The NCBA Group has issued a profit warning to its investors, meaning its profits will dip by more than 25 percent in 2020, as compared to 2019.
This is the first time the lender is issuing a profit warning since the merger between NIC and CBA Banks was finalised.
In a statement, the lender attributes the fall to increasing rates of impairments due to delayed repayments and on assessment of additional stress that could emerge due to Covid-19.
“The Group will continue to take a conservative provisioning outlook. The earnings for the current financial year are expected to be substantially lower than the earnings reported for the same period in 2019, based on the un-audited financial statements for the 9 months ended 30th September 2020, and projected full year financial forecasts,” the statement read in part.
This comes less than a year since the NIC and CBA banks merged to form the NCBA bank, which was set to rival the big brothers in the market.
Recently, the group announced plans to retrench a number of its employees, due to difficult financial times.
“Today, I announce that we are embarking on a process to reorganize our workforce which will result in reduction of staff headcount. The COVID-19 pandemic, which is the most harrowing health and economic crisis of our lifetime, has affected the execution of our growth plans,” said NCBA Group Managing Director John Gachora.
In the quarter three of 2019, NIC profits notched up just 0.2% year on year, and 62.6% quarter on quarter, while CBA profits climbed 37.1% year on year and 94.8% quarter on quarter.
Pre-merger costs entailed Ksh344 million for NIC and Ksh330 million for CBA for the nine months period to September 30, 2019 making a total of Ksh674 million for the combined entity.