Surge in lending boosts Sidian Bank’s Q3 performance

Sidian Bank, a prominent financial institution in Kenya, has witnessed a remarkable surge in performance in the third quarter of the financial year, with a consolidated net profit of 369 million shillings, a significant increase from the 8 million shillings recorded in the same period last year. The Director of Finance, Strategy, and Administration at Sidian Bank, Douglas Mwangi, attributes this remarkable growth to the bank's strategic focus on lending. Mwangi highlighted that the bank's loan book experienced a 17% expansion from December to September, mainly fueled by lending to Small and Medium Enterprises (SMEs) as they navigate their way through the recovery phase from the adverse impacts of the COVID-19 pandemic on their businesses. This support for customers, coupled with increased transactional activity, contributed to a substantial rise in non-funded income, ultimately bolstering profitability. Mwangi emphasized that the bank's diverse and proactive approach to lending and business transactions played a pivotal role in achieving the impressive financial results. Despite the challenges posed by the pandemic last year, where many financial institutions observed a decline in their loan portfolios, Sidian Bank stands out as a success story of resilience and adaptability. As the economy gradually reopens and vaccination efforts intensify, there is a noticeable uptick in customer engagement and business activities, indicating a promising performance outlook for the bank. The shift towards a short-term lending strategy, focusing on loan tenures ranging from three to 24 months, has also contributed to maintaining a healthy asset quality for Sidian Bank. This strategy enables the bank to promptly identify and address any potential credit risks, leading to a favorable NPL ratio of 11%, which is currently below the industry average. Looking ahead, Sidian Bank remains committed to fortifying its capital base to sustain its growth trajectory. As part of this strategy, the bank plans to reinvest profits back into the business to enhance its capital adequacy for future expansion. While there are no immediate plans to issue dividends for the ongoing financial year, Sidian Bank aims to initiate dividend payments by 2023, demonstrating a long-term commitment to value creation for its shareholders. In terms of investment focus, the bank has traditionally held positions in government securities as a means to manage surplus funds and mitigate risks. However, with a renewed emphasis on expanding its loan book, Sidian Bank anticipates a reduced reliance on government securities as it shifts towards more aggressive lending activities. As an SME-focused institution, Sidian Bank recognizes the pivotal role played by small businesses in driving economic growth in Kenya. The bank is keen on harnessing opportunities in the SME sector by offering tailored financial solutions and trade finance products to support the unique needs of these businesses. With a clear vision for sustained growth and a customer-centric approach, Sidian Bank is poised to further solidify its position as a leading player in the Kenyan banking landscape.