StanChart beats Barclays with 82pc profit leap

Standard Chartered has chalked up 81.5 per cent increase in net profit to Sh4.5 billion in the first half to zoom past its transnational peer, Barclays Bank of Kenya.

On Tuesday, Barclays reported Sh4.2 billion earnings for the same period, ranking them fourth after KCB and Equity.

StanChart made the profit after a 54 per cent increase in total income to Sh10.995 billion. Despite the high growth in income, its total expenses rose by only 22.7 per cent to boost its net profit.

In a statement, the bank said it had “seen substantial income growth momentum across both businesses during the first half of the year with consumer banking revenue growing by 45 per cent while wholesale banking revenue grew by 55 per cent.”

“Consumer banking income momentum has continued while wholesale banking has also had a strong first half with a record performance in client income,” said CEO Richard Etemesi.

Mr Etemesi also attributed the higher performance to “the benefits of sticking to a clear and consistent strategy, investing for growth, as well as disciplined management of capital, liquidity, costs and risks.”

Mr Francis Mwangi, a research analyst at Standard Investment Bank, said the bank had adopted a more aggressive approach from the third quarter of 2011.

“We have seen the bank increase lending to the small and medium enterprises. It grew the proportion of longer-term loans of more than five years compared to the shorter-term loans of up to three years,” said Mr Mwangi.

He said the bank was increasingly lending to projects and had taken advantage of higher interest rates that brought in more income.

The bank saw 96.7 per cent growth in total interest income in the first half of the year. Banks were forced to raise their rates after the Monetary Policy Committee (MPC) hiked the Central Bank Rate (CBR) last December to its highest level since the instrument was introduced in June 2006.

“We have remained disciplined on costs and processes and innovative on products and services. Our improved technology platforms have enabled us to serve new business segments and respond to the changing business environment,” Mr Etemesi added.

Whereas its loanbook was flat during the first quarter of this year, in the second quarter it grew by 7.8 per cent to Sh104.1 billion.
“That was the biggest loanbook growth I have seen so far this quarter,” said Mr Mwangi.

girungu@ke.nationmedia.com