K-Rep posts Sh514m profit as customer savings grow

What you need to know:

K-Rep announced an after tax profit of Sh514 million, up from Sh359 million an year earlier.
Customer savings with the lender grew by 30 per cent to Sh12 billion faster than the loan book expansion of 20 per cent to Sh10.6 billion from Sh8.8 billion.
Bank largely lends to SMEs who put less emphasis on price and more on access to finance and turnaround time.

K-Rep, which lends to small and medium enterprises (SMEs), has recorded a 42.8 per cent post-tax profit having benefited from a cheaper source of funds.

The bank, majority owned by listed investment firm Centum Investments Limited, announced an after tax profit of Sh514 million, up from Sh359 million an year earlier.

K-rep relied more on customer savings for lending last year following a fast growth in deposits. Customer savings with the lender grew by 30 per cent to Sh12 billion faster than the loan book expansion of 20 per cent to Sh10.6 billion from Sh8.8 billion.

“Loans-to-deposits ratio scaled back to 88 per cent compared to 97 per cent in 2013 pointing to a change in funding mix from lines of credit to deposits,” said Standard Investment Bank.

The lender’s net interest income rose by 17.2 per cent riding on a 25-per cent increase in interest income to Sh2.4 billion.

K-rep, classified as a small lender by the regulator, had a net interest margin of 12.2 per cent higher than that of listed lenders. The bank largely lends to SMEs who put less emphasis on price and more on access to finance and turnaround time.

Centum acquired an additional 60 per cent of the bank last year at Sh2.5 billion to up its interest in the bank to 67.5 per cent. The stake was acquired from International Finance Corporation, World Bank’s private lending and investment arm as well as from the Netherlands-based Triodos Bank.

READ: K-Rep Bank stake set to earn IFC Sh500m

The founder shareholder of the bank, K-Rep Group, also upped its stake in the lender to 31.5 per cent from 19.7 per cent in the previous year.

James Mworia, Centum’s chief executive is now the chairman of the bank, replacing Kenny Nwosu.

READ: Centum in K-Rep Bank board shake-up after acquisition

“Going forward we anticipate the lender’s evolution as well as growth in the industry to be catalysed by Centum as the anchor shareholder,” said Standard Investment Bank.

The bank’s capital levels give it room for expansion.

K-Rep returned to profit ways in 2010 after two loss making years which had seen a dark cloud cast over its future. A change in management and tightening of expenses saw the bank pull out of the red.