Centum Investment has recorded a 21 per cent drop in its half-year net profit, posting Sh1.6 billion in September compared to Sh2.1 billion posted during the same period last year.
The Nairobi Securities Exchange-listed firm has blamed the decline on poor performance of its subsidiary, Sidian Bank, which recorded a 37 per cent drop in its interest income.
Centum Chief Executive Officer James Mworia said yesterday at an investor briefing in Nairobi that Sidian’s depressing performance was attributed to the negative impact of the interest rate capping regulations on the entire banking sector.
“Sidian is a third-tier bank. It is mostly engaged in micro-lending. The credit pricing as a result of the rate cap law has hit the bank hard,” Mr Mworia said. “But we are in the process of restructuring its balance sheet to bring operating costs down in order to revise the trend.”
Centum holds a 74 per cent controlling stake in Sidian.
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Apart from Sidian’s performance, Mworia also blamed the political uncertainties that rocked the country for Centum’s drop in profits in its other investment portfolio.
The firm recorded a 55 per cent decline in dividend income in the period under review.
Planned exits
Mworia said Centum had planned some exits from some of its investments just after the August 8 elections, but the political period that gripped the country afterwards made that difficult to happen.
“We mostly deal with international investors. We had planned to exit some of our investments by selling to these investors but the political uncertainty kept them at bay,” Mworia said.
However, publishing subsidiary Longhorn Publishers saw its profit rise by 41 per cent - from Sh381 million to Sh535 million - for the period under review.
Mworia attributed this positive growth to good performance in Longhorn’s subsidiaries in Zambia and Malawi, where the publisher replicated the same business model.
Apart from Longhorn, another subsidiary, Almasi Beverages, which is involved in the manufacture of soft drinks, recorded a five per cent growth in sales.
Centum’s main investment portfolio, real estate, which soaked in a Sh1.6 billion investment during the first half of this financial year, also gave sluggish returns as a result of the general economic slowdown arising from political uncertainties.
Centum’s real estate investment portfolio comprises Two Rivers Mall in Runda, Vipingo at the coast, Pearl Marina, Uhuru Heights and Athena properties.
“We intend to increase the development and sale of apartments at the Two Rivers Mall, as well as sell the bulk land that is held in our other properties in Vipingo and Pearl Marina in order to reap returns from real estate,” Mworia said.
