Family Bank Group has reported KES 2.5 billion Profit After Tax for the full year ended 31 December 2023, representing a 13.3% growth compared to KES 2.2 billion posted in 2022.
While interest expense from deposits and long-term debt grew by 41%, driven by the high funding costs, in line with the current operating environment, interest income increased by 20% with the net interest income increasing by 9%.
The slower growth in the interest income was because the Group chose not to pass the full cost of funding to the customers thereby cushioning them from the steep rise in interest rates which was witnessed in the year 2023.
Non-interest income grew strongly by 19% in the year as the bank continued to pursue an income diversification strategy from interest income. This diversification drove the growth in the net operating income by 12%.
Operating expenses growth was kept at a minimum which saw a 14% increase which was mainly driven by the high inflation, continued investments in people and technology, and the Kenya shilling depreciation which saw a steep increase in the dollar-denominated technology-related expenses. Loan loss provisions on the other hand increased by 180% during the year. The increase was driven by both additional lending and additional downgrades by the Group on customer loans in 2023 in line with the Group’s credit risk management practices.
Commenting on the results Family Bank Chief Executive Officer and Managing Director Nancy Njau noted, “2023 was a tough year for businesses as we experienced high interest rates, a weaker shilling, and sky-high inflation. As a Group we continued focusing on building and strengthening relationships with our customers and employees. We believe that the tough part of the operating environment is behind us, and we are well positioned to take advantage of the market segments we operate in as the market turns.”
The Group’s total assets increased by 10.8% to close at KES 142.4 billion during the year from KES 128.5 billion in FY22. The growth was funded primarily through deposits which increased by 15.4% to close the year at KES 102.59 billion. The growth in deposits was driven by continued support and patronage by the bank’s customers in all segments in addition to new customers onboarded during the year.
On the investments side, the bank continued to optimally allocate capital which saw a growth in government securities by 35% to close at KES 34.8 billion and a growth in the net loan and advances to customers by 6.8% to KES 86.9 billion. These investments were in line with the Group’s strategy and were aligned to the operating environment.
The Group Directors have proposed a 30% dividend payout which translates to KES 0.56 per share. The Bank’s total capital and liquidity ratios remained strong, adequately above the regulatory requirement with total capital ratio closing at 16.9% against 14.5% and liquidity ratio closing at 38.7% against 20%.
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