•Njau said The slower growth in the interest income was because the Group chose not to pass the full cost of funding to the customers.
•Operating expenses grew 14 percent mainly driven by the high inflation, continued investments in people and technology .
Image: FILE
Family Bank has proposed a Sh723 million dividend payout for the financial year ended December 2023 a drop from the Sh795 million that the bank paid in 2022.
This despite the bank posting posting a Sh2.5 billion Profit After Tax for the full year ended 31 December 2023, representing a 13.3 percent growth compared to Sh2.2 billion posted in 2022.
The directors recommended a payment of the first and final dividend of Sh0.56 per share for the year 2023.
According to bank, the period under review was characterised by high inflation, high interest rates and a depreciating local currency with adverse effects on customers’ purchasing power.
This saw the loan loss provisions increase by 180 percent during the year.
However, Family Bank Chief Executive Officer and Managing Director Nancy Njau, expressed optimism for 2024.
“We believe that the tough part of the operating environment is behind us, and we are well positioned to take advantage of the market segments we operate in as the market turns,” said Njau.
Interest expense from deposits and long-term debt grew by 41 percent, driven by the high funding costs, in line with the current operating environment, interest income increased by 20 percent with the net interest income increasing by 9percent.
The slower growth in the interest income was because the Group chose not to pass the full cost of funding to the customers thereby cushioning them from the steep rise from interest rates, which was witnessed in the year 2023.
Non-interest income grew strongly by 19percent in the year as the bank continued to pursue an income diversification strategy from interest income. This diversification drove the growth in the net operating income by 12percent.
Operating expenses grew 14 percent mainly driven by the high inflation, continued investments in people and technology and the Kenya shilling depreciation that saw a steep increase in the dollar denominated technology related expenses.
The Group’s total assets increased by 10.8 percent to close at SH 142.4 billion during the year from SH 128.5 billion in FY22.
The growth was funded primarily through deposits that increased by 15.4 percent to close the year at Sh102.59 billion.
The growth in deposits was driven by continued support and patronage by the bank’s customers in all segments in addition to new customers on boarded during the year.
On the investments side, the bank continued to optimally allocate capital which saw a growth in government securities by 35 percent to close at Sh34.8 billion and a growth in the net loan and advances to customers by 6.8 percent to Sh86.9 billion.
These investments were in line with the Group’s strategy and were aligned to the operating environment.
The bank’s total capital and liquidity ratios remained strong, adequately above the regulatory requirement with total capital ratio closing at 16. 9 percent against 14.5 percent and liquidity ratio closing at 38.7 percent against 20 percent.