Spire Bank is on the brink of going under according to its financial market reports and Central Bank’s measure of a bank stability.
According to CBK, Spire bank has breached all the parameters put in place to measure a banks stability.
The bank has a negative core capital of Sh2.11 billion, meaning that it requires Sh3.12 billion to meet the CBK minimum capital of Sh1 billion. This has seen it breach all the capital-related ratios such as total capital to total risk weighted assets ratio which in June stood at negative 34.61 percent against the set minimum of 14.5 percent.
Whoever, Spire bank is blaming loan defaulters for its tribulations. Reports from the bank indicate that borrowers have defaulted a record 90.65 percent of Spire Bank loan book.
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Spire,a lending bank owned by businessman Naushad Merali and Mwalimu National Sacco, revealed that gross non-performing loans (NPLS) hit Sh2.69 billion last June against the Sh2.96 billion that has been lent out.
Spire bank loan book has recorded a six month loss of Sh254.7 which is more than twice the net loss booked in 2019 financial year.
Spire’s loan loss provision is Sh16.53 million in contrast with a negative loan loss provision of Sh150 million in the preceding similar period.
@CBKKenya What’s happening with #SpireBank ?!
The books are in bad shape— D (@Vi_VaKE) September 7, 2020
The bank has been struggling to ensure its not put under receivership by CBK through limiting of withdrawals, which has caused a lot headache to some of their customers.
The bank had in June last year relied on the negative loan loss provision to bring down operating expenses to Sh272 million and book the net profit. Current period’s expenses amount to Sh523.9 million.
Accounting allows for negative loan loss provisions where a lender is more optimistic about its portfolio and expects fewer defaults going forward.
