Loan book
Sumac Microfinance Bank grew its profits by 16 per cent to Sh5.36
million from Sh4.6 million after an impressive expansion of its loan
book.
Eight of the 13 MFBs regulated by CBKs are yet to publish their audited
results - though they have all since furnished the regulator with a copy
of the results in line with the requirements of the Microfinance Act.
However, unlike commercial banks which should publish results within
three months after the end of a financial year, MFBs have an extra one
month to do so.
In recent years, numbers for the 13 MFBs have not been impressive with deposits dissipating and their loan books shrinking.
Their pre-tax losses increased to Sh935 million by the end of June 2018,
compared to a loss of Sh171 million in June 2017, according to figures
from CBK.
This was an earth-shattering decline of 450 per cent that stretched the
loss-making streak by CBK-regulated micro-lenders to three consecutive
financial years.
Another report by the regulator shows that by the end of 2017, about 70
per cent of MFBs recorded losses - bringing into question the viability
of a financial sub-sector that not long ago was hailed as a panacea for
financial exclusion in the country.
Kenya Women Microfinance, the biggest MFB and one of those which did not
slide into the loss-making zone, however, saw its profit decline by 92
per cent to Sh18.7 million from Sh224 million in December 2016.
Only Faulu survived the loss-making whirlwind, registering a profit growth.
Pages
Tuesday, April 2, 2019
Micro-lenders sink deeper into losses
Dominic Omondi
Microfinance banks (MFBs) plunged further into the red, signalling a
tough business operating environment for micro-lenders who have been
losing customers to mobile lending platforms.
Of the seven microfinance banks that published their results, only Faulu
and Sumac Microfinance reported growth in profit. The three others were
stuck in the loss-making zone as they grappled with heavy operating
costs against dwindling returns.
Uwezo, Maisha, Caritas, and Daraja continued their loss-making streak in
what analysts have attributed to the difficulty in navigating
structural changes occasioned by digitisation of the financial sector.
Net-loss by Uwezo Microfinance nearly tripled to Sh27 million in the
financial year ending December 30, from Sh9.4 million in the previous
financial year. This is as interest on loans declined while
administrative costs and provision for bad loans went up.
The microlender’s interest in the loan portfolio declined to Sh24.7
million, from Sh25.4 million. Other administrative costs increased to
Sh24.5 million from Sh16.9 million.
Maisha Microfinance saw its losses triple to Sh119 million from Sh42.3
million after the micro-lender increased its provision for bad loans by a
whopping 690 per cent.
Maisha’s provision for loan impairment in the period under review
increased to Sh61 million from Sh7.7 million in the financial period
ending December 2017.
Caritas losses after taxes increased from Sh70.9 million to Sh85.4 million.
Although Daraja Microfinance slashed its loss by 36 per cent, it still
remained in the red after making a loss after tax of Sh43.8 million in
the period under review - from a net loss of Sh59.7 million in the
previous period.
Daraja’s interest on loans went up by 38 per cent to Sh17.4 million from
Sh12.6 million. Its staff costs also declined to Sh23.9 million from
Sh29.7 million.
Faulu, the largest deposit-taking microfinance, saw its profit increase
by increased by more than three-quarters to Sh190.44 million from Sh104
million as it significantly reduced its provision for bad loans. “Our
future focus as a customer-led retail and traders’ bank is to continue
evolving digitally by offering our customers relevant financial
solutions,” said Remu in a statement.
U & I Microfinance saw its net profits decline to Sh9 million from Sh11 million.
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