Fees and commission income was up 10.3%y/y with management continuing to focus on improving cross selling ratios as well as alternative channel banking.
During the quarter, the bank’s branches became independent units and were required to cater for their cost and are appraised on income. Corporate segment performance was poor with operating income up just 5%y/y. Going forward, the bank plans to continue data mining its customers to cross sell more especially through its asset finance unit. Notably, its asset finance unit has regained its top position with market share currently at 27%.
Source; SIB, Kenyanwallstreet, NSE
