The National Bank of Kenya (NBK) has demonstrated a significant turnaround in its financial performance for the year ending December 31, 2024, reporting a profit after tax of KShs. 1.06 billion. This marks a substantial recovery from the after-tax loss of KShs. 3.3 billion recorded in the same period the previous year, underscoring the bank’s resilience and strategic focus on operational efficiency.
Key Financial Highlights
- Operating Income: NBK’s operating income grew by 12% to KShs. 12.65 billion, with non-funded income contributing 23% of the total operating income.
- Net Interest Income: There was a 24% increase in net interest income, rising from KShs. 7.9 billion in 2023 to KShs. 9.8 billion in 2024.
- Interest Expenses: Interest expenses grew by 18% to KShs. 6.4 billion, attributed to increased borrowings and higher funding costs in a high-interest-rate environment.
- Operating Expenses: The bank achieved a 22% reduction in operating expenses, decreasing from KShs. 11.7 billion to KShs. 9.1 billion, primarily due to one-off expenses in the previous year and effective cost optimization measures.
- Credit Impairment Charge: There was a 21% reduction in the credit impairment charge, indicating effective risk management amidst a challenging operating environment characterized by high-interest rates.
- Customer Deposits and Borrowings: Customer deposits declined to KShs. 98 billion from KShs. 118 billion in the previous year. Consequently, borrowings increased from KShs. 15 billion in 2023 to KShs. 23 billion in 2024.
- Net Loans and Advances: Net loans and advances to customers decreased from KShs. 79 billion to KShs. 75 billion in 2024.
Strategic Initiatives Driving Growth
NBK’s return to profitability can be attributed to several strategic initiatives:
- Digital Transformation: The bank implemented a new core banking system and enhanced its digital payments platform, improving customer experience and operational efficiencies.
- Revenue Diversification: By diversifying its revenue streams, NBK reduced its reliance on traditional banking income, thereby enhancing financial stability.
- Cost Optimization: Through effective cost management strategies, the bank significantly reduced operating expenses, contributing to improved profitability.
NBK’s performance is noteworthy within the context of the Kenyan banking industry’s overall growth. As of June 30, 2024, the industry’s total assets stood at KShs. 7.6 trillion, marking a 7.1% year-on-year rise, driven by an enlarged deposit base and expanded shareholders’ funds.
The bank’s focus on digital transformation aligns with industry trends, as digital banking services have become increasingly pivotal in enhancing efficiency and customer satisfaction. NBK’s implementation of a new core banking system and enhancement of its digital payments platform are strategic moves to stay competitive in this evolving landscape.
NBK’s Managing Director, George Odhiambo, expressed optimism about the bank’s future, stating:
“The year 2024 has seen the Bank bounce back to profitability despite the rough macroeconomic environment that we encountered. This is highly attributed to the improved efficiency in our systems, diversifying revenue streams, and continuous improvement in customer service and experience. Looking ahead, we have set our sights on strengthening our relationship with our existing customer base and also enhancing product and service delivery to meet their ever-evolving needs.”
NBK’s remarkable turnaround presents an opportune moment for investors, customers, and stakeholders to engage with the bank. Investors may consider exploring investment opportunities, while customers can benefit from the enhanced digital services and diversified product offerings. Stakeholders are encouraged to collaborate with NBK in its journey towards sustained growth and innovation in the Kenyan banking sector.
