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NCBA Group PLC Reports a Pre-tax Profit of KES 6.4 Billion in Q1 2023 Results

May 25, 2023

NCBA Group PLC has posted a profit before tax of KES 6.4 billion in its Q1 results ending March 31st 2023, which is a 32 per cent increase compared to KES 4.8 billion reported during a similar period last year.
The Group registered a profit after tax of KES 5.1 billion representing 49 per cent growth up from KES 3.4 billion in Q1 2022.

Summary Key Highlights

  • Assets grew to KES 629 billion, 7 per cent up year on year
  • Customer deposits closed at KES 500 billion, 7 per cent up year on year
  • NCBA Group disbursed KES 223 billion in digital loans, a 37 per cent increase year-on-year
  • Operating income of KES 15.5 billion, 18 per cent up year on year
  • Operating profit before loan loss provisions of KES 8.3 billion, 10 per cent up year on year
  • Provision for credit losses was KES 2.0 billion, 23 per cent down year on year
  • Profit before tax of KES 6.4 billion, 32 per cent up year on year
  • Profit after tax of KES 5.1 billion, 49 per cent up year on year

Growth in profitability was attributed to increased operating income and a decline in loan impairment charges by 23 per cent. Despite the tough macroeconomic conditions, the Group’s prudent management of credit risk has resulted in an improved NPL ratio and a reduced cost of risk.

Commenting on the results, NCBA Group Managing Director, John Gachora remarked, “These strong operating results are attributable to continued focus on our strategic priorities, growth in customer numbers and improvement in regional entities profitability. Our market-leading forex capabilities have led to an increased customer base and transaction volumes.”

Business Highlights

NCBA’s strategic priorities remain unchanged as the Group heads into the second quarter: Become a distinguished brand known for customer experience, Scale retail banking to expand distribution, deepen leadership in corporate banking and asset finance, drive digital transformation, and develop a high-performance culture.

The Group`s regional footprint across 5 key markets in Africa; Kenya, Uganda, Tanzania, Rwanda and Ivory Coast has increased the opportunity to be relevant to more customers. All regional subsidiaries are contributing positively to the Group following 2022 turnaround efforts and increasing the Group’s diversification of revenues.

“We have a stable and growing deposit base which is an indication of our ability to invest and attract more retail and corporate customers by offering a greater superior experience and convenience through a bigger network. Our systematic branch expansion has allowed us to cover 26 counties in Kenya, and we expect 36 in 2023 with a target to add another 10 in 2023 which will enhance job opportunities across the regions we operate in….” said Gachora.

The affordable housing initiative of 105% home financing offered by NCBA at a 9.5% interest rate with up to 25 years of repayment is aligned with Government commitments to address affordable housing needs and cost of living. As the market leader in asset finance, NCBA advocates for the adoption of innovative solutions that meet the needs of the market. Partnerships signed with Delux Motors and D.Light Ltd provided unique financing solutions for a growing motor industry that has also embraced sustainable energy-based products.

Through NCBA`s Digital Banking Business, the Group continued servicing over 60 million customers with organized mobile lending solutions through partnerships with Telcos across the African region. In the period under review, NCBA maintained its positioning as the most extensive digital banking solutions provider with KES 223 billion in digital loan disbursements representing a 37 per cent year-over-year growth.

The strength of NCBA’s universal business model is bearing fruit. The Group’s Investment Bank which enables its customers to access a wide variety of investment advice and products, supports a savings culture which has seen year-on-year growth. The digitization of client engagement with NCBA’s unit trust products has facilitated the onboarding of over 5,000 new unit trust customers.

NCBA connects company success with social progress. Over 100 students benefited from its 2023 education sponsorship initiative. Through the Change The Story programme, NCBA with a number of partners has so far planted over 7 million trees as a corporate response to reforestation which is aligned with the Government’s target to plant 15 billion trees in the next ten years. NCBA’s continued investment in the sport of Golf through the NCBA Golf series is a significant milestone in promoting and democratizing the sport and uplifting the social and economic livelihood of communities.

Gachora recognized that “While the macro-environment remains suppressed for customers driven by rising inflation costs, forex pressure and market liquidity concerns, NCBA Group`s regional employee footprint of more than 3,000 professionals remains committed to delivering financial solutions that help customers navigate the changing microeconomic environment. Additionally, NCBA’s over 27,000 listed shareholders continue showing investor confidence in one of the fastest growing businesses in the region.”

Looking ahead, Gachora added that the business environment is showing signs of slowing down but the Government initiatives are set to create a more predictable environment for investment. Concerns on forex are being addressed through concerted efforts of the Government, the Regulator and the Banking sector. In the short term, the wide margins seen in forex will disappear but this should spur more customer activity.