NIC Bank Group has announced a 3.9 percent profit after tax drop in its first quarter 2017 financial results released today.
The banking group’s profit dropped to Sh952 million from Sh990.7 million the same period in 2016 dragged down by falling interest income in spite of an expansion of its loan book.
Interest income from loans took a sharp 18 percent dive to Sh3.333 billion compared to Sh4.066 billion in March 2016.
The results reflect increasing pressure on Kenyan banks to maintain a healthy curve on earning in the aftermath of the interest rate capping law that came into force in September 2016.
Curiously, interest expense dropped during the period in which the banking group reported 5.38 percent jump in customer deposits. In the period under review, deposits increased by Sh6 billion to Sh117 billion from Sh111 billion in December 2016. But interest expense fell 21.78 percent in spite of the requirement by law to cap interest on deposits at 70 percent of the prevailing base lending rate of 10 percent.
The bank’s loan book expanded by a marginal 1.61 percent from Sh114 billion to Sh114 billion reflecting an industry wide drop in risk appetite since the interest rate capping law entered into force.
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