National Bank Q3 profit dips to Sh521m as bad loans rise

National Bank of Kenya (NBK) has recorded a 76.8 percent slump in its third quarter net profit.

During the period ended September, the bank’s net profit stood at Sh521 million, down from Sh2.2 billion a year earlier.

This has been attributed to the growth in non performing loans which stood at Sh29.2 billion up from Sh6.4 billion during the same period in 2015.

The bank’s loan book during the period stood at Sh62.2 billion.

This saw the bank set aside Sh1.9 billion to cover the bad loans.

The Central Bank of Kenya introduced new requirements for banks earlier in the year to adequately cover for the NPLs, a move that has seen a number of banks record a reduction in profit.

National Bank is particularly under the spot over its 2015 financial performance after it was discovered the bank had been under stating the level of its bad loans.

The bank has in 2016 had to adhere to strict financial reporting rules.

“Through consolidated efforts of the board of directors and the bank’s management team, there is continued strengthening of risk management and corporate governance towards delivering sustainable value for all stakeholders,” National Bank said in a statement.

During the period, National Bank’s net interest income grew marginally to Sh10 billion from Sh9.7 billion.

The bank has reached to the government, which is the majority shareholder, to inject capital to strengthen its operations.

The National Social Security Fund owns 48 percent of the bank while the Treasury holds a further 22.5 percent stake.

However an impasse between the anchor shareholders has seen National Bank delay plans to raise Sh13 billion through a rights issue initially slated for 2013.

The bank continues to struggle due to capital inadequacy which needs to be addressed.

Report by Grace Kabura