BOB_2017_SMALL

CHAIRMAN’S REPORT
Dear Stakeholders,
I have the pleasure to present the Bank’s Annual Audited Report and Financial Statements for the year ended December 31,
2017.
KENYAN ECONOMY & BANKING SECTOR
Subsequent to a prolonged presidential poll in 2017 that delayed investment decisions in the backdrop of a biting drought
that hurt farming as also slow credit offtake, the Kenyan economy is estimated to have expanded by 4.8 per cent in the year
2017. Annual average inflation jumped to 7.98% in 2017 compared to 6.3% in 2016. The Kenya Shilling remained stable against
convertible currencies as well as regional currencies in the month of December, 2017.
IFRS 9 replaced IAS 39 effective from January 01, 2018. Implementation of IFRS 9 significantly impacts Banks’ Financial
Statements, the greatest impact being the calculation of impairments. IFRS 9 aligns measurement of financial assets with the
Bank’s Business Model. In addition, the IFRS 9 provision framework will enable Banks to evaluate the effect of economic and
credit changes on the Bank’s Business Model, Capital and the Provision levels under various scenarios.
PERFORMANCE OF THE BANK
As at the end of the year 2017, Deposits stood at Kshs 73.01 Billion vis-a-vis Kshs 64.87 billion as at December 31, 2016 translating
to a growth of 12.53%, while Advances closed at Kshs 43.94 billion vis-à-vis Kshs 38.09 billion as at December 31, 2016 translating
to a growth of 15.36%. Growth of 30.15% was recorded in Profit before Tax, with the PBT at Kshs 5.05 Billion vis-à-vis Kshs 3.88
billion as at December 31, 2016. The Non-Interest income increased by Ksh 322 million on account of profit on sale of Bank’s
property at Tom Mboya Street during the year. The ratio of Gross NPA to Total Advances stood at 6.07% as at December 31, 2017,
down from 8.91% as at December 2016 while the Net NPA ratio stood at 2.26%, down from 4.47% in 2016.
ACHIEVEMENTS
During the year, the Bank introduced various new IT initiatives such as SMS alert, Mpass book and E-banking for enhanced
customer service. A Customer Care Centre was established for blocking of Debit Cards. Mobile Banking is also to be launched
shortly. The construction of Baroda Head Office Block along Muthithi Road is in progress and is scheduled to be completed by
February 2019. Additionally, Bank has introduced the school fee module to facilitate fee payments. Bank distributed wall clocks
to churches and donated computers to schools during the year, as a part of Corporate Social Responsibility initiatives.
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