Sidian claws back from losses on loans growth

Sidian Bank has escaped loss-making territory by posting a Sh43.5 million profit for the six months to June from a loss of Sh123.6 million in a similar period last year.

The lender increased loans by 12 percent from Sh12.2 billion to Sh13.8 billion boosting interest income earning by Sh44 million.

Sidian, which is owned by investment firm Centum #ticker:ICDC, focused on customer deposits while cutting on deposits from other banks over the period with customer money jumping from Sh14.1 billion last year to Sh17.7 billion in the six months to June.

Deposits from other banks meanwhile declined from Sh2.6 billion to Sh608 million which resulted in a marginally higher interest expense of Sh516 million up from Sh499 million last year.

The bank’s liquidity has doubled from 26 percent to 41 percent, allowing the lender to chase top-line growth.

The lending drive comes on the back of a Sh1.2 billion capital injection by Investment Fund for Developing Countries (IFU), a Danish private equity, in a deal that will see it (Sidian) progressively cede a 20 percent stake.

“As part of the financing agreement, IFU will have the option within the first three years, to convert the outstanding principal loan into equity which will translate to shareholding of approximately 20 percent of the bank,” said Sidian Bank board chairman and Centum CEO James Mworia.

The capital is set to be used to grow the lender’s small and Medium-sized enterprises (SME) loan book, trade finance portfolio and mobile lending, according to Mr Mworia.

Sidian shareholder funds stood at Sh4.1 billion up from Sh3.5 billion.

The lender has also been able to rein in on bad loans which were flat at Sh2.9 billion allowing them to book back insurance for bad debt.

Loan loss provisioning stood at Sh144 million down from Sh175 million last year.

In the period Sidian Bank managed booked Sh699 million in non interest incomes up from Sh496 million last year.

This was buoyed by a 49 percent jump fees and commissions and pushing foreign exchange income.

Centum bought a controlling stake in Sidian, formerly known as K-Rep Bank, in 2014 but had been a minority shareholder in the lender since 2004.

The firm said at the time that the move was in line with Centum’s strategy of expanding its presence in Kenya’s financial services sector.