NCBA Group PLC is set to venture into Ghana as the bank eyes a piece of the West African market.
While launching the half-year results today, NCBA Managing Director John Gachora said the expansion to new countries is primarily driven by the bank’s digital business, especially in Ghana.
“I am happy to say that we have now started the setup in Ghana. We have established an entity in Ghana. We also have our first employee in Ghana and we are building the technology that is required for us to launch early next year. We are working in partnership with a local bank to ensure that the products that are developed here are available to the market in Ghana,” said Gachora.
Out of the Sh5.5 billion of the total provision expense registered by the bank, about half of it comes from the digital business which is small loans lent to the market.
The bank has reported benefits as it has been on forefront to profile foreign exchange to its customers which has reflected significant growth in foreign exchange income.
On managing operating expenses, the bank indicates that there has been growth of 12 per cent on lenders operating expenses which has been reflected through slower growth than displayed on the revenue.
“For every bank we talk about negative and positive jaws. Positive jaws mean that your revenue is growing faster than your expenses. For us that is something that we watch very keenly. This year our revenue (operating income) is up 20 per cent. Our operating expenses are only up 12 per cent,” Gachora insisted.
Recent data from the Central Bank of Kenya (CBK) reveals that bank loan defaults have for the first time surpassed the half-a-trillion-shilling threshold, putting thousands of debtors at risk of having their property seized.
However, the lender has recorded Sh400 million down impairment expenses for the first six months signalling decent management expressed through lending to the right customers and understanding customer niche. This has helped to bringing the cost down.
On the environmental conservation aspect, the bankers have initiated “change the story movement” so as to rally everybody together to work on changing the narrative around the floods and droughts and believe the most effective way to encourage the same is through planting the right trees in the right environment.
“We have established a nursery at Karura and are planting a million trees to make them available to Kenya for planting of trees and mobilisation of the same across the country,” revealed Gachora.
The creditor has identified non-funded income as an extra source of operating income. The non-funded income account for 50 per cent of the operating income.
The bank’s assets have increased to Sh604 billion, up 11 per cent, while customer deposits increased by 7 per cent year over year to Sh468 billion.
With operational profits of Sh28.9 billion, up 20 per cent year over year, NCBA Group disbursed Sh339 billion in digital loans, a 25 per cent increase to Sh339 billion from Sh272 billion in 2021.
The lender’s saw a 38 per cent drop in total non-performing loans from Sh37.5 billion to Sh28.2 billion.
Banking sector in the country seems to be on projection-trajectory are struggling to resuscitate from post Covid-19 pandemic which greatly affected the sector with a number of borrowers being seized by newly aggressive moneylenders.