Family Bank's Q1 net earnings up 27.2%

Family Bank Group has reported a significant increase in net earnings for the quarter ended March 31, 2020, with a rise of 27.2% driven by increased net interest income as businesses gradually recover from the impact of COVID-19. The bank recently redeemed its five and a half years Medium Term Note valued at approximately $18.6 million on April 19, 2021. Following this redemption, Family Bank received formal approval from the Capital Markets Authority to float a $74.1 million bond. This move is aimed at strengthening the bank's capital base and supporting lending activities. Speaking on CNBC Africa, Stephen Ngugi, the Chief Financial Officer of Family Bank, shared insights on the bank's performance in Q1 2021 and shed light on the strategy moving forward. Family Bank witnessed growth in various key areas during the first quarter of this year. The balance sheet increased from $900 million to $914 million, while deposits rose from $960 million to $974 million. Lending activities remained robust, with loans totaling $100 million. Despite the ongoing challenges, particularly in sectors like hospitality and tourism, Family Bank observed positive developments in sectors such as health, education, manufacturing, and business. This growth in interest income contributed to a 26% increase in net interest income compared to the same period in 2020. The bank also managed to maintain operating expenses at a consistent level, while increasing provisions by 29% to cover potential risks. Ngugi highlighted the bank's efforts to address non-performing loans, noting a decline of 4.7% in Q1. Family Bank has focused on implementing proactive debt recovery measures and correcting the course for struggling clients. The bank has seen encouraging progress, with 71% of previously at-risk customers now back on track. As sectors recover, Family Bank anticipates releasing provisions and easing financial pressures. Going forward, the bank is set to issue a $74.1 million bond to enhance its capital structure. This move aims to fortify the bank's balance sheet and ensure compliance with regulatory requirements. By tapping into the capital markets, Family Bank seeks long-term funding options and demonstrates confidence in the market's potential. The decision to float a bond is aligned with the bank's governance strategy, emphasizing transparency and commitment to shareholders. Family Bank's commitment to maintaining a strong capital position and supporting lending activities reflects its dedication to driving sustainable growth and financial resilience. As the bank navigates the evolving economic landscape, strategic initiatives like capital market engagements will play a crucial role in sustaining momentum and fostering stability.