- Sidian Bank is majority owned by Centum (ICDC)
Sidian Bank’s performance in 1Q2016 deteriorated compared to the corresponding quarter last year. A spike in payroll expenses appear to have contributed to the hit in the company’s bottom-line in the latest quarter.
Net profit shrinks and staff costs rise
Sidian Bank posted a net profit of Sh103.3million in 1Q2016, down from Sh120.8M in the like quarter a year ago. A Sh20 million rise in payroll expenses had an adverse impact on the lenders earnings. Staff expenses in the latest quarter was Sh162 million.
Sidian Bank posted a net profit of Sh103.3million in 1Q2016, down from Sh120.8M in the like quarter a year ago. A Sh20 million rise in payroll expenses had an adverse impact on the lenders earnings. Staff expenses in the latest quarter was Sh162 million.
Sidian Bank is not alone in the struggle with soaring staff expenses. Several banks have recently reported an uptick in payroll expenses with some resorting to headcount reduction to lower staff expenses. Equity Group Holdings Ltd (NSE:EQTY), for instance, recently said that the exit of about 660 employees last year contributed to a 4% decline in payroll expenses and it expect a further 4% drop in payroll expenses in 2016.
Growing for the loan book
As part of its efforts to grow its credit business, Sidian Bank recently announced a Sh10 billion loan deal with taxi operator Uber. Under the deal, Uber drivers will be able to obtain cheaper loans from Sidian to enable them buy modern cars. Uber requires its drivers to have cars manufactured in 2008 or later, which has necessitated the need for drivers to seek loans to enable them upgrade their cars.
According to Sidian, each Uber driver can quality for a car loan of between Sh1 million and Sh1.5 million. The bank is targeting 10,000 under drivers. The drivers will get the loans from Sidian Bank at below market interest rates.
As part of its efforts to grow its credit business, Sidian Bank recently announced a Sh10 billion loan deal with taxi operator Uber. Under the deal, Uber drivers will be able to obtain cheaper loans from Sidian to enable them buy modern cars. Uber requires its drivers to have cars manufactured in 2008 or later, which has necessitated the need for drivers to seek loans to enable them upgrade their cars.
According to Sidian, each Uber driver can quality for a car loan of between Sh1 million and Sh1.5 million. The bank is targeting 10,000 under drivers. The drivers will get the loans from Sidian Bank at below market interest rates.
Sidian Bank’s majority holder Centum Investment Company Ltd (NSE:ICDC) will provide the money to be loaned to Uber drivers. Centum owns more than 67.5% of Sidian Bank.
Shares of Centum Investment Company Ltd (NSE:ICDC) closed flat at Sh41.25 on Tuesday. However, during Tuesday’s sessions, the shares rallied between a high of Sh42 and a low of Sh41. Some 1.22 million shares of Centum changed hands during the day.
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