Operations at Victoria Commercial Bank. Photo/business daily
Victoria Commercial Bank has for the very first time in ten years recorded a loan default of Sh 18.3 million in the half year ended June. The small lender attributed the non-performing loan to a tough operating environment in the banking industry.Hezron Kamau, Victoria finance manager said, “The operating environment has been particularly difficult both locally and internationally and this has unfortunately led to some difficulty in repayment by the borrower, as many businesses have experienced”. “However, the recovery process is ongoing and likely to be successful” said the finance manager.The bank set aside Sh7 million to cover for the bad loan, similar to what was provided in June 2016.Victoria managed to register growth in net earnings, interest income and loan book size in the six-month period despite the non-performing loan and the rate caps .Net profit grew 11.5 per cent to Sh307.7 million compared to Sh275.9 million a year earlier. Net interest earnings increased by Sh60 million to Sh618.4 million.The bank said , “VCB business model mainly focuses on providing financial solutions to a niche corporate segment. It has always been a policy of the bank to be as competitive as possible and provide interest rates which are fairly priced, through cost and service efficiency models”.Victoria’s loan book expanded 17 per cent to Sh15.5 billion in the half-year period.Earnings from fees and commissions grew by a fifth cent to Sh144.3 million. Customer deposits rose marginally to Sh15.8 billion from Sh15.6 billion.