Despite posting a narrower profit for 1Q2016 compared to the same period a year ago, investors still showed love for the stock of National Bank of Kenya Ltd (NSE:NBK). Shares of the lender gained 0.50% to sit at Sh10.05 by closing. The development came a day after the bank reported its 1Q2016 earnings in which revenue grew and deposits increased.
During Thursday’s session, shares of National Bank of Kenya Ltd (NSE:NBK) shares rallied between a low of Sh9.90 and a high of Sh10.15. Some 1,900 shares of NBK were traded on the day, sharply below the daily average volume of 31,216 shares. NBK shares have touched a low of Sh8 and a high of Sh23 over the last 52-weeks.
What happened in 1Q2016?
The lender posted a profit of Sh334.6 million, down 33% from the profit posted in the corresponding quarter a year ago. Earnings per share (EPS) of Sh1.09 in the latest quarter also shrank from Sh1.77 in the year ago quarter.
Revenue from operations of Sh3 billion in the latest quarter rose from Sh2.6 billion in the like quarter a year ago. It appears the growth in revenue made some investors smiling despite the pull back in the bottom-line figure, thus pushing up the stock during Thursday’s session. The market seems to have interpreted the revenue as a positive sign that National Bank of Kenya Ltd (NSE:NBK) was in a position to boost its profitability once it clears challenges it is currently facing.
NBK also reported that customer deposits in the latest quarter rose to Sh99.4 billion from Sh85.3 billion in the year ago. Investors also liked the development in the deposit books.
What are some of these challenges?
National Bank of Kenya Ltd (NSE:NBK)’s bad loans ballooned to Sh15.1 billion, indicating a sharp increase from Sh6.7 billion in the comparable quarter a year ago. The company’s management is also battling allegations of breach of fiduciary duty that saw at least six top officials including the CEO sent on compulsory leave. However, Munir Ahmed later resigned as the CEO of the company. The board has tapped Wilfred Musau as caretaker CEO pending recruitment of a permanent CEO.
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