StanChart nine month net profit rises to Sh6.3bn

Standard Chartered Kenya’s #ticker:SCBK net profit for the nine months ended September rose by a third to Sh6.3 billion on higher revenue from government securities, fees and commissions and a fall in provision for bad loans.

The top tier lender, which had made a net profit of Sh4.7 billion in the corresponding period last year, cut its provision for bad loans by half, from Sh3.73 billion last year to Sh1.88 billion this year.

Interest income from government securities went up by 15 per cent to Sh9.5 billion even as the bank’s outstanding stock of securities shrank by Sh10 billion to Sh115.5 billion, indicating a shift to higher-yielding bonds.

The lender however saw a two per cent fall in interest income from customer loans to Sh9.9 billion, continuing a trend that has hit a number of banks this year due to a lower cap on rates and a preference for government lending. Interest expenses rose marginally by two per cent to Sh5.76 billion, while operating expenses fell by 6.7 per cent to Sh12.4 billion largely due to lower provisions for bad loans.

“Non-interest income increased by 10 per cent to Sh7 billion compared to a similar period in 2017 driven by good growth in fees and commissions, foreign exchange income and growth in our wealth management business,” said StanChart in a statement.

“Interest income on customer loans and advances declined by two per cent to Sh9.9 billion due to lower average balances coupled with re-pricing in line with the reduction of the Central Bank Rate while interest income from government securities increased by 15 per cent.”

The fall in loan loss provision continues to provide the base for banks’ increasing their profits in the nine month period, with fellow top tier lenders KCB, Cooperative Bank, DTB and Equity Bank all making significant reductions in their loan loss provisions even as the stock of bad loans goes up.

Only Barclays among the six tier-one lenders that have so far released their results has made an increase in the provision.

Stanchart cut it’s bad loans provision even as its gross non-performing loans stock rose by Sh2.5 billion to Sh19.5 billion.

Overall, the bank’s loan book shrunk by Sh3.2 billion to stand at Sh114.2 billion at the end of September compared to the same period last year, saying that they remain selective in lending in order to grow the balance sheet in a safe and sustainable manner.