Family Bank Posts 17.1% Profit Growth Despite Challenging Economic Conditions

Family Bank has demonstrated resilience and strategic adaptability, reporting a 17.1% increase in profit after tax for the first half of 2024. The bank’s earnings rose to Sh1.7 billion, up from Sh1.4 billion in the same period last year, despite muted demand for credit from customers.

CEO Nancy Njau highlighted the bank’s focus on prudent financial management and strengthening its liquidity position as key factors in navigating the current economic landscape. “We’ve had to be nimble in our approach,” Njau explained. “With the sluggish credit demand, we pivoted to increase our investments in government securities, which saw a significant 69% jump to Sh41.9 billion.”

This strategic shift allowed Family Bank to make the most of available liquidity, offsetting potential losses from reduced lending activity. The move paid off, with the bank’s total assets swelling by 19.2% to reach Sh158.3 billion.

However, the bank faced its share of challenges. The high cost of funding in the first half of 2024 led to a 46% increase in interest expenses, putting pressure on the bank’s margins. Additionally, non-performing loans inched up from Sh13.6 billion in 2023 to Sh14.07 billion, reflecting the broader economic struggles faced by borrowers.

To counteract these pressures, Family Bank doubled down on its income diversification strategy. Non-funded income saw a notable 20% rise to Sh2.3 billion, driven by fees and commissions, trade finance, and gains from securities trading. This multi-pronged approach helped cushion the bank against the volatility in traditional lending activities.

The bank also continued to invest in its future, with operating expenses increasing by 15% to Sh4.9 billion. This spending was primarily directed towards technology, human resources, and digital transformation initiatives, positioning Family Bank to capitalize on emerging opportunities in the evolving financial landscape.

Despite the challenges, Family Bank managed to grow its loan book by 7.9% to Sh91.4 billion and increase customer deposits by 18.1% to Sh119.1 billion. These figures suggest that while the economic environment remains tough, the bank is still finding ways to expand its core business.

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