Family Bank has posted a profit loss of Sh. 492 million in the first six months of the year.
The bank attributed the loss to a 50 per cent reduction in interest income following a slowdown in lending as well as an increase in bad loans. The bank made Sh. 711 million profit after tax during the first half of 2016.
Financial results released yesterday attributed the poor performance to a drop in the interest earned on loans, which fell to Sh. 3.3 billion over the first half compared to Sh.6 billion in a similar period last year.
Family Bank has over the last year slowed down on lending, which is seen in its loan book declining to Sh. 43 billion from Sh. 57.7 billion in the first half of last year and Sh.50 billion in December 2016.
Net non-performing loans and advances went up to Sh.4.7 billion from Sh.2.6 billion in 2016. While there has been an industry-wide caution in lending since the implementation of the interest capping law in September last year, Family Bank’s lending capability to advance loans might have been affected by a dip in deposits from customers.
The bank’s depositors started getting jittery and made major withdrawals following a tumultuous time in the banking industry that saw a number of struggling lenders put in receivership.
Allegations of complicity in the infamous National Youth Service (NYS) scandal, where more than Sh1 billion of taxpayer’s money was lost, also played a part in eroding confidence in the bank.