Spire Bank would still owe Sh. 2.6 billion if it sold all assets to pay its debts

Spire Bank Cumulative Losses: The financial mess at Spire Bank just keeps getting murkier. Today, the bank would still owe Sh. 2.6 billion if it were to liquidate all its assets to repay its debts.

It’s cumulative losses have topped Sh. 9.2 billion as of September 30 2021 and eaten through the lender’s working capital resulting in negative shareholder’s equity.

In the first nine months of its 2021 financial year, Spire Bank’s net loss increased to Sh. 818.8 million from Sh. 783.6 million which was recorded in the same period the previous year.

Over time, the bank’s cost of funding which is represented by total interest expenses has continued to outstrip both interest and non-interest income.

The lender is in breach of all Central Bank of Kenya (CBK) capital requirements that that designed to ensure the financial stability of a bank. Currently, the bank’s liquidity ratio sits at 3.4 per cent against the Central Bank of Kenya’s prescribed 20 per cent. Spire also has a negative core capital of Sh. 3.14 billion, meaning that it requires Sh. 4.14 billion to meet the CBK minimum capital of Sh. 1 billion.

Spire Bank loan defaults are now more than its entire loan book

In the half year ended June 2021, gross non-performing loans stood at Sh. 2.64 billion and raced above net loans and advances to customers which dropped by 28 percent to Sh. 2.36 billion from Sh. 2.97 billion.

The lender said in April that it was in talks with four potential investors for a stake sale in search of turnaround of the institution which was sold to Mwalimu National Sacco by the late businessman Naushad Merali. The small lender now needs at least Sh. 4.14 billion to stabilize its operations.