Despite returning to profitability in the first half of 2024, the National Bank of Kenya (NBK) faced a notable 14 per cent decline in customer deposits, which closed at Sh102 billion.

This decline contrasts sharply with the bank’s robust profit after tax of Sh839 million, showcasing a complex financial landscape for the institution.

The drop in deposits Is significant, especially when considering the bank’s pre-tax profit of Sh1.1 billion, a remarkable turnaround from a pre-tax loss of Sh3.8 billion in the same period last year.

Even as the bank continues to grow its profits, the decline in deposits highlights potential challenges in maintaining customer confidence in the volatile economic climate.

Acknowledging the decline, NBK Managing Director George Odhiambo expressed optimism about the bank’s strategic approach, stating, “This resilience for holding on, in a challenging environment is a testament to our continued commitment to maintaining a strong and stable asset base… Despite this temporary decline, we remain confident in our focused approach, which we believe will yield sustainable growth in the future.”

The bank’s diversification strategies, which saw non-funded income contributing 26 per cent of total operating income, have helped drive a 20 per cent rise in net operating income to Sh6.6 billion.

However, the reduction in deposits raises questions about the broader confidence of NBK’s customers and their engagement with the bank.

Amid these mixed results, NBK’s total assets saw a modest 1 per cent year-on-year growth to Sh153 billion, reflecting the institution’s ability to remain resilient.

Additionally, a 9 per cent reduction in loan impairment charges, amounting to Sh886 million, demonstrates the success of the bank's enhanced credit management processes, strengthening its financial resilience.

Looking ahead, NBK remains committed to improving its customer experience, particularly through technological advancements.

The recent migration of its core banking system to Temenos T24 Transact Release 21 is aimed at streamlining operations and enhancing service access.

According to Odhiambo, “We will continue to leverage technology to streamline our operations, enhance the customer experience, and stay ahead in a competitive market.”

As NBK charts a course towards sustainable growth, it also remains focused on its corporate social responsibilities, with ongoing initiatives supporting seven Sustainable Development Goals.

The bank’s achievements have not gone unnoticed, earning it ten local and international awards in recognition of its efforts.

The decline in customer deposits, however, remains a challenge the bank must address as it navigates the complexities of a recovering economy.

NBK’s ability to balance profitability with customer retention will be key to its sustained success.