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

the pandemic.”

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

year 2019.

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.

About The Author

Leave a Commment

Leave a Comment