Companies

K-rep Bank records 84pc rise in net profit to Sh360 million

krep

A K-rep Bank branch along Kenyatta Avenue in Nairobi. K-rep has recorded an 84 per cent jump in net profit 2013 to Sh360 million. Photo/Salaton Njau

K-rep Bank registered an 84 per cent jump in net profit last year buoyed by increased interest earnings from government securities and cost cutting.

The bank’s net profit rose to Sh360 million in 2013, up from Sh196 million a year earlier. But shareholders will forgo dividend as the firm boosts retained earnings to Sh678 million.

The bank rode on customer deposits that rose 40 per cent to Sh9.2 billion to grow its loan book to Sh8.9 billion, representing a 29 per cent increase from 2012 when total lending stood at Sh6.9 billion.

The increase in total income from Sh1.7 billion to Sh1.93 billion was driven by non-interest income mainly in form of fees and commissions from loans as well as interest from government securities.

The non-interest income increased from Sh398 million in 2012 to Sh533 million.

Government securities income rose to Sh195 million from Sh12 million in 2012, driven by the bank raising its holdings of government debt from Sh33 million in 2012 to Sh2.1 billion in 2013.

Interest from loans was however down by Sh45 million to Sh1.7 billion.

The bank reduced its total expenses from Sh1.4 billion in 2012 to Sh1.37 billion in 2013, keeping employee costs flat at Sh481 million.

K-rep joins another SME-oriented small tier bank, Jamii Bora, in announcing a big growth in net profits.

Jamii registered a 300 per cent increase in net profit to Sh157 million for the 2013 financial year, also boosted by an expanding loan book.

“The SME sector is a natural choice for growth for these banks,” said ABC Capital corporate finance and advisory manager Johnson Nderi.

K-rep has been rolling out lending for segments such as solar, biogas and water projects targeting counties in a bid to boost its revenues.

READ: K-Rep partners with World Bank to fund water projects

The bank has also targeted Saccos and micro-finance institutions by providing financing to cover gaps in their loan books.

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