NBK Remains in Breach of Capital Adequacy Ratios despite Sh5bn Injection

The National Bank of Kenya (NBK) is still undercapitalized even after receiving a Sh5 billion capital injection from its parent company KCB Group with results for the year ended December showing that the creditor fell short of the obligatory capital to back its lending and deposit-taking activities.

This was despite factoring in support afforded by the Central Bank of Kenya’s order allowing creditors to add estimated credit loss provisions back to the capital.

“All banking subsidiaries met regulatory capital requirement with the exception of NBK which was below total capital requirement,” KCB said in a statement adding that “this is expected to be addressed within the first half of 2020 through various initiatives at NBK.”

KCB, the country’s biggest bank by assets,  had initially estimated a capital injection of up to Sh7.5 billion and the injection of an addition Sh5 billion was projected to be enough to alleviate NBK, but now it says that the subsidiary will be yielding by June after undertaking unstipulated balance sheet changes.

NBK’s basic capital to total deposit ratio stood at 7.3 percent as of December, 0.7 percentage points below the minimum requirement of eight percent.