Jamii Bora Bank, which lends mostly to small and medium
enterprises, has recorded a 79.5 per cent drop in after-tax profits
following increased expenses associated with branch expansion and higher
tax charge.
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The bank reported a Sh19 million net profit compared to Sh93 million posted in 2013.
“We have increased our branch network to 24
branches and they take time to break even,” said Samuel Kimani, chief
executive of the bank.
The lenders operating expenses grew at a faster
pace of 70 per cent than its income expansion of 60 per cent resulting
in marginal growth in profits before tax of Sh6 million.
Profits after tax, however, took a hit from
exhaustion of a four-year grace period set to recover losses made in
2010. This resulted in the lender paying taxes of Sh76 million compared
to a tax credit of Sh3 million last year.
“We have decided to be prudent and book the tax because we have not seen other companies getting extensions,” said Mr Kimani.
The bank is open to applying for an extension from the taxman to recover the losses.
This is the third year in a row that the bank is
recording profit. Between 2005 and 2011, the bank was recording losses.
The turnaround followed entry of new investors Asterisk in 2011.
Jamii Bora mobilised deposits of Sh8.4 billion up
from Sh3.4 billion while its loan book expanded to Sh6.1 billion from
Sh3.8 billion.
Jamii Bora has been raising capital to support its
growth with Sh820 million of new capital booked in the last month of
last year. The lenders paid up capital increased to Sh1.7 billion from
Sh1.2 billion.
Private equity firm Catalyst Principal Partners bought a stake into the bank last year for an undisclosed amount.
There has been increased attention in lending to
small and micro businesses which is the target market for Jamii Bora.
Some lenders have opted to open subsidiaries targeting the SME segment
in order to tap into the market without changing their brand radically.
Chase Bank operates Rafiki Microfinance Bank which
has also been on an expansion mode. The microfinance bank opened six
branches last year to push it outlets to 19. The expansion saw its
deposit base double to Sh2.8 billion as its customer numbers rose to
106,689 from 61,162.
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