Spire bank full year net loss doubles to Ksh 2.25B

Spire Bank saw its 2018 full-year net loss double to Ksh2.25 billion, hurt by a Ksh1.5 billion deferred that the lender incurred.

Despite the net loss, Spire Bank has cut down operating losses before tax by 53 per cent from Ksh1.6 billion to Ksh746 million in 2018.

Spire Bank’s operating loss before exceptional items stood at Ksh 307 million, representing a 78 per cent improvement compared to the prior year.

The lender attributes the improvement to the Bank’s decision to focus on loan collections.

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However, the lender saw its full-year net loss more than double from Ksh1.12 billion to Ksh2.26 billion on account of an exceptional item.

The main exceptional item was deferred tax assets amounting to Ksh1.5 billion, which was derecognized in the period under review leading to a higher income tax provision.

Spire Bank’s Managing Director, Dr. Norman Ambunya says: “The Bank has 10 years to utilize these derecognized tax provisions against future profits as per the Kenya Revenue Authority rules. As management, we are optimistic the Bank will recover this asset from taxes as it returns to profitability.”

Despite the losses, the lender is optimistic to turn around its performance banking on a new business model it is implementing that is hinged on recapitalization of the business as well as a new strategic investor ensure it remains competitive as well as boost its capital base.

The bank says talks with a strategic investor are at an advanced stage, which is likely to see Mwalimu National Holdings Limited buy out the minority shareholder, subject to regulatory approval.

Despite the efforts, the bank has failed to meet most statutory ratios such as the core capital to total deposits liabilities ratio, core capital to total risk-weighted assets ratio, total deposits to total risk-weighted assets ratio and liquidity ratio.

The lender’s liquidity ratio worsened from 14.16 per cent to 10.1 per cent, which is below the statutory minimum of 20 percent.

This is likely to see Spire Bank attract penalties from the central bank for flouting the minimum statutory ratios.