Prime Bank has posted a Sh1.25 billion net profit for the six months ending June, a 32 percent jump from Sh939.37 million last year over increased lending to the government.
The lender, which got Sh5.1 billion through a private equity deal with AfricInvest and Catalyst Principal for a minority stake last year, cut loans to private sector from Sh35.8 billion to Sh34 billion as it shifted the money to the National Treasury as government securities rose from Sh20.5 billion to Sh36.6 billion.
While interest income from loans fell from Sh2.2 billion to Sh1.9 billion, interest from government paper rose from Sh1.4 billion to Sh2.2 billion.
Reduced loans also hit fees and commission on loans which declined from Sh127 million to Sh94 million.
Seeking revenue outside lending saw foreign exchange trading boost non-interest income from Sh850 million to Sh1.1 billion. The bank, which is owned by the wealthy Rasik Kantaria family, was able to mobilise Sh78.6 billion in customer deposits from Sh65.7 billion mid last year which came at a cost as interest expense also rose from Sh1.9 billion to Sh2.2 billion.
The lender cut loan loss provision from Sh111 million to Sh80 million despite a jump in souring loans which increased from Sh2.7 billion to Sh3.7 billion.
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