Family Bank has
warned that its full-year net profit will fall by at least a quarter
following the lender’s decision to retrench an unspecified number of
employees.
The mid-sized lender has announced that its
net profit for the 12 months to December will not exceed Sh1.48 billion,
mainly due to one-off retrenchment costs.
Family Bank
made the profit warning Tuesday when it reported that its net earnings
for the nine months to September had nearly halved to Sh963.3 million
compared to the Sh1.86 billion it made during a previous period last
year.
“We would like to bring to the attention of our
investors that we will definitely make profit but it will close at lower
than 25 per cent of last year,” said Family Bank chief executive David
Thuku.
“We are, however, hopeful that the cost
containment measures we are embarking on will enable us to remain
profitable going forward.”
Family Bank plans to relieve
of duty an unknown number of its employees as it restructures to
respond to thinned margins for lenders in the wake of a rate capping law
that has forced banks to the drawing board.
NIC Bank, Sidian and First Community are some of the other banks that have announced staff cuts.
Family
Bank closed the nine months of this year with staff costs of Sh2.05
billion, representing a 9.4 per cent growth from the Sh1.87 billion it
recorded during a similar period last year.
Family Bank’s interest income from loans grew by Sh2.1 billion to close the nine months to September at Sh7.9 billion.
The lender’s loan book grew by Sh3 billion to close the period at Sh55.7 billion as its customers grew to nearly two million.
Customer deposits during the nine months decreased by Sh10 billion to Sh53.5 billion.
The bank’s chairman, Wilfred Kiboro, said this was a result of capital flight in the wake of Chase Bank’s collapse last year.
However,
the bank’s deposits through its mobile platform more than tripled to
Sh3 billion monthly from the Sh700 million it averaged during a similar
period in 2015.
Mr Thuku said the lender would, going
forward, shift its focus to alternative banking channels to weather the
low-interest income environment brought about by the capping law
introduced in August.
“Currently, we have 93 outlets in
32 counties and will be opening three more branches in Eastleigh, River
Road and Wangige. We intend to close out on our target number of 100
branches by end of Quarter One of 2017,” he said.
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