Caritas Microfinance Bank: Success Beyond Limits

Three years after being licensed, the bank has achieved many accolades hence cementing its visibility in the market

By Catherine Kuria

Caritas Microfinance Bank was licensed in 2015 by the Central Bank of Kenya (CBK). It is a
financial institution that is committed to serving the banked and under-banked segments which account for about 25% of Kenya’s population. The bank’s roots can be traced to a self-help group that was established in 1983 in Kiriko Parish, Gatundu, Kiambu County. The main objective of the group was to promote selfreliance amongst its members. The model
later spread to other parishes within the Archdiocese of Nairobi. The idea of starting the microfinance bank was mooted with the aim of accommodating the emerging needs
of the members of the self-help groups.

Being a microfinance bank that mobilizes savings from the members of the public, Caritas is regulated by CBK. It was the twelfth microfinance bank in Kenya to be licensed by CBK. Currently, there are thirteen microfinance banks (MFBs) in the country. However, Caritas is the first MFB to be owned by a religious institution – the Catholic Church’s Archdiocese of Nairobi.

It was officially launched by His Eminence Cardinal John Njue in a colourful ceremony
held at the Holy Family Basilica in 2017. “Since the bank’s inception, we have grown from one member of staff to almost a hundred,” says Mr. George Maina, the Chief Executive Officer, adding that the bank’s branch network has grown from one to six.

Massive success 

2018 was a great year for the bank; it bagged four awards! In April to start with, it was recognized as the fastest growing microfinance bank during the Think Business Banking Awards. According to Mr. Maina, that was no mean achievement. “We know that there are other players in the market and to be recognized as the fastest growing was indeed very humbling,” he asserts.

In addition to that, it has also won two other awards in the digital space. It won the awards for best microfinance institution in the use of digital solution and the best microfinance bank in the E-services. Most recently, it won the first runners up position during the Financial Reporting (FiRe) Awards. The awards are a joint initiative of the Institute of Certified Accountants of Kenya (ICPAK), the Capital Markets authority (CMA) and the Nairobi Securities Exchange (NSE). Being the first time to participate in the FiRe Awards, this was another accolade for Caritas Microfinance Bank in 2018.

Mr. Maina credits the bank’s very dedicated board as well as the staff members for the superb performance. “The team we have on the ground is the engine that drives the business,” he says, adding that the shareholders have also supported the bank financially, hence contributing to its overall success.

Moreover, the products it has been able
to provide in the market have been very appealing to its customers. Impressive
growth has also been witnessed in its portfolio that doubled in the course of 2018. In 2017, it closed with a loan book of Kshs. 350 million while currently it has a loan book of close to Kshs. 800 million. Currently, the bank’s deposits are about Kshs. 950 million, while the asset base is over Kshs. 1 billion (compared to Kshs. 170 million when it commenced business).

Digital space

One of the key things that the bank has geared towards is leveraging on technology. In that field, it is doing quite great in that some of the delivery channels it has been able to provide and offer include agency banking and mobile banking. The bank has also partnered with the Cooperative Bank of Kenya for ATM and point-of-sale (POS) services, enabling its customers to have nation-wide access to their accounts. Customers can make withdrawals at all
Visa branded ATMs and purchase goods and services at all Visa-branded outlets. “I can say that we have taken advantage of the digital space including internet banking,” he says. “We have also seen an uptake of about 80% of our banking services being done outside the bank,” he adds.

According to Mr. Maina, interest capping was not in the best interest of commercial banks because it limited the amount of interest charged on the loans advanced to customers. Lenders price the interest on loans depending on the customer’s risk and capping has therefore constrained them from doing so. Due to this, commercial banks have not been financing the so called high risk customers – for instance micro and small enterprises (MSEs). “That has given us an opportunity as a microfinance bank to serve such customers since we were not affected by the capping because we fall under the Microfinance as opposed to the Banking Act,” he elaborates.

Market share and growth strategy
According to the recent Central Bank statistics, Caritas Microfinance Bank has a market share of about 2% and that number is still growing. Come next year, the bank is planning on increasing that to 5% and maybe in a few years, it will be the dominant player in this field. Mr. Maina believes that the bank has the potential to expand even further. In the first two years
of operation, it concentrated on laying the foundation in terms of getting the right people, and putting the right systems in place. Currently, it has a presence in Nairobi and its environs, Thika town and Banana Hill urban centre in Kiambu County. Additionally, plans have already been put in place and are geared towards the opening of two more branches come 2019.

“Opening of branches will be key because the closer we are to the people, the more
efficient our services will be,” he says adding that they are anticipating that their shareholders will inject more capital because that is the fuel that drives the bank. Moreover, they are expecting their asset base to continue growing so that they can stabilize the business.

As it opens more branches, the bank will have more staff coming on board. Mr. Maina concludes by saying: “We are a force to be reckoned with. We might be young in the industry but we are slowly coming up and gaining more recognition. We have great things to offer our customers in the coming years so watch this space!”