NCBA to pay Sh7.8 billion dividend after profit rise

NCBA Group is set to pay a record Sh7.8 billion in shareholder dividends following a 56.2 per cent jump in net profits for the year ended December 31, 2023.

The higher dividend represents a total payout of Sh4.75 a share after the lender added a Sh3 final pay to the interim Sh1.75 dividend declared in September last year.

This compares to a total dividend of Sh7 billion in 2022 or a Sh4.25 per share total payout representing an 11.42 per cent growth in shareholder pay.

The record dividend comes amid a rise in NCBA’s net earnings to Sh21.4 billion from Sh13.7 billion previously, on stronger operating income and contained costs.

Foreign exchange

The lender’s total operating income rose to Sh63.6 billion from Sh60.9 billion supported by a 13 per cent jump in net interest income.

“We have recorded a very strong return to our shareholders and our underlying performance shows momentum in all our financial drivers,” NCBA Group Managing Director John Gachora said.

Non-interest-funded income, however, slacked slightly, dipping by four per cent to Sh29 billion from Sh30.2 billion on lower foreign exchange trading income.

On the flipside, the bank contained its cost base as total operating expenses only rose marginally to Sh38.2 billion from Sh37.9 billion previously.

Loan recoveries

This is as the bank cut its loan-loss provisions by 30 per cent to Sh9.1 billion from Sh13 billion previously.

The lower provisions were supported by a decline in the bank’s net non-performing loans ratio which eased to 12 per cent from 12.7 per cent previously sticking well below the industry average of 14.8 per cent as of December 2023.

Gross NPLs for the group, however, edged higher by 13.8 per cent to hit Sh44.5 billion from Sh39.1 billion.

The bank noted that it had sufficiently provisioned for expected credit losses and expects bigger loan recoveries in 2024.

Customer deposits

“When you look at our stock of NPLs, there is a lot of mediation going on and there are a couple of names that are on the right track and we would expect to upgrade them. As such, we do not expect a significant increase in non-performing loans,” said NCBA Group Director of Finance David Abwoga.

During the year, NCBA’s balance sheet expanded by 18.5 percent as assets hit Sh734.6 billion from Sh619.6 billion in 2022.

The group’s net loans and advances to customers increased by 20.8 per cent to Sh337 billion from Sh278.9 billion, while customer deposits were up 15.2 per cent at Sh579.4 billion.

NCBA targets to pay the final dividend to shareholders on or immediately after May 29.

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