Stanbic Bank Kenya has reported a low after-tax profit amounting to Sh3.6 billion which is 29.4pc lower compared to the Sh5.1 billion the lender recorded during the same period in 2019.
The dim performance is attributed to an increase in loan loss provisions which surged by 76pc in what the lender says is sufficient to cover future potential credit losses.
The bank noted the hardships to service outstanding loans during the period which resulted to 23pc of its loan book being restructured.
“2020 has been a challenging year for everyone including our clients, so we made an intentional decision to walk the journey with them and financially cushion them against the adverse effects of the COVID- 19 pandemic,” said Charles Mudiwa Stanbic Bank Chief Executive.
Uncertainties brought by the coronavirus pandemic saw Stanbic cut down operational expenses by 23pc to Sh7.74 billion, from Sh9.99 billion it reported during the same period last year.
Mudiwa says the decision by the Central Bank of Kenya to lower the base lending rate by 100 basis points to 7pc in April, and which has since been kept unchanged saw the bank cut interest charges on existing loans, which in turn saved borrowers Sh300 million.
“While this contributed to a 6.9pc drop in net interest income compared to the third quarter of 2019, it was Stanbic’s way of giving back to the clients and supporting them further during the pandemic,” Mudiwa added.
The waiver of costs on selected mobile transactions also saw clients benefit from additional reductions estimated at Sh283 million during the quarter, the bank said.
The 18.4pc drop in non-interest income was due to a 31.4pc decline in mobile transaction fees and commissions on account of reduced business activity during the period, even though forex income rose 28.7pc during the period.
Mudiwa is however optimistic of a favourable full-year outlook saying, “As our clients begin to chase a rebound strategy in recovering economy, we are confident that with our strong capital-liquidity ratios, we are well-positioned to support them find innovative ways to make their dreams possible.”
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