NCBA Explains How Bank Made KSh 9.8 Billion Profit Despite Economic Challenges, Approves Dividends

• NCBA Group PLC reported a profit after tax of KSh 9.8 billion for the first half of 2024, marking a 5.0% increase compared to the same period in 2023
• Customer deposits grew by 2.4% year-on-year to KSh 529 billion, while total assets increased by 4.3% to KSh 689 billion
• NCBA's board of directors approved an interim dividend of KSh 2.25 per ordinary share, reflecting the bank's solid financial performance

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

NCBA Group PLC has reported a profit after tax of KSh 9.8 billion in the first half of 2024, a 5.0% increase from the KSh 9.4 billion recorded in the same period last year.

The bank reported that customer deposits grew by 2.4% year-on-year to KSh 529 billion, while total assets increased by 4.3% to KSh 689 billion.

In addition, digital loans disbursed during the period rose by 4.0% to KSh 478 billion, underscoring the bank's focus on leveraging technology to enhance financial inclusion across the region.

According to a press statement seen by TUKO.co.ke, NCBA's Board of Directors approved an interim dividend of KSh 2.25 per ordinary share.

How NCBA navigated economic challenges

Despite navigating a challenging economic landscape, the bank attributes its success to strategic management, operational resilience, and diversification across its business model.

NCBA's Group Managing Director, John Gachora, attributed the growth to the bank’s strong financial fundamentals and its ability to adapt to a tightening economic environment.

“Despite some headwinds presented by the current operating environment, our diversified business model continued to demonstrate resilience. Our banking business across the Group delivered a collective PBT (profits before tax) of KSh 11.7 billion in the period.

These outcomes are flat year on year, largely driven by a tight interest rate environment, which has elevated our cost of funds and pressured our profit margins. Despite these challenges, we remain committed to strategically managing our balance sheet and optimising our financial performance to sustain our growth trajectory,” Gachora said.

One key factor in NCBA's success has been a reduction in loan impairment charges, which fell by 38.3% year over year to KSh 2.7 billion.

Non-banking subsidiaries like investment banking, bancassurance, and leasing helped NCBA's performance, generating KSh 0.6 billion in profit, up 56% from the previous year.

The 100% acquisition of AIG Kenya further strengthened NCBA’s position in the financial services industry by tapping into a sizeable KSh 309 billion insurance industry.

This diversification of businesses, Gachora noted, has been instrumental in insulating the bank from economic volatility.

Future outlook

Speaking on the future trends, Gachora remained cautiously optimistic about the economic outlook for the remainder of 2024, noting easing inflation and currency stabilisation as positive indicators for the banking sector.

“The economic outlook for the latter half of the year presents a nuanced blend of optimism and caution. In Kenya, we have observed positive trends, with inflation easing to 4.6% and the local currency stabilising against major currencies. We are encouraged by the government’s commitment to support sustainable growth, maintain fiscal discipline, and continue fostering a favourable financial environment. These efforts will be key in driving economic progress and supporting the ongoing success of the private sector,” Gachora noted.

In response to current economic conditions, NCBA took proactive steps to cushion its customers by waiving monthly account maintenance fees for retail banking clients.

KCB Bank announces largest interim dividend in history

In other related news, KCB Group reported a 6% increase in assets to KSh 1.98 trillion in the first half of 2024, and profit after tax grew by 86%, reaching KSh 29.9 billion.

KCB Group's subsidiaries across East Africa contributed significantly, accounting for 37.8% of pre-tax profits and 34.4% of total assets.

KCB Group's board recommended an interim dividend payout of KSh 4.8 billion, marking the largest interim dividend in the bank's history.

Proofreading by Otukho Jackson, a multimedia journalist and copy editor at TUKO.co.ke