Bad call by the honchos at Nbk. To me this is more of a qualitative issue than a quantitative one.

The expensed LLP is 2.5 times the previous year which is in line with the market fundies at the moment and I guess they wouldn't want to cross the line here.

However, an NPL spike calls for a corresponding increase in LLP in the loan book(must be a grey area in the cbk rules for them to have the guts to flout this). Given the impressive set of results, why goose the numbers in a non-income statement metric? This especially coming from an institution that has fallen short of some capital ratios.

Or is it a case of trying to look good now (considering all the slack that's been thrown their way) at all costs..... Imprudence is what it is and will catch up with them soon enough.

I don't understand all this terms and acronyms. Can you please tell us in plain english. Assume I am in standard seven.

Also, in plain english, is NBK cooking the books?

The big rise in profit is due to booking a Sh600 million gain from the sale of its buildings.
This is where trouble starts;once they are done with selling all the buildings they can where will profit growth come from.

KCB did sell (or tried to) properties to boost the capital during the post-Moi era when Gareth George, Terry Davidson and Martin Oduor-Otieno were brought in to clean up the mess. Ultimately, there were Rights Issues and management changes [& reduced GoK ownership and influence] that boosted KCB.

Unless similar strategies are employed at NBK, this bank will not grow as fast as its peers. Currently, it gets a lot of GoK business but that isn't real or sustainable growth.

Gareth George tried selling KENCOM but met stiff resistance from shareholders as the building was being sold for a song.
When Narc came into power and Terry Davidson appointed as MD sale of properties or buildings was halted and a number of rights issues done even during Martin Oduor-Otieno reign that boosted KCB.
@VituVingiSana like u said "unless similar strategies are employed at NBK, this bank will not grow as fast as its peers"

The difference between 13% and 15% is just 2%. Now factor in rent you have to pay going forward + The rents you pay are incremental + the foregone rent would have been incremental + your 15% is on a tightly fixed amount... Zero sense.

Seems you are forgetting a couple of issues:

1. 13% rental yield is a best case scenario. Average is about 8-9% and it is even lower in most small towns.

2. If you don't sell the real estate assets(not that am advocating for it) you still have to source for funds either through more deposits, debt, rights issues etc and such come at a cost. So you need to factor in the costs associated with such in your trade off analysis.

3. The disadvantage suffered in future rent payments and escalations is negated if you are selling the whole property and leasing back only part of the premise. So technically it frees idle capital for a better ROI.

The opposition was NOT from the shareholders but the KCB Employee Pension Fund who thought Kencom House was over-priced. KCB owned the Pension Fund a lot of moolah so KCB (GG) tried to transfer Kencom Houseto the Fund in lieu of cash. That led to a disagreement over the value of Kencom House. Anyway, GG was fired, he went after GoK officials/cronies who owed money to KCB and that wasn't kosher in Moi's time. TD came in with a different philosophy and seeing what happened to GG decided to split the bank into the Good Bank and Bad Bank.

NBK should follow that script. Emphasize/grow the Good Bank while have a dedicated team run the Bad Bank and finally close it out.