Faulu Microfinance targets profitability as losses shrink in 2025

The bank’s loss before tax narrowed to Ksh.386.9 million, down from Ksh.1.04 billion in the previous period, according to its latest financial results. This improvement came alongside a reduction in total operating expenses, which fell from Ksh.4.04 billion to Ksh.3.46 billion.

A key driver of the improved performance was Faulu’s increased focus on the MSME segment, which the lender says offers stronger cash flows and more stable deposits. This shift, combined with cost rationalisation measures, helped reduce interest expenses from Ksh.1.7 billion to Ksh.1.5 billion.

The bank also recorded growth in non-funded income, including fees and commissions, as it worked to diversify revenue streams beyond traditional lending.

“Faulu is now firmly on a path to sustainable profitability and long-term value creation,” said Chief Executive Officer Julius Ouma, noting that the bank had “significantly reduced its cost base while strengthening the quality of its balance sheet.”

The lender’s strategy has included a deliberate move away from higher-risk loan portfolios in favour of MSME lending, which it considers more resilient under current market conditions.

Despite the narrowing losses, Faulu continues to operate below profitability. However, it maintained a liquidity ratio of 25 percent, above the regulatory minimum of 20 percent.