Nigeria’s first digital bank, Kuda Microfinance Bank, has incurred losses of over N6 billion, a loss streak spanning two years.
It was announced that at the end 2021 financial year, the bank recorded a loss of N6,092,554,866, about $14.2 million and a 602 per cent increase from the N868 million or $2 million loss it recorded in 2020.
According to the financial report, the company’s revenue increased by 4,315 per cent from N7.6 million in 2020 to N3.2 billion in 2021.
Kuda Bank’s net profit indicates that it recorded a net loss with high credit loss/impairment charge and operating expenses which contributed to most of the losses.
The report also said that the bank’s non-performing loan (NPL) is too high, which is calculated at 69 per cent and drove the bank to a high impairment rate valued at N2.2 billion.
Loans are impaired when it becomes evident that the creditor will be unable to collect all interest and principal payments due to it, according to the contractual terms of the facility.
The firm, in March 2021, began piloting its overdraft project with over 2,500 active bank users.
Netizens have criticized the firm for its “bank for the free” strategy to win customers, which goes without charges for transfer within the bank.
The strategy also means 25 free transfers to other banks every month with extra free transfers to other banks costing N10 each.
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By the end of the 2021 financial year, Kuda Bank recorded a loss of ₦6,092,554,866 ($14,214,681), a 602% rise from the ₦868,062,000 ($2,025,295) loss it made in 2020, according to financial report seen by TechCabal. https://t.co/2ufiWiOxPt
— TechCabal (@TechCabal) September 16, 2022
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