NAIROBI, Kenya Sep 1 – Spire bank has trimmed its net loss to Sh403million in the half-year ended June 2022, as the recent conversion of deposits held by Mwalimu Sacco into share capital improved the firm’s capital base.
In the same period last year, the lender posted a Sh512.9million net loss.
During the half-year under review, Spire’s core capital improved from a negative position of Sh3.1 billion to a deficit of Sh1.8 billion.
This is attributed to the conversion of part of customer deposits worth Sh3.4billion by Mwalimu Sacco into new equity/capital.
Despite the ease, Spire Bank remains in breach of the Central Bank of Kenya (CBK) capital rules which would require an additional injection of at least Sh1.8 billion to meet the regulatory requirements.
Banks are required to maintain a floor of 10.5 percent for core capital to total risk-weighted assets ratio, 14.5 percent for total capital to total risk-weighted assets, and eight percent for the core capital to total deposits ratio.
The bank’s liquidity position rose to 6.8 per cent from 4.3 per cent even as it remains below the regulatory threshold of 20 per cent.
In the period, deposits in the bank fell by 63.5 per cent to Sh1.9 billion from Sh5.2 billion.
The lender also recorded a 22 per cent balance sheet reduction as net loans and advances to customers shrunk by 26.1 per cent to Sh1.7 billion from Sh2.3 billion in the same period last year.
It posted an operating income of Sh70.3 million from an operating income loss position of Sh4.5 million on the backdrop of a 61.6 per cent reduction in total interest expenses in the period.
The lender also cut its total operating expenses by 7.3 per cent to Sh470.9 million from a higher Sh507.8million.
The lower expenses are attributable to a decline in loan loss provision costs to Sh49 million from Sh107.9 million and a fall in staff costs to Sh135.5 million from Sh143.1 million.
Mwalimu National Sacco which is the bank’s major shareholder has in recent months explored various avenues to put Spire Bank back on its feet including potential disposal of the bank’s assets.
The Sacco has presented seven potential buyers to the CBK, but the regulator informed MPs it was carefully engaging the potential investors while trying to balance the conflict of interest issues and ascertaining their credibility.
