Family Bank records Ksh.704 million nine-month profit


Family Bank records Ksh.704 million nine-month profit
Family Bank CEO Rebecca Mbithi speaking at the lender's quarter 3 investor briefing on November 25 PHOTO | COURTESY

In Summary

  • The bank’s notable growth in the period is on the back of aggressive deposit taking and on-lending to small and medium enterprises (SMEs) in the last year against the weighted risk of a rate cap environment.
  • Having given an expected earnings guidance of Ksh.1.5 billion in profit after tax (PAT) by the close of the year, the lender is now keen to break into the Tier 1 space by incorporating among other strategies, a potential listing on the Nairobi Securities Exchange (NSE)
  • As of December 31, 2018, Family Bank was ranked in 16th place with Ksh.66.9 billion in net assets, Ksh.44.8 billion in customer deposits, Ksh.11.4 billion in shareholder funds and 2.2 million deposit & 101,000 loan accounts respectively.

Family Bank has announced a near four-fold jump in profit for the first nine months of the year to Ksh.704.6 million signalling the lender’s continued run back into profit making.

The bank’s notable growth in the period is on the back of aggressive deposit taking and on-lending to small and medium enterprises (SMEs) in the last year against the weighted risk of a rate cap environment.

Customer deposits grew by a substantive 26 percent to Ksh.60.2 billion as net loans and advances kept pace at a distant 11 percent to grow to Ksh.49.3 billion.

“Our aggression in deposit taking was targeted at institutions, county governments, NGO’s, corporate and SME customers as we arrived at an optimum deposit mix,” Family Bank Chief Executive Officer Rebecca Mbithi said.

Family Bank’s net interest income rose by 16.1 percent to Ksh.3.6 billion anchored on a flat Ksh.1.2 billion interest expense to depositing customers and a fall in other interest expenses.

Investments in digital continued to strengthen the bank’s balance sheet by weeding off costs to see operating expenses retained at a flat Ksh.4.7 billion from a similar period in 2018.

70 percent of the bank’s total transactions now sit outside branches with the lender’s styled mobile loan application PesaPap  having pushed out Ksh.1.5 billion in customer loans since its launch in January of 2018.

The enhanced efficiency has seen the lender improve on its asset quality in the slashing of its net non-performing loans portfolio by 15.5 percent to Ksh.4.6 billion.

Family Bank’s board of management sees the strengthened performance as a marker of confidence to invested shareholders as the lender seeks to put behind its recent slump in earnings.

Having given an expected earnings guidance of Ksh.1.5 billion in profit after tax (PAT) by the close of the year, the lender is now keen to break into the Tier 1 space by incorporating among other strategies, a potential listing on the Nairobi Securities Exchange (NSE)

Chairman Wilfred Kiboro says the lender which was in-line to go public until its financial slippage in 2017 is now keen on tapping onto the market to raise new capital based on its rediscovered attractiveness to investors.

“We are keeping all our options open, listing is one of the options especially as we seek to raise more capital. Our shares will become more liquid and this gives flexibility to both the value of shares and the return to shareholders,” he said.

According to the latest data from the CBK, Family Bank is currently ranked on the rear end of Tier 2 banks with a weighted market size score of 1.56.

To breach the required threshold of a weighted score of five, the lender will be required to grow its shareholders’ funds base alongside both deposit and loan accounts to play alongside the big boys in KCB and Equity.

As of December 31, 2018, Family Bank was ranked in 16th place with Ksh.66.9 billion in net assets, Ksh.44.8 billion in customer deposits, Ksh.11.4 billion in shareholder funds and 2.2 million deposit & 101,000 loan accounts respectively.

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Story By Kepha Muiruri
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