The NCBA Group has reported a 45 per cent drop in profit-after-tax to Sh2.5 billion in the nine months to September 2020.
This is despite more than doubling its interest income from Sh15 billion to Sh31.1 billion in the period, following its merger last year.
The Nairobi Securities Exchange-listed lender attributed the drop in profitability to provisioning for potential loan defaults that reduced the operating gains.
Its balance sheet almost doubled, with its total assets rising from Sh272 billion to Sh519 billion following the combination of NIC Group PLC (NIC) and Commercial Bank of Africa (CBA).
NCBA, which is now the third largest lender by assets, said its earnings this year are expected to be substantially lower than in 2019 occasioned by the Covid-19 pandemic impact on economic activity.
The bank’s total comprehensive income stands at Sh3.3 billion, representing a 31 per cent drop from the Sh4.9 billion recorded in a similar period last year.
NCBA said the completion of the Group's business integration has led to structural changes.
"The Group is reviewing its organisation structure to ensure that resources are focused on meeting customer and other stakeholder needs," said the lender.
As part of this process the bank announced a voluntary exit programme for employees who wish to consider early retirement before it declares redundancies.
NCBA said that while economic activity is gradually resuming following the easing of lockdown restrictions, it remains cautious as the shape and timing of the recovery remains uncertain.
"The NCBA Group has supported its customers throughout this period and has disbursed Sh310 billion in digital loans thus enabling small enterprises and individuals to manage their day-to-day needs and working capital," it said.
"In addition, the Group has also granted loan moratoriums and restructured loans amounting to Sh76 billion to corporate and retail customers as at end of September 2020."
It noted that trends show that the rate of impairments is increasing, due to delayed repayments and an assessment of additional stress that could emerge due to Covid-19.
"The Group will continue to take a conservative provisioning outlook."