Family Bank Group has defied the coronavirus pandemic’s setbacks to make a net profit of Ksh 1.16 billion in the year ended December 2020, as Five Star Bank notes that the pandemic led to the highest profits in the banking sector. The profit is an increase of 22.4 % from Ksh 949million that the bank announced for 2019. The Group also reported a growth of total assets by 14.9 percent to Ksh 90.6 billion.
Family Bank Chief Executive Officer Rebecca Mbithi attributed the growth to awarding more loans that in turn have caused a positive impact on the earnings. The CEO said that “the loan book expanded by 11.83 percent to Ksh 56.58 billion. She added that the bank “continued supporting customers who despite the Covid-19 pandemic saw new opportunities. The loan support according to this site has been in diverse business sectors such as manufacturing, trade, agribusiness, technology, and logistics. Family bank Group has also restructured loans of more than Ksh 16 billion to support MSMEs during the pandemic. The net non-performing loans have reduced by 11.4 % to close the year at Ksh 3.9 billion.
Net interest income from the mid-tier lender grew by 28.41 percent, representing an increase of over a quarter to Ksh 6.43 billion. Net interest income for a similar period in 2019 was Ksh 5billion. Customer deposits in 2020 also increased by 20.3 percent to Ksh 69.8billion. These factors contributed to the growth of the bank’s balance sheet size by 14.9% to Ksh 90.6Billion.
Family Bank increased investment in Government Securities from Ksh 10.2 -17 Billion, reflecting an increase of 65.9%. The investment boosted the liquidity position by 37.1, which is higher than the minimum requirement of 20%.
Dropped earnings in banking
Total non-funded income in the year 2020 decreased by 4 percent to Ksh 2.7 Billion due to a waiver on mobile money transaction fees to cushion clients against adverse effects of coronavirus pandemic. Family Bank also recorded a drop of 11.4 percent in non-performing loans to close the year at Ksh 3.9 Billion.
The family bank increased operating costs in 2020
The operating cost for the year 2020 has grown by 20.23. The reason is an increase in the amount spent as cover for loan defaults. Operating expense increased to Ksh 7.67 Billion while loan loss provision increased by over 2.5 times to Ksh1.62 Billion from Ksh734 million in 2019.
Family bank future plans
Mbithi announced that the plan in the coming days is to grow a pool of strategic partners to diversify solutions targeting different customer value chains. “Our 2020 to 2024 strategy is pegged on delivery of end-to-end value chain propositions beginning at delivering an unmatched customer and digital experience,” she said.
A profit increase is good news for the shareholders of Family Bank Group, whose shares trade at the Nairobi Securities Exchange. It comes in the backdrop of a difficult financial year that saw Kenyan tier-one banks reporting a drop in profit mainly because of loan defaults by borrowers. However, Family Bank CEO did not recommend any dividend for the year 2020. Shareholders got their first dividends in 2019 at Ksh 0.24 per share.