Former building societies’ quarter one earnings soar

By Jackson Okoth

It is boom time for middle-sized banks. Their expanding balance sheet and loan book as well as investment in technology is paying off.

Family Bank is riding on paperless banking platform that allows customers to transact without having to fill in deposit or withdrawal slips.

West African-based, Ecobank Kenya has been pumping more cash into its vaults from the parent company.  This is after lengthy court battles involving loan defaulters on a balance sheet it inherited from East African Building Society, became frustrating. In the first quarter ending March 31, 2014, Family Bank more than doubled its profits to Sh641 million-compared Sh311 million, a 106 per cent increase. Since converting into a bank from a building society, Family Bank has increased its branch network from 35 to 73.

 It has been a beneficiary of the vicious talent war in the banking industry-bagging Peter Munyiri, its managing director, who occupied a senior position at Kenya Commercial Bank.

Family Bank has also poached middle level managers from its rival Equity Bank, also a player in the retail space.  “Our loan book continues to expand signifying the strong support by all our customers, partners and investors — a stamp of approval in the direction we are going. We are also guided by our ambitious strategy of becoming a tier one bank in the next three years,” said Munyiri. Family Bank had its loan book expand nine per cent this quarter to Sh30.4 billion from Sh27.9 billion, driven by increased lending to small business and personal consumers.

It is banking on this segment of borrowers to drive up its business and investment in technology, to drive up its business. Ecobank Kenya Ltd had a 238 per cent growth in net profit in the first quarter of 2014. Net earnings rose to Sh27 million, up from Sh8 million in the same period last year.

“We have significantly grown our balance sheet, revenues and branch network and it is only rational that we ratchet up our human resource capacity in readiness for growth,” said Ehouman Kassi, Ecobank Kenya managing director.

Ecobank has been riding on huge capital injections from the parent company, to drive up expansion of its branch network. Ecobank Group injected Sh2.1 billion ($25 million) as additional capital into Ecobank Kenya in June 2013 to accelerate growth.

Equity Bank was the first to release its first quarter results with its pre-tax profits up 21per cent to Sh5.4 billion, up from Sh4.5 billion posted within the same period last year.