Family Bank posts Sh435mn in Profit in a remarkable turnaround

FAMILY BANK - Family Bank posts Sh435mn in Profit in a remarkable turnaround
Family Bank Board Chairman, Dr Wilfred Kiboro also attributed the improved financial performance to an increase in non-interest income which grew 15% from the previous year and a Sh1.5 billion reduction in operating costs, translating to a 19% saving relative to the 2017 financial year/file

NAIROBI, Kenya, Mar 29 – Family Bank has announced a profit before tax of Sh435 million profit for the Financial Year 2018, reversing a Sh1.36 billion loss the previous year.

This remarkable turnaround was made possible by an aggressive transformation program and an increased focus on digital banking services, growing the bank’s non-funded income as well as cost management.

The tier II lender shrugged off a tough operating environment characterized by the interest rate cap that came into effect in 2016 and a sluggish economic recovery following the protracted electioneering in 2017.

Family Bank Board Chairman, Dr Wilfred Kiboro also attributed the improved financial performance to an increase in non-interest income which grew 15% from the previous year and a Sh1.5 billion reduction in operating costs, translating to a 19% saving relative to the 2017 financial year.

The Bank’s deposits grew by 2.4% to hit Sh48.4 billion while the loan book remained largely steady, recording a growth of 1.5% to Sh4.1 billion. However, the quality of the loan book improved in the 2018 financial year with the lender posting a 17% reduction in loan loss provisions.

“Our growth strategy, pegged on innovation and providing value for our customers, yielded great results for us in 2018. Last year, the Bank invested heavily in revamping our PesaPap mobile application and greatly enhanced the features as well as the customer journey and experience. We have advanced over Sh1.2bn through the App since the launch of the mobile lending service in July 2018. The Bank also became the first Kenyan lender to offer an instant money transfer service from Kenya to China and India, in partnership with London-based financial technology firm SimbaPay. WeChat and PayTM integration was a game changer for thousands of local businesses that trade with counterparts in China and India respectively. The service dubbed Family Bank Remit is available to both customers and non-customers and enables users to send money easily and conveniently to more than 15 destinations in Africa and beyond,” Dr Kiboro added.

In line with the global trend, Kenyan financial institutions have increasingly resorted to innovation in an attempt to boost revenues while reducing transaction costs. With the growth of mobile and online banking, banks have invested billions of shillings in revamping their technology platforms to meet the surge in demand for fintech services.

“We will continue to invest in our mobile and online banking capabilities to grow our business through increased lending and offering a superior customer experience,” added Dr Kiboro.

Kenya’s banking industry has been grappling with a cap in interest rate on loans imposed in 2016 in a move the government said was aimed at lowering the cost of credit to small and medium-size businesses. However, commercial lenders argue the interest cap has hurt borrowers and should be reviewed.

“We are optimistic about prospects for the banking industry even as discussions on the interest rate cap continue.

In the same breath, we are optimistic about Family Bank’s growth prospects in 2019, having implemented strategies and measures that have already set us on a strong growth path. Our focus as a business going forward is to grow our revenue base while capitalizing on the exponential growth in mobile banking,” stated Dr Kiboro.

Author: worldwidenewscast

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