KENYA – Family Bank, a commercial bank, has reported a 75.2 per cent net profit growth in the half year ended June on the back of higher interest income.
The lender’s net earnings in the period stood at KSh638.4 million (US$5.88m) compared to KSh364.3 million (US$3.36m) a year earlier.
The performance is one of the best in the industry where more players are posting lower profits on increased provisions for coronavirus-related defaults.
KCB Group’s net profit, for instance, fell 40.4 per cent to KSh7.5 billion (US$69.14m) while that of Equity Group receded 24.9 per cent to KSh9 billion (US$82.96) over the same period.
Family Bank’s interest income surged 25.7 per cent to KSh4.1 billion (US$37.79m), helped by increased lending and investment in government debt securities.
Its loan book expanded 17.4 per cent to KSh54.8 billion (US$505.16m) while its holdings of government bonds and T-bills increased 14.6 per cent to KSh10.4 billion (US$95.87m).
The bank’s stock of non-performing loans rose 11.7 per cent to KSh9.1 billion (US$83.89m), resulting in provision for the bad debt jumping 32.2 per cent to KSh451.3 million (US$4.16m).
Lenders such as Equity and KCB have raised their provisions multiple times of the levels seen in the previous period, hurting their earnings in the half year ended June.
That of Equity, for instance, rose 8.7 times to KSh8 billion (US$73.75m) in response to defaults jumping 1.5 times to KSh45.5 billion (US$419.43m).
“The bank’s impressive performance is a testament of the resilience of our business in light of our current tough operating environment amidst the Covid-19 pandemic,” said Family Bank Chief Executive Rebecca Mbithi.
“We remain focused on driving a differentiated customer experience driven by a deeper understanding of our customers, automation and digitisation of our processes, of which 80 per cent of our transactions are on the digital platform anchored on simplicity and personalised service as we continue to cushion businesses, especially the micro, small and medium enterprises through the emerging pressures.”
Outbreak of the Covid-19 pandemic and public health measures taken to contain it has hurt business and household incomes, causing many borrowers to default or renegotiate their loan terms.
Family Bank’s interest expenses increased 19.6 per cent to KSh1.2 billion (US$11.06m), partly reflecting the impact of customer deposits rising 23.5 per cent to KSh66.6 billion (US$613.94m).
The lender’s non-interest income including fees and commissions declined 1.4 per cent to KSh1.2 billion (US$11.06m).
The ongoing reopening of the economy, including resumption of international travel and reduction of night-time curfew hours, is expected to lift business activities and brighten the outlook for bank earnings.
The tourism, entertainment, travel and education sectors have suffered the biggest disruption from the public health measures.
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