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The National Bank of Kenya, which has in recent months come under intense pressure to explain its financial health, has more than doubled its profit after tax in the first second months of this year.
 The lender’s unaudited financial statements show its net profit grew to Sh1.7 billion in the six months to June 2015, up from the Sh776 million it reported in a similar period last year. The results are set to be good news to the bank’s two biggest shareholders, the National Treasury and the National Social Security Fund (NSSF).


Chief Executive Officer Mr. Munir Ahmed attributed the performance to cost-cutting at a time when the bank’s business volumes, branch network and investment in technology, are all looking up. The good results are a testimony that the bank’s five-year transformation agenda that began in March 2013 is strongly on course. “As we continue with this agenda, we are strategically leveraging on innovation and technology”, Mr. Ahmed said during a media briefing.
Total Assets
Its total assets rose to 13 percent to Sh124 billion, compared to the Sh109 billion in a similar period in 2014. The bank grew its customer deposits by six percent to Sh97 billion while loans and advances to customers grew by 31 percent, from Sh57.7 billion last year to Sh71 billion.
Non-performing loans
However, the lenders non-performing loans rose by 29 percent to hit Sh6.4 billion in the period under review. Interest income from loans grew 39 percent to Sh4.6 billion while interest expenses from deposits increased 53 percent to Sh2.37 billion. The bank’s total assets increased by 14 percent to Sh124.4 billion. But the bank will not pay any interim dividends in the period.
“The directors do not recommend the payment of an interim dividend”, the bank said in a statement. National bank says its main challenge has been the delayed approval of the Rights Issue, which according to its strategic plan was to inject Sh13 billion by July 2014 into the bank to support its growth.
TOP TIER 1 BANK
Shareholders approved the resolution in its June 2013 AGM and the Capital Markets Authority (CMA) is awaiting National Treasury’s approval. The bank, which was the eleventh largest lender by assets at the end of last year, has come out recently to dispute media reports that suggested that it was in distress. Mr. Ahmed said the bank’s assets are growing at a rate of 33 percent, and its profits at 45 percent, which is faster than the target set by the strategy responsible for its ongoing transformation to get the bank into the Tier 1 bank club by 2017.
According to its transformation strategy, the bank is expected to deliver a 25 percent compounded annual growth rate on balance sheet and 30 percent on profits year on year respectively to achieve its goal of being a top 5 Tier 1 bank. The strategy was drafted by McKinsey and Company.
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