Listed non-bank financial service provider Sanlam Kenya has announced the commencement of a strategic business recovery strategy following the release of its half year trading results.
Announcing the business recovery strategy, Sanlam Kenya Group CEO, Patrick Tumbo said that for the firm to maintain prudent standards, it had opted to proactively impair financial assets including corporate bonds worth more than Kshs 1.1 billion earlier invested in companies currently showing signs of financial strain. Immediate collection efforts on the outstanding amounts, he said, have already started with a high chance of recovery.
In its trading results released this morning, Sanlam Kenya posted a Kshs 1.53 billion loss attributed to a 100% prudent impairment of distressed financial assets, slower economic growth and continued interest rates capping effects within the period under review.
To ensure business stability, Tumbo said the business will be adopting a variety of remedial interventions including an enhanced investment policy to facilitate sustained growth.
The interventions which also feature the firm’s management team reorganisation are expected to accelerate growth from alternative market segments and new revenue streams including enhanced focus on the firm’s General and Life Insurance businesses.
“It will no longer be business as usual. We have adopted a revised business model and we will be pursuing key initiatives geared at elevating the business back on a profitability path,” Tumbo said, adding that, “on this journey, we shall be anchoring our business operations on an enhanced investment policy, to secure the interests of all our stakeholders.”
Compounded by economic headwinds that have characterized the local market, Sanlam Kenya in keeping with prudent business practice has impaired financial assets amounting to Kshs 1.114 billion covering earlier corporate bond investments in distressed local enterprises. Some of the corporate bond investees included Athi River Mining (under administration) Kshs 574 million, Real People Kshs 398 million and Kaluworks Kshs 169 million.
“These facilities are at various stages of financial distress and it remains prudent for us to maintain a balance sheet that reflects this status as collection and recovery efforts progress,” Tumbo explained.
Reflecting the prevailing depressed market climate for non-bank financial services providers, Sanlam Kenya posted a marginal growth in gross written premiums which stood at Kshs 3.340 billion up from Kshs 3.308 billion realized during the same period last year. Total revenue during the period for the firm stood at Kshs 3.688 billion.
The firm’s investment income largely affected by the impairment of financial assets also dropped by 24% to Kshs 1.194 billion down from Kshs 1.571 billion posted during the same period last year.