Family Bank records 35pc increase in H1 profit on loan earnings

Family Bank grew its net profit 35 per cent in the first half of the year riding on higher interest income and reduced provisions for bad debts.

The lender’s net profit in the period stood at Sh1.1 billion, up from Sh875.2 million a year earlier.

This came as interest income jumped 36.7 per cent to Sh4.5 billion while fees and charges on transactions rose nine per cent to Sh1.4 billion.

“Key drivers of this performance have been sustainable growth of the loan book, aggressive deposit mobilisation, branch expansion and increased revenue from alternative business channels — Internet, mobile banking, among others,” said chief executive Peter Munyiri.

“The performance culture embraced by staff has also made this accomplishment possible”.

The higher interest income was driven by a 40 per cent expansion in the loan book to Sh46.3 billion, with most of the loans taken up by SMEs and individuals.

Family Bank also benefited from a drop in gross non-performing loans, allowing it to reduce its provisions for bad debts in its profit and loss account.

The lender’s provisions dropped 83.2 per cent to Sh36.9 million compared to Sh220.6 million the year before, cutting the accounting expense by Sh183.6 million.

Its gross non-performing loans dropped to Sh2.7 billion from Sh2.9 billion.

Mr Munyiri said Family Bank continues to expand its operations in line with its stated goal of rising to a top-tier institution in the coming years.
It opened five new branches in Migori, Chuka, Utawala, Thika Makongeni and Bamburi.

Another five more outlets will be opened by year-end.

The bank, which currently has 1.6 million customers, is betting on the wider footprint to further reach more customers across the country.

“We have also increased significantly product and services utilisation per customer through cross-selling and enhanced customer experience,” Mr Munyiri said.

The new investments come after the bank raised Sh3 billion from shareholders in December last year, marking the latest equity financing by the lender that sought more capital to fund its expansion strategy.

Mr Munyiri noted that the cash call, coupled with increased retained earnings, nearly doubled shareholders’ funds to Sh11.2 billion from Sh6.6 billion.