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National Bank of Kenya profit falls on bonds sale

14 November 2011, 15:22

Nairobi - National Bank of Kenya posted a 9 percent fall in nine-month pretax profit to 1.81 billion shillings ($19.3 million), after its operating expenses rose 26 percent and it slashed its government securities holdings, it said on Monday.

In line with other banks, National Bank in the third quarter sharply reduced its investment in government and other securities held for trading, to 1.88 billion shillings from 11.18 billion, to avoid further revaluation losses as yields rise.

"This drop was expected because of the huge bond trading book they were holding. They wound down that book and it had to take a cost," said George Bodo, an analyst at Apex Africa Capital.

Yields on government securities have been on a steady rise this year, due to higher inflation and tight liquidity in the market, with the 91-day Treasury bills hitting a high of 15.998 percent in last week's auction.

Total operating expenses climbed by 26 percent to 3.98 billion shillings, outpacing the growth in operating income which increased 12 percent to 5.79 billion shillings.

Loans and advances rose to 26.4 billion shilling from 17.33 billion previously, the bank said in its unaudited results sent to the Nairobi Securities Exchange.

The bank did not recommend a dividend payment for the period under review.

- Reuters

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