By Douglas Muriithi
On 1st October 2019 NIC Group PLC (NIC) and
Commercial Bank of Africa Limited (CBA)
completed the merger of both institutions, the
transaction was accounted for in accordance
with IFRS 3 – Business Combinations.
The Q1 2020 financial statements of the bank
are prepared on a prospective basis (a
continuation of CBA), representing 3 months
performance of NCBA Bank (merged bank);
prior year comparatives are those of CBA Bank.
The consolidated financial statements are also
a continuation of the financial statements of
CBA with an adjustment to capital to reflect the
legal capital of NIC. The prior year
comparatives are those of CBA.
The Group’s fundamentals remained strong in
the first quarter of the year with overall positive
volume increases, ending the quarter with a
total assets base at KES 509.6 billion. The
customer base stood at 54 million, deposits
stood at KES 390.5 billion, while the net loan
book closed at KES 245.9 billion.
The underlying trends of the income statement
remained solid, with customer revenue growing,
operating costs on the other hand remained
stable compared to the last quarter of 2019.
The Group continues to pursue integration
efficiencies and synergies.
The Group notes the increase in levels of non-
performing loans especially in the transport and
manufacturing sectors and on the mobile loan
portfolio and has taken proactive steps to
increase provisions coverage through an
increase in its impairment provisions.
The Bank continues to maintain a high liquidity
profile of 55% across the network placing it in a
strong position to withstand the expected
economic downturn as a result of the COVID-19
“The year started strong with promising growth
driven by the optimisms in the East African
economies, however the COVID-19 pandemic
impacted business performance towards the
end of the quarter where we saw reduced
transaction volumes and credit demand,” said
NCBA Group Managing Director, John Gachora.
“NPLs remain a major issue from legacy
accounts for which we continue to provide.
Further stress was seen in the digital business
as a result of a one off increase in limits. We
expect that the impairments seen in the digital
business will normalize during the second
quarter. However, we expect the overall NPL
ratio will continue to be impacted negatively by
the ongoing challenges in the market caused by
Mr Gachora noted the Bank has led the way in
taking capital conservation measures including
replacing an earlier proposed cash dividend
with a bonus share issuance for the financial
At the end of the FY19 the Board had resolved
to recommend to the shareholders the approval
of a final dividend for the year of KES 1.50 per
ordinary share bringing the total dividend to be
paid for the year to KES 1.75 per ordinary share
(2018: KES 1.25).
As part of conserving capital, the Group instead
opted to offer shareholders a bonus share issue
of one share for every 10 shares held.
The planned Integration in the other
jurisdictions where NCBA Group has a presence
is ongoing and is expected to be completed by
the close of the third quarter.
Going ahead, NCBA Bank will continue to
leverage on its core strengths to boost growth.
The Bank’s strategic priorities include:
The Group has put in place a clear action plan
to protect the health and safety of its staff and
customers, enable business continuity, guard
against shocks and reduce costs.
NCBA remains cognisant of the impact
COVID-19 pandemic has caused to personal
lives, businesses and the economies as a
As part of its action plan, NCBA has taken
significant measures to cushion its customers
during this uncertain period. These actions
include: extension of loan repayment periods by
up to 12 months, restructuring of loans with the
Bank absorbing associated bank restructuring
charges and waiving of fees on mobile transfer
and Pesalink cashless transactions. In addition,
the Bank has waived all M-Shwari late payment
sanctions, deferred roll over fees by 30 days
and suspended CRB listing for 90 days.
“Since the pandemic begun, we have
restructured loans worth over KES 30 billion,
offering much needed relieve to thousands of
our customers. We remain steadfast in our
commitment to support our customers to
weather this challenge and are supporting their
requests with a clear view to ensure recovery
post crisis,” said Mr Gachora.
The bank is also committed to supporting the
community during these trying times and in
April pledged KES 100 million to the Kenya
COVID-19 Emergency Response Fund
established to address the pandemic.