Kenya: Family Bank first half profit increases to Sh1.2 billion

Family Bank’s net profit for the first six months has increased 83.9 percent to Sh1.17 billion driven by growth in interest and non-interest income as operating costs reduced.

The increase in profit, from Sh638.47 million posted in a similar period last year, places the lender on the path of record-high full-year earnings.

The half-year profit is equivalent to 95 percent of the Sh1.16 billion that Family Bank had posted in the full year ended December 2020.

Net interest income grew by 25 percent to hit Sh3.69 billion coming on the back of the loan book growing 12 percent to Sh63.98 billion.

Non-interest income, mainly related to fees and commissions, grew 18.2 percent to Sh1.52 billion helping the bank to post improved performance in the first half ending June 2021.

Operating expenses rose by 4.6 percent to Sh3.54 billion partly driven by a 36 percent rise in loan loss provision to Sh614.9 million.

Customer deposits rose to Sh76 billion at the end of June, from Sh69.8 billion at the end of December last year.

The performance raises prospects of a return of dividends for shareholders. The board last year paid Sh0.24 dividends per ordinary share on the 2019 results. It was the first time since 2015 for shareholders to get dividends. The payout for 2015 was Sh0.50 totalling Sh622.59 million.

In 2013, the bank paid dividends of Sh222.8 million, in addition to issuing one–for–one bonus shares.

Bond

The lender in June raised Sh4.42 billion against a Sh3 billion target in the bond issuance that has a maturity of 5.5 years.

Family Bank plans to use the money to expand its presence across the counties as it gears up for tier-I status in the next three years.

The tier-II bank said it would use the funds to increase its branch network from the current 92 outlets in 37 counties, widening its presence and customer base as it also considers an initial public offering (IPO) proposal.

From running one branch in 1985, the bank has grown over time and in addition to the 92 branches has over 4,000 bank agents and about 10,000 merchants countrywide.

Banks’ latest first-half results have sent the clearest indication that the sector has come out of the Covid-19 pandemic downturn.

Central Bank of Kenya data show that commercial banks’ six-month profits before tax jumped 61 percent to Sh96.4 billion—the all-time high—in a period majority of them increased government paper holdings.

The half-year earnings for 2021 have now surpassed the pre-Covid high of Sh85.8 billion recorded in the first six months of 2019.