Rafiki, which is 75 per cent owned by Chase Bank, says its earnings were also negatively impacted by loss of income from significant deposits held at its parent company.
Rafiki has 19 branches across the country and over 125,000 customers (mostly small and micro-businesses).
Rafiki ended 2016 with a loan book of Sh3.7 billion, representing a 14.3 per cent contraction from the previous year.
Rafiki Microfinance Bank, a subsidiary of the troubled Chase Bank, has reported a Sh297.6 million full-year loss attributed to increased provisioning for doubtful loans and unrealised interest income from deposits locked at its principal shareholder.
The micro-lender, which posted a net profit of Sh29.4 million the previous year, saw its earnings impacted by loan loss provisions of Sh237.8 million-- which steeply rose from Sh82.6 million the previous year.
Rafiki, which is 75 per cent owned by Chase Bank, says its earnings were also negatively impacted by loss of income from significant deposits held at its parent company-- which the Central Bank of Kenya (CBK) placed under receivership a year ago.
“The placement of Chase under receivership affected the operations of Rafiki due to its funds held in Chase and the resulting interest income frozen,” Rafiki’s management said in a statement.
Rafiki has 19 branches across the country and over 125,000 customers (mostly small and micro-businesses), having added 9,329 new clients in the 12 months to December.
Its full-year financials show it sought a Sh500 million line of credit from the CBK while borrowings from other banks increased by Sh56.7 million to close the year at Sh635.8 million.
Following the collapse of Chase Bank, Rafiki saw panic customer withdrawals which management contained by introducing daily caps. The micro-lender’s customer deposits dropped by Sh1.2 billion to close the financial year at Sh2.9 billion.
Rafiki ended 2016 with a loan book of Sh3.7 billion, representing a 14.3 per cent contraction from the previous year.
Despite this decline, the business registered Sh921 million in interest income, a year-on-year increase of Sh47.6 million which points to higher interest rates during the period. Rafiki’s massive loss saw the lender eat into its core capital by Sh246.6 million to close the year at Sh713.9 million.
The micro-lender also breached its statutory liquidity ratios, closing the period under review at 12 per cent, falling short of the 20 per cent prescribed by the CBK.
“The bank’s liquidity including funds held at Chase is at 65 per cent, while without these funds is at 12 per cent. Looking forward, Rafiki will recapitalize and return to its growth trajectory,” noted the lender.
The micro-lender also breached its statutory liquidity ratios, closing the period under review at 12 per cent, falling short of the 20 per cent prescribed by the CBK.
“The bank’s liquidity including funds held at Chase is at 65 per cent, while without these funds is at 12 per cent. Looking forward, Rafiki will recapitalize and return to its growth trajectory,” Rafiki noted.
