Recent unaudited results show that Spire Bank made a net loss of Ksh 556 million for the first six months of 2020 compared to a net profit of Ksh 81.48 million in the same period last year. Financial statements from the bank show that the losses stem from drastic drops in income, and rising provisions.
Interest income for the bank fell to KSh 186.6 million this half-year from Ksh 319 million as the COVID-19 pandemic continued to affect the lender’s loan book. Interest from loans fell by 51.4% to Ksh 104.7 million, as the lender’s loan book shrunk by 20% to Ksh 2.9 billion.
The bank recorded a negative net interest income of Ksh 41.8 million down from Ksh 89.1 million in a similar period last year. The negative interest income follows a 90% default rate, as gross non-performing loans hit Ksh 2.69 billion out of a total loan book of Ksh 2.96 billion.
The surge of NPLs for the first six months of 2020 pushed provisions for bad loans to KSh 16.5 million for the half-year against negative loan loss provision of Ksh 150 million for the same period last year when it expected fewer defaults.
The bank’s high NPLs for the half-year are representative of the harsh operating environment during the pandemic, which saw Kenyan banks restructure loans worth 844 billion in July.
Still, Spire Bank’s 90% default rate at end June is almost seven times higher than the industry’s rate of 13.1%.
Spire Bank recorded a negative operating income of Ksh 22.4 million, down from Ksh 358.6 million following lower commissions and Forex income which pushed its loss further.
The board of Spire Bank does not recommend a dividend for the half-year.
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