- 1.2 billion shillings loss after posting profit year earlier
- Loan loss provision to 3.72 billion shillings in 2015
National Bank of Kenya Ltd. said it swung to a full-year loss after setting aside significantly more money for bad loans, one day after sending its chief executive officer on compulsory leave.
Kenya’s 10th largest bank by market value posted a 1.2 billion shillings ($11.8 million) loss in the 12 months through December after increasing its loan loss provision to 3.72 billion shillings from 525 million shillings a year earlier.
“Increasing provisions is a prudent practice in accounting,” acting CEO Wilfred Musau said in an e-mailed statement. “We have further put elaborate structures in place to manage the recovery of this position.”
National Bank, which hasn’t made a loss since 2001, said its non-performing loans increased to 9.96 billion shillings from 7.05 billion shillings a year earlier.
“I don’t want to speculate on what’s behind the board’s decision,” he said in a phone interview Tuesday. “I totally disagree with the decision. It’s not in line with corporate-governance practices.”
The bank has been waiting since 2014 for regulatory approval to raise 13 billion shillings through a rights offer. The government, which controls a 22.5 percent stake in the bank, withdrew 4.9 billion shillings it had set aside for the cash call.
Kenyan Treasury Secretary Henry Rotich said in October the government is considering merging state-controlled lenders including National Bank, Consolidated Bank and Development Bank of Kenya Ltd. as part of a plan to sell government assets to private investors.
National Bank’s shares were down 10 percent by 11:05 a.m. in Nairobi, headed for the lowest close in nearly 11 years.