A neobank employing a Nigerian microfinance bank licence, Kuda MFB reported a loss of approximately N6 billion ($14.2 million) in 2021.
According to TechCabal, who cited the bank’s 2021 financial report, the loss increased significantly from the N868 million ($2 million) loss it experienced in 2020 by a staggering 602%.
The bank incurred a staggering $2.2 trillion in nonperforming loans (NPL) in 2021 as a result of the company’s high impairment rate, or decline in asset value, according to the research.
The company’s personnel costs grew by roughly 500% from N215.4 million in 2020 to N1.2 million as a result of its increased usage of pricey senior management personnel, compensation evaluations, and promotions of current employees, according to the document’s additional details.
Depreciation and amortisation increased significantly by 246% as a result of the increased workforce, resulting in an asset payment that increased from N18.5 million to N64.3 million over time. Kuda’s overall operating expenses (OPEX) grew 652% from N93.5 million to N7 trillion in 2021.
“The income of the firm does not justify this spend in the short time,” said the statement.
The loan is considered impaired when it is anticipated that the creditor won’t be able to collect all interest and principal payments due in accordance with the terms of the loan agreement.
According to the assessment, Kuda’s assets were impaired since it was unable to guarantee that 96% of the loans it granted in 2021 would be repaid with interest and principle when due.
Recall that only days before announcing its $25 million Series A financing in March 2021, Kuda started testing its overdraft services with more than 2,500 consumers who “had been actively using their Kuda accounts.” It stated that the product had 50,000 weekly users by the end of June.
The bank added that by the end of the second quarter of 2021, it had provided $20 million in credit with a 30-day repayment period to more than 200,000 qualifying users.
However, risk analysts have criticised Kuda’s loan disbarment process, noting that the bank has to redesign and add more risk evaluation into its overdraft offering or abolish it totally. Kuda has made it easier and quicker for Nigerians to access loans.