NIC Bank net profit drops 4.4 pc on rate cap, sluggish economy
NIC Group’s #ticker:NIC net profit for 2017 dropped by 4.4 per cent to Sh4.14 billion following a drop in interest income that the lender blames on the rate cap and a slow economy.
Although the lender grew its loan book by Sh5.3 billion to Sh 119.8 billion, the interest income from this line of lending dropped by 13.2 per cent to Sh13.15 billion. Gross non-performing loans rose by Sh730 million to hit Sh14.3 billion.
Interest income from government securities on the other hand was up by 39.3 per cent to Sh5.21 billion, after the lender increased its stock of securities by Sh24.2 billion to Sh51.5 billion.
“The yield on loans and advances are declining as more and more customers have challenges in meeting their credit obligations. However this was offset by government securities where due to increased investment we have seen higher income,” said NIC Bank finance and strategy director David Abwoga.
The bank is now set to pay shareholders a lower dividend of Sh1 per share for the 2017 financial year, down from the Sh1.25 they were paid last year.
Shareholders will however enjoy a bonus share issue this year after NIC proposed a one for 10 issue, which translates to an additional 64 million shares going into issue.