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Nigerian Digital Bank, Kuda, Sees Losses Grow By Over 600% in 2021

Kuda uses its mobile application to vet borrowers compared to banks which usually lend to performing businesses, derisking the likelihood of defaults to happen.

Kuda Bank has reported a $14,214,681 loss for 2021, latest reports have reavealed.

The report also shows that in 2020, the company reported a loss of $2,025,295, which means the company’s losses rose by 602% in 2021. At the same time revenue grew by 4,315% from $169,273 in 2020 to $7.48 million in 2021. In the end, however, analysis shows that high credit loss/impairment charges and operating expenses drove the company into the red.

As seen in Kuda’s reports, ‘the non-performing loan (NPL) recorded by the firm is too high for the comfort calculated at 69%,’ with loans totalling as much as $5.28 million unlikely to be paid by borrowers. These kinds of poor performing loans are reportedly wiping out 96% of interest income as well, the company’s own analysis showed.

In sharp contrast, the non-performing loans in the traditional banking sector averaged 4.8% within the same period. Kuda uses its mobile application to vet borrowers compared to banks which usually lend to performing businesses, derisking the likelihood of defaults to happen.

As such, Kuda’s financial report has determined that ‘the firm’s risk appetite, criteria, and strategy relating to retail and business loan, calls for immediate restructuring.

At the beginning of September 2022, Kuda announced it was laying off 23 out of its 450 employees. This comes as the company’s expenses on the workforce rose 500% in 2021 bringing raising employee-related costs by 246%, and overall, leading to a 652% jump in operating costs.

The income of the firm does not justify this spend in the short time.  – Kuda’s financial statement

 

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