NATIONAL BANK EMERGING OUT OF THE WOODS

The National Bank (NB) of Kenya's profit before tax increased by 38 percent from Sh 1.5 billion in 2009 to Sh 2 billion in 2010, the chairman of the Bank, Michael Muhindi has said.

Muhindi reported a profit before tax of Sh 2.7 billion for the year ending December 2010, reflecting a 25 percent improvement over the same period in 2009.

The bank attributed this growth to inflation that declined markedly to 4.5 percent in 2010 from 5.3 percent in 2009 as a result of improved food supply and lower energy and communication costs.

However, inflation surged towards the end of the year due to skyrocketing prices of international crude fuel and other food commodities. Thus, the chairman while addressing shareholders during this year annual general meeting (AGM) said the total operating income grew by 24 percent to Sh 7.1 billion from Sh 5.7 billion in 2009.

During the same period, he pointed out operating expenses increased by 23 percent from Sh 3.6 billion in 2009 to Sh 4.4 billion. Interest income grew by 21 percent to Sh 5.4 billion from Sh 4.5 billion. However, interest expense dropped by 8 percent from Sh 1.2 billion in 2009 to Sh 1.1 billion in 2010 due to general reduction of interest rates.

The bank grew its lending to customers by Sh 8 billion which translates to a 58 percent growth. Customer depots also grew from Sh 42 billion to Sh 48 billion a 14 percent increase.

The bank total assets grew by 17 percent to Sh 60 billion in 2010 up from Sh 51 billion as at end of 2009.

The Bank said the significant growth in assets was due to increased deposits, injection of capital and retention of profits. The level of non-performing loans decreased compared to the previous years.

There was also improvement in lending. The bank's lending products are personal loans, asset finance, mortgages, business loans, LPO financing, Insurance Premium finance and agricultural based financing. The bank is looking to introduce more of such products to suit a wider range of customers.

Last year the Bank opened five branches towards the end of the year namely; Malindi, Ukunda, Migori, TSC and Nandi Hills. This year are targeting to open 20 branches in strategic business locations across the country. Already the bank has opened two branches in Westlands and at the Times Tower.

“The Bank is committed to bring its products and services closer to the people,” said the chairman who denied claims by shareholders that some of the board members who are mainly drawn from the government don't attend meeting as per act. “It's only Francis Atwoli who has attended the meetings less than 75 percent – because of his schedule.”

The Bank has rebuild revenue reserves from which the board recommended payment of a first and final dividend of Sh 0.6 per share to the holders of the ordinary and preference shares; and further Sh 0.15 per share to the holders of the preference shares.

At the same time a total of 80 million bonus shares were issued to the registered ordinary shareholders, at the ratio of 2 for every 5 shares, held at the close of the business on 9 April 2010.