Standard Chartered Bank Kenya has reported a 30.6 per cent profit decline in their Q3 results to Ksh.4.3 billion.
In the nine months of operations to September 30, higher costs of covering potential loan defaults by customers (loan-loss provisions) and falling operating incomes had significantly contributed to the decline.
The bank’s total operating costs surged by 4.7 per cent to Ksh.17.7 billion as loan-loss provisions grew three fold to Ksh.2.7 billion from Ksh.728.2 million last year.
The higher defaults cover came as the bank’s stock of gross non-performing loans (NPLs) widened by 10 per cent to Ksh.22 billion from a flat Ksh. 20 billion.
Meanwhile, Standard Chartered has seen its total operating income decline by 4.2 per cent to Ksh.20.7 billion billion on lower interest and non-interest revenues in the period.
Leveraging on Retail Banking
“Our strategic priorities are enabling us to weather the macroeconomic storm. Our Wealth Management business has strong momentum, we are controlling costs to fund investments, and we believe we are well provided against loan impairment. We are further streamlining our business to sharpen focus on our retail business, more effectively leverage our unique network and drive efficiencies,” said Kariuki Ngari, Chief Executive Officer
Summary Q3’ financial performance
- Income is down 4 percent to KShs 20.7 billion year-on-year driven by margin compression and subdued economic activity.
- Operating expenses of KShs 11.4 billion improved 3 percent despite continued investment in digital capabilities.
- Loan impairment is up significantly as previously guided to KShs 2.7 billion including a management overlay of KShs 0.8 billion. The overlay was taken to reflect the potential impact of delinquencies in Retail Banking on account of the relief measures extended to customers.
- Loans and advances to customers increased 11 percent year-on-year.
- Customer deposits increased 8 percent year-on-year supported by our focus on digital migration and investment in technology platforms. Funding quality has improved with Retail CASA1 supporting a reduction in term deposits.
- The Bank is well capitalised with a strong liquidity position providing capacity to support clients through further COVID-related disruption and to take advantage of future growth opportunities.
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