NCBA Group shareholders set to receive dividend next month on profit growth

NCBA Group has announced an interim dividend of Sh2.8 billion or Sh1.75 per share, becoming the only listed bank to declare a payout in the half-year ended June.

The dividend will be paid on September 28 to shareholders on record as of September 14. NCBA had paid an interim dividend of Sh2 per share amounting to Sh3.29 billion for a similar period a year earlier.

“Our promise is that unless we can find a compelling investment option we will … give cash back to our shareholders,” said NCBA chief executive John Gachora.

Other top banks like KCB Group and Standard Chartered Bank Kenya that previously paid interim dividends at the half-year mark skipped distributions in the review period when their defaults rose substantially.

Nairobi Securities Exchange-listed banks have witnessed erratic dividend payments since the outbreak of the Covid-19 pandemic in 2020, with some opting to make interim distributions in the third quarter to September.

NCBA recorded a 20 percent growth in net profit to Sh9.3 billion in the review period, helped by higher interest income and a modest rise in expenses.

Net interest income rose from Sh14.8 billion to Sh17.2 billion on the back of increased lending that took the loan book from Sh250.5 billion to Sh292.38 billion.

Rising interest rates in the review have also helped banks to expand their lending margins, especially for those that managed to keep a lid on defaults and provisions for the same.

NCBA’s total operating expenses grew by Sh1.5 billion to Sh18.6 billion, with the bank reducing its loan loss provision to Sh4.3 billion from Sh5.5 billion.

This was despite gross defaults increasing to Sh42.6 billion from Sh37.2 billion.

“We have very good management on provisions. We are down on provisions across both our core bank and digital bank,” said Mr Gachora.

NCBA’s non-interest income dropped marginally to Sh13.8 billion from Sh14.1 billion.

The bank said that its fee income has increased significantly in the wake of increased investments in technology supporting its digital banking channels.

“It is up to the point that it is almost replacing the drop that we saw in our FX (foreign exchange) income,” Mr Gachora said, noting that the bank saw its income from trading currencies decline by nearly Sh1 billion to Sh4.3 billion.

The bank grew its customer deposits to Sh516.6 billion from Sh468.4 billion, a move that saw interest expenses rise to Sh13.1 billion from Sh10.1 billion.

“I think you see a significant cost of deposits for a lot of banks in the country. Even for us, it has grown, but not as badly,” Mr Gachora said.

Source: Business Daily