Faulu Bank has secured a Sh900 million capital injection from its parent firm Old Mutual to boost its digital service offering as local lenders vie for mobile loan share.

The microfinance bank said on Thursday that the new financing will help it refocus on its business as it seeks to boost digital lending and support for small businesses as part of a return-to-profit strategy.

This comes amid an increasing rush by lenders in the country to expand their digital service offerings as the rise in digital lenders has eaten into a market that was previously almost entirely controlled by banks.

“We are keen to be a leader in the digital finance space. Many of the services the bank offers are now available online, and we aim to make our services more accessible to our customers,” bank chief executive Julius Ouma said yesterday. said

With about Sh21 billion in customer deposits and over 350,000 accounts, Faulu is one of Kenya’s largest microfinance lenders but has struggled to turn a profit for the past few years.

According to its latest financial results available, it made a loss of Sh13 million in the financial year ending December 2022, an improvement from a loss of Sh205 million in 2021.

Joint damage

In general, all of the country’s microfinance banks have been struggling to turn a profit recently, with their combined losses increasing by 78 percent in the year ending December 2022, according to the latest report by the Central Bank of Kenya. 1.3 billion reached Rs.

To return to profitability, small-scale lenders have recently prioritized digitization and mobile lending to increase efficiency and compete in the growing field of digital lenders.

The latest survey report by the Central Bank of Kenya shows that 74 percent of commercial and microfinance banks now prioritize digital lending, up from just 44 percent in 2022.

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