Customers at a banking hall in Nairobi. FILE PHOTO | NMG
State-owned Development Bank of Kenya has sunk deeper into
crisis as its net profit nearly halved and its liquidity ratio fell
further into the negative territory.
In the quarter to
September 30, the bank reported a liquidity ratio of negative 4.9 per
cent putting it far below the legal minimum threshold of 20 per cent.
This was a worse performance than that of positive 8.1 per cent at the
end of June.
The liquidity ratio is a good indicator for a bank’s ability to meet its debt obligations as they fall due.
Development
Bank’s cash crunch has been worsening over the last one year. The
liquidity ratio was steadily eroded from 15.1 per cent in September 2016
to the current position.
The
company’s profits after tax fell 48.1 per cent to Sh55.9 million in
comparison to a similar period last year. Net interest income fell 25
per cent year-on-year as the firm took a bite from the interest rate
caps.
Total operating income fell 22 per cent from the
Sh475 million recorded in September 2016. The rate at which the company
was cutting expenses could barely keep up with the falling income.
Total operating expenses fell 10 per cent during the period to Sh289.6
million.
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