NC Bank Uganda, a subsidiary of Kenya’s NIC Bank Group, saw its after-tax profits drop 34.95% in 2016 on the back of rising expenses, results released on Wednesday show.
The bank reported a net profit of Shs561.75 million compared to Shs863.61 million in 2015. Its revenue increased 5% to Shs22.68bn, while expenses rose 7.51% to Shs22bn.
The rise in expenses was driven by a 14.26% increase in operating expenses to Shs14.52bn. The bank’s loan-loss provisions also surged to Shs1.33bn from a paltry Sh24.15 million in 2015.
Profits before tax dropped by 39.19% to Shs657.92 million.
Loans and advances to customers declined to Shs98.69bn from Shs127.25bn a year earlier, pulling interest income earned loans – the bank’s biggest revenue source – to Shs13.97bn from Shs14.83bn. Relatedly, non-performing loans increased to Shs13.18bn from Shs9.93bn.
The bank’s assets fell 18.39% to Shs165.96bn largely due to the decrease in its loan book. It also reduced cash and balances with the central bank by 17.66% to Shs16.72bn, while deposits in other banking institutions dropped by 56.54% to Shs8.47bn.
A reduction in borrowed funds to Shs41bn compared to Shs84.35bn in 2015 was the biggest contributor to liabilities declining 23.48% to Shs124.18bn.
Shareholders equity, on the other hand, increased by 1.71% to Shs41.77bn. NC Bank’s sole shareholder is NIC Bank Group, which is listed on the Nairobi Stock Exchange. NC Bank Uganda launched operations in 2012.