Jamii Bora Bank triples profit after three-fold income growth

Jamii Bora Bank has tripled its net profit for 2013 helped by increased interest income from loans, which grew threefold during the year.

The lender’s net earnings rose to Sh157.2 million in 2013 compared to Sh52.7 million in 2012, financed in part by a Sh63 million gain following a revaluation of plant, property and equipment.

“We made a deliberate decision to invest in the SME sector. In the next one year we plan to open 10 additional branches and widen our product offerings… we are in the final stages of fine tuning our mass market mortgage products and these will come on stream in the coming months” said Jamii Bora chief commercial officer Timothy Kabiru.

The bank’s drive to expand its presence in the two sectors saw it issue a Sh1 billion bond that closed in August 2013 with a two per cent over-subscription.

The bank issued the bond through private placement, with tenure of five years at an interest rate of 13.3 per cent. The bond sale was the third time the bank tapped the capital markets for cash since the beginning of 2012.

The lender raised Sh1 billion in two rights issues in 2012, used for branch expansion and to meet the regulator’s minimum capital requirement.

READ: Jamii Bora hits Sh1bn corporate bond-sale target

Jamii Bora saw its net assets rise by 202 per cent to Sh7 billion in 2013, underpinned by a 292 per cent growth in the loan book to Sh3.8 billion. This led to interest income from loans going up from Sh125.6 million in 2012 to Sh465 million in 2013.

The expanding loan book also provided the base for the bank to increase its non-interest income from Sh131 million in 2012 to Sh202 million in 2013, mainly on the fees and commissions charged on loans.

An increase in customer deposits helped expansion of the loan book, which rose from Sh1.2 billion in 2012 to Sh3.4 billion in 2013.

Non-performing loans however increased in tandem with the growth, up from Sh145 million in 2012 to Sh250 million in 2013.

The bank said it will for the second straight year not issue dividend to its shareholders, the biggest of whom are Jamii Bora Scandinavian Group and Messrs Asterisk with a 25 per cent stake apiece, Jamii Bora Africa Group (12 per cent) and Nordic Micro with a five per cent stake.

The bank has now targeted the government’s Uwezo Fund for its loan book.