NCBA Group #ticker:NCBA has posted Sh7.84 billion profit for the year ended December 2019, the first financial results after the merger of NIC and CBA banks.
The profit is made up of CBA performance for nine months to September and three months of NCBA, making it difficult to make direct comparison with previous financial year.
In 2018, CBA posted net profit of Sh5 billion while that of NIC was Sh4.23 billion. The two entities merged last year through a share exchange transaction and commenced trading as NCBA in October.
The bottom-line was supported by a bargain purchase gain of Sh4.1 billion resulting from the merger. This means the value of the net assets transferred at the completion date was Sh4.1 billion higher than the consideration paid.
The net earnings for the merged entity makes NCBA the fifth most profitable bank in Kenya after KCB #ticker:KCB (Sh25.1 billion), Equity #ticker:EQTY (Sh22.6 billion), Co-operative Bank #ticker:COOP (Sh14.3 billion) and Standard Chartered #ticker:SCBK at Sh8.2 billion.
Net interest income was Sh13.3 billion, while operating expenses were Sh20.36 billion. The merged entity booked Sh2.1 billion as exceptional costs.
This was comprised of Sh1.1 billion related to merger costs such as integration, advisory and legal services while the rest relates to amortisation of intangible assets and goodwill write off on consolidation.
“While the results of 2019 included a number of costs necessary to complete the merger, our underlying performance remained strong” said NCBA Group managing director John Gachora.
“Now that we have concluded the merger and established a much stronger bank, I am positive and confident in the business growth prospects going forward.”
Loan loss provisions during the review period was Sh6.2 billion. The ratio of non-performing loans to the total loan book stood at 12 percent.
Impairment provisions at the bank level increased to Sh5.9 billion from Sh2.1 billion. NCBA said the jump in provisions was driven by higher non-performing loans in the transport and manufacturing sectors and on the mobile loan portfolio.
The board has recommended payment of final dividend Sh1.50 per ordinary share, which when added to interim dividend of Sh0.25 brings total payout to Sh1.75.
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