The two banks join Housing Finance and National Bank, which this week also reported losses.
Family Bank reported a Sh259.57 million net loss for the first three months of the year.
Sidian Bank also slipped into the red posting a net loss of Sh55.5 million for the period on lower interest income and higher expenses.
Family and Sidian banks have slipped into losses, signalling hard times for lenders which are coping with reduced profit margins following last year’s passage of the interest rates cap law.
The two banks join Housing Finance #ticker:HFCK and National Bank #ticker:NBK , which this week also reported losses.
Family Bank yesterday reported a Sh259.57 million net loss for the first three months of the year attributed to a sharp rise in bad loans and the interest rate cap law, which shrank its profit margin.
The lender reported a net profit of Sh344.95 million in the comparative first three months of last year.
Sidian Bank also slipped into the red posting a net loss of Sh55.5 million for the period on lower interest income and higher expenses.
Its net earnings declined sharply from a net profit of Sh103.4 million posted during a similar period last year.
Family Bank’s interest and non-funded incomes both recorded declines.
Bad debts
Its interest income dropped 43.72 per cent to Sh1.68 billion for the period ended March 31 as its loan book contracted by Sh12 billion in the period to stand at Sh46.64 billion.
Gross non-performing loans jumped 92.14 per cent or Sh3.98 billion to Sh8.3 billion prompting the mid-sized lender to raise its provisions for bad debts by Sh167 million to Sh247.9 million in the period.
Its non-interest income went down 27 per cent to Sh526.2 million, further compounding its revenue decline.
“We slowed down on lending to focus our efforts in strengthening the liquidity position,” said Family Bank’s CEO David Thuku.
“We had to address the significant withdrawals that took a toll on our 2016 performance and also embark on recovery efforts following the hit on our bottom-line.”
The lender last year suffered deposit flight following social media attacks.
Sidian, a subsidiary of investment firm Centum #ticker:ICDC, saw its loan book shrink by Sh339 million to close the period under review at Sh12.6 billion.
The lender’s operating expenses increased six per cent to Sh523.9 million, mostly due to higher loan loss provisions (Sh84.3 million) and staff costs (Sh190.1 million), representing a jump of 32.1 and 17.3 per cent respectively.
