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Sidian Bank defies pandemic to record Sh72 million profit

By Bernard Sigei
Thursday, March 25th, 2021
From left: Lucy Njanja, Branch Manager - Gikomba, Loise Mwangi, Head - Branches and Chege Thumbi, CEO, at the Gikomba Branch opening in January.
In summary

Sidian Bank  shrugged off effects of Covid-19 pandemic to post  profit before tax of Sh72 million for the year ended December 31, 2020.

The mid-tier bank focusing on SMEs said though a drop of 28 per cent drop from the previous year’s profitability of Sh99 million, it indicates a strong performance across key indicators despite the setback arising from the pandemic that affected most businesses last year.

It attributed the profitability to growth in the loan book by 31 per cent with customer deposits growing by 32 per cent.

As a result, the bank’s balance sheet increased by 27 per cent from Sh26.5 billion to Sh33.5 billion. 

“The impressive balance sheet growth is a testament of the Bank’s foray into the SME market, by providing solutions that work for businesses and entrepreneurs,” the bank said in a statement yesterday.

Commenting on the financial performance, the bank's CEO Chege Thumbi, indicated that the the insitution will continue to pursue innovations to deliver to the market, solutions that will allow banks clients to access services more conveniently and efficiently.

During the period in review, the increased lending in the period resulted in higher loans interest income which grew by 13 per cent as well as increased lending fees which boosted overall performance. 

Loan impairment provisions were lower at Sh187 million as at December 31, 2020 compared to Sh403 million as at December 31, 2019.  

This is due to the improved quality of the bank’s loan book with gross non-performing loans (NPLs) reducing by 28 per cent from Sh3.3 billion in 2019 to Sh2.3 billion in 2020 as a result of focused credit management and collections.

According to the statement, Sidian managed to sustain its profitability despite the pandemic through diversification of its revenue streams to support SME's through a variety of solutions that resonate with the target market. 

Trade finance has remained the flagship product for the bank supporting clients in energy, water, infrastructure and transport.

Further, through the WASH Fund, the bank supported affordable credit to SMEs and privately-owned business enterprises to finance Covid-19 WASH loans to entrepreneurs in the Water, Health and Sanitation sectors with an approximate of $1 million (Sh109.8 million) disbursed to SMEs across 17 counties in the country. 

In the year, the bank also drew down the 2nd tranche $10 million (Sh1.09 billion) FMO facility, which it used to on-lend to SMEs.

The bank has substantially upgraded its digital platforms to allow end to end access by customers at their convenience. As a result, over 80 per cent of its transactions were through alternative delivery channels. 

At the centre of innovation, the bank in 2020 launched Sidian Credible, a digital solution that allows customers and non-customers to access bid bonds in less than five minutes, cutting off the need for physical bank visits and queues at bank branches.

In January 2021, Sidian Bank opened its 42nd Gikomba Branch in order to support the growing economy of small-scale traders within the Gikomba area.