Mr Okpanachi said the bank benefited from expansion. It posted Sh202 million profit. file
Ecobank Kenya has posted a 61.6 per cent rise in net profit for the year ended December as it significantly cut its gross non-performing loans by Sh1 billion.
Net earnings of the Togo-based Kenyan subsidiary stood at Sh202 million compared to Sh125 million in year 2010 following expansion. It increased its branches in Kenya from 19 to 24.
“We benefited from expanded branch network and product diversification though we had challenges with high interest rates which affected interest expenses,” said Tony Okpanachi, the bank’s chief executive.
Ecobank’s customer deposits remained flat at Sh16.5 billion but the interest it paid for the deposits rose by 47 per cent to Sh732 million indicating the cost banks were willing to bear in the second half of last year to retain and attract cash.
Following high inflation rates, Central Bank resorted to cutting back money supply by increasing interest rates, a move that affected the cost of funds for banks with customers demanding rates as high as 29 per cent. “There was a spike in customer deposit rate and interbank rates from the last quarter in the year that led to higher interest expense,” said Mr Okpanachi
The lender’s loan book grew by 17.4 per cent to Sh11.3 billion, but it was able to cut its non-performing loans by 28.5 per cent to Sh2.4 billion. Ecobank has in the past grappled with massive bad debts inherited from mortgage company EABS, which it acquired while entering the Kenyan market
EABS was one of the banks saddled with bad debts on Triton Oil collapse. The bank attributed the reduction in non-performing loans to restructuring and rescheduling of various facilities, out of court settlements with defaulters, and improved credit administration. This saw the company cut its expenses in loan loss provisions to a positive position of Sh40 million from Sh227 million loss.
Meanwhile, Family Bank which is seeking to list at the Nairobi Securities Exchange announced that its profit remained flat at Sh354 million on the back of higher interest income crossed out by a drop in bond trading income. Its loan book grew by 58.5 per cent to Sh16.3 billion and its customer deposits to Sh21.4 billion from Sh15.7 billion.
