NAIROBI, Kenya, Mar 28 – Spire Bank has cut down Operating losses before tax by 53 percent from Sh1.6 billion to Sh746 million in the financial year ending December 2018.
The Bank’s operating loss before exceptional items stood at Sh307 million, a 78 percent improvement compared to the prior year driven by the Bank’s decision to focus on loan collections.
However, deferred tax assets of Sh 1.5 billion continued to weigh down the earnings of the bank but which was derecognized in the period under review leading to a higher income tax provision.
“The Bank has 10 years to utilize these derecognized tax provisions against future profits as per the Kenya Revenue Authority rules. As management, we are optimistic the Bank will recover this asset from taxes as it returns to profitability,” said Spire Bank’s Managing Director, Norman Ambunya.
“The Bank is now implementing a new business model, which is expected to turn around its performance to profitability.”
The Bank’s Chairperson Teresa Mutegi said recapitalization of the business is key to improve the Bank’s performance going forward and ensuring it remains competitive in the industry as well as boost its capital base.
“The shareholders are fast-tracking an ongoing recapitalization programme with a strategic investor already identified and the transaction is at an advanced stage,” said Mutegi.
“As part of the programme Mwalimu National Holdings Limited is in the process of buying out the minority shareholder. The board remains optimistic for a return to profitability and a continuation of the business’ internal capital generating ability going forward.”
This process is subject to regulatory approval.
Ambunya noted that during the period under review the Bank saw positive returns from its aggressive loan collection strategy and cost containment, which led to gains and this will continue into this financial year.
“Our focus on customers as well as diversifying our business model and containing costs will be key to turning around this business into profitability. In the current financial year we will be investing in technology channels and capitalizing on new growth areas,” said Ambunya.