Orals East Africa>Family Bank lifts H1 profits 14 pc on state securities leverage At the hut of the story

Written by Oral East Africa

Family Bank Group posted a 14.2 percent jump in net profits of Kes1.6 billion in the half year of 2024 by leveraging on government domestic borrowing appetite after private credit demand slumped.

The bank profits grew from Kes1.4 billion in a similar period last year after the bank more than doubled its investment in government securities.

Family Bank’s interest income grow by 26.1 percent driven by the growth in the loan book and the additional investments in government securities. Net Interest income increased by a 12.7 percent to close at Kes4.9 billion.

The Kenyan government is paying handsomely for short-term debt as East Africa’s largest economy struggles with huge bills amidst slowing taxes and expensive money markets..

Tight money market

This has helped banks maintain growth in profitability and increase revenues even amid a tough operating environment.

“With the muted demand of credit from customers due to the prevailing macroeconomics, the Bank invested the available liquidity in government securities which saw this investment class increase by 69 percent to Kes41.9 billion from Kes24.8 billion,” said Family Bank CEO Nancy Njau.

Family Bank has maintained steady growth despite a challenging macro environment by navigating tight interest rates and growing a resilient loan book with high asset quality.

Total assets increased by 19.2 percent to KES. 158.3 billion fended by growing deposits 18 percent from to Kes119 billion.

With the additional liquidity, the Bank continued to support the customers with additional lending which saw the loans and advances increase to Kes91.4 billion from Kes86.5 billion in June 2023.

Prudent banking

This growth was muted by the higher cost of funding witnessed during the period which saw a 46 percent increase in interest expense in line with the high cost of funding witnessed in the first half of 2024.

The Group’s income diversification strategy proved successful with non-funded income rising by 20 percent to KES. 2.3 billion. This was largely driven by the fees and commissions, trade finance, and gains from securities trading.

Ms Njau said the prudent strategy remains the bank’s key focus as they prioritize building scalable infrastructure to continue supporting the significant balance sheet growth they have experienced over the last few years.

“As a Group, our focus in the first half of the year has been on prudent financial management by strengthening our liquidity position while working on satisfying customer needs. The performance of this first half is a testament of the Bank’s agility and resilience in the face of enduring market uncertainties,” said Ms Njau.