SBM shrugs liquidity support allegations, says books in order

Liquidity ratio at 53%, way above statutory requirement

In Summary

•A wholly owned subsidiary of Mauritian bank group SBM Holdings, the bank has indicated a strong financial position with a total asset base of Sh84.3 billion.

•This is compared to Sh70.7 billion as at December 2018, after the acquisition of Chase Bank (in receivership).

SBM branch/FILE
SBM branch/FILE

SBM Bank (Kenya) Limited has dismissed liquidity troubles even as it commits on its investment in the country, where it has undertaken major buyouts.

A wholly owned subsidiary of Mauritian bank group SBM Holdings, the bank has indicated a strong financial position with a total asset base of Sh84.3 billion as at June 30, 2022.

This is compared to Sh70.7 billion as at December 2018, after the acquisition of Chase Bank (in receivership).

The total assets position is at the backdrop of customer deposits of Sh59.7 billion at the end of June 2022, largely being the same level as at the end of December 2021 of Sh60.0 billion.

The customer deposits balance has been growing steadily over the years, despite the full payment of moratorium deposits that were acquired from Chase Bank in August 2018.

The last tranche of these moratorium deposits was paid in August 2021.

The bank liquidity position was 53 per cent as at June 30, 2022, management noted, way above statutory minimum.

The minimum liquidity ratio that the Central Bank of Kenya (CBK) requires commercial banks to hold is 20 per cent.

The strong liquidity position was underpinned by investment in government securities totaling Sh37.3 billion.

Lenders have traditionally invested heavily in government securities and liquidated the securities as and when required.

The funds that SBM Bank (Kenya) has invested in the government securities are therefore available for utilization in other financial needs that the Bank may have in future, management said.

“The bank retains a solid liquidity position.This confirms our commitment to the market, and underpins the long term strategic plans to continue strengthening the brand both in Kenya and the region,” SBM Bank (Kenya) chief executive Moezz Mi said.

Presently, the bank does not have intentions to exit the market and remains focused on enhancing its position, while offering its customers the best value for their trust in the brand, Mi added.

There have been concerns over an alleged planned sale of its Kenyan subsidiary five years after entering the market through the buyout of Fidelity Bank.

This is by former owners of Fidelity, who in a suit, want to block the deal or be paid what they say was lost during the buyout.

The lender received financial support from CBK totaling Sh12.5 billion to help resuscitate both Fidelity and Chase Bank.

This is Sh9.7 billion for the support of Chase Bank (under receivership) and Fidelity Bank’s Sh2.8 billion.

According to the lender, the funds were advanced by CBK to the two distressed institutions under liquidity support framework much before the acquisition by SBM Bank (Kenya) Limited.

“The bank is up to date on repayment of the liability to CBK,” it said yesterday.

On Friday, it affirmed its continued operations and investment in the Kenyan market.

“The SBM Holdings Ltd as the ultimate holding company of SBM Bank (Kenya) Limited wishes to reassure its stakeholders in Kenya that it remains committed to the local banking market through its long-term investments in SBMBK,” management said in a statement.

SBM Bank Kenya’s annual profits dropped to Sh346.7 million in December 2021, from Sh654.6 million a year earlier, a period that banks, albeit remaining profitable, some were shedding off the Covid-19 impact which had slowed down economic activities.

“As the second largest banking and financial services Group listed in Mauritius, the SBMH remains disciplined and close with its regulatory bodies, clients and other stakeholders,” it said yesterday.

As such, the SBMBK reserves its right to explore all legal avenues against any false, unfounded, and malicious allegations concerning the sale or transfer of any of its Kenyan banking operations, it said.

In an explainer, the bank said its liquidity purposely reduced from 61 per cent at end of December 2021 to 53 per cent in June 2022, as it increased lending to customers so as to drive upwards lending income.

Lending to customers increased from Sh29.0 billion in December 2021 to Sh 33.5 billion in June 2022.

“The bank is not under any liquidity support framework from the Central Bank of Kenya (CBK) as can be demonstrated by its strong liquidity ratio of 53 per cent," it said.

The balances due to CBK, included in the financial statements of the bank, primarily includes liabilities that were assumed from the Fidelity Commercial Bank and Chase Bank (In receivership), the lender explained.

In the last five years, SBM Bank (Kenya) has demonstrated resilience as a brand, having honoured all the obligations of settlement to depositors of Chase Bank in receivership, and in respect to the assets and liabilities it took over after entering the Kenyan market.

“In this period, the bank has garnered considerable confidence with customers across all sectors and has entrenched its brand as a catalyst for empowering women and been feted with various awards to validate this positioning,” management noted.

As an initiative to further deepen its impact on the SME sector in Kenya, SBM (Kenya) has recently entered into a partial risk sharing collaboration of $10 million (Sh1.2 billion) with the Africa Guarantee Fund for the next five years.

This is expected to positively impact many businesses for the long term with SBM committing to support growth of entrepreneurs.

“The bank is committed to sustainable development of the country through its various initiatives in supporting gender equality, green financing and providing entrepreneurs’ access to finance whilst also supporting corporate entities within the country that drives employment,” it said.

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