Sidian Bank, which is owned 74% by investment company Centum (ICDC), is shedding 108 jobs from its 560 workforce. The move is designed to increase efficiency. The lender has been automating its operations as part of the efforts to pare costs and boost profits.
The mass layoff of staff will cost the bank Ks70 million. However, long-term benefits will be impressive as the bank will significantly trim its Ks70 million monthly payroll expenses.
Sidian joins other lenders that have recently announced restructuring measures aimed at saving costs to protect the bottom-line. A new law that capped interest banks charge on loans has made it harder for backs to grow revenue.
Amid the interest rates cap and the stiff competition for customers, banks are betting on cost cutting to stay profitable. In cost-cutting measures, headcount reduction is among the low-hanging fruits lenders can quickly reach for and that’s what Sidian has done by sending home some of its employees.
Expansion continues
The bank plans to open four more outlets in Nairobi before the end of the year. The move suggests the management of Sidian sees more growth opportunity in the city despite competition from larger rivals.
Sidian battles for market share against industry giants such as Equity Bank (EQTY), Co-operative Bank (COOP) and Kenya Commercial Bank (KCB). The lender controls 0.6% of Kenya’s credit market and boasts close to 80,000 customer accounts.
Ks1.2 billion boost for Sidian
In vote of confidence in Sidian’s prospects, Centum earlier this year injected Ks1.2 billion in the bank, significantly boosting the lender’s capital base. Sidian distributed Ks390 million in loans in the second-quarter, or 2Q16.
Sidian’s revenue rose to Ks1.32 billion in the first-half of 2016, or 1H16, from Ks1.17 billion in the year-ago period. But profit of Ks158.2 million in 1H16 declined from Ks228.7 million in the same period last year.
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