National Bank of Kenya today became the latest bank to release its results as the banking industry tried to beat the March 31st deadline for releasing their full year results. The bank recovered from a Ksh. 1.1 Billion loss in 2015 to post a profit of Ksh. 147 Million.

The bank’s total operating income rose by 16% to Ksh. 10.9 Billion. This was on the back of a fall in the interest expense on customer deposits by 31% to Ksh. 3.5 Billion. Both interest income and income from government securities rose by 1% to Ksh. 9 Billion and Ksh. 3.2 Billion respectively. After the rate cap I would have expected that the bank would have increased it’s investment in the risk free government securities hence assuring it good income but that seems not to be the case here.

In the period the total operating expense declined by 3% to Ksh. 10.7 Billion. This can be attributed to a drop in the loan loss provision to Ksh. 2.7 Billion from Ksh. 3.7 Billion in 2015. Director emoluments however increased by 74% to Ksh. 43 Million most probably due to benefits paid to sacked directors. In my opinion the bank needs to manage its costs better if it is to increase its profitability.

Gross non-performing loans rose from Ksh. 11.7 Billion in 2015 to Ksh. 29.9 Billion reflecting the tough operating environment that banks faced in 2016.

Customer deposits fell from Ksh. 110 Billion in 2015 to Ksh. 96.9 Billion. This left the bank with a liquidity ratio of 29.7% against a minimum statutory requirement of 20%.

No dividend payment was declared.