Equity’s revenue up despite harsh economic scene

“I think many banks will explain their performance using externalities like inflation and the difficult economic environment — which was indeed a major factor this year. The bank can still double profits in future,” said Mr Job Kihumba, an executive director at Standard Investment Bank.

Analysts say only a revival of the economy could bring back the phenomenal profitability of past years at the bank, which has also registered bigger bad debts.

Mr Kihumba said the bank was still in the growth phase, with its expansion in Uganda and Sudan and in under-served areas of Kenya.

Thus, higher profitability in coming years is possible.

The bank was helped by its relatively huge capital outlay, making it grow its balance sheet more aggressively as at the end of the nine months of 2009 compared to December 2008.

Indeed, its loan and advances portfolio grew by 32 per cent between December 2008 and September 2009, a factor that may also have contributed to the growing NPL numbers in the sense that a bigger loan book increases the amount of possible defaults in absolute numbers.

The consolidated loan book grew to Sh58 billion from Sh44 billion in December 2008 and from Sh43 billion in September 2008.

As at September 30, the group’s gross NPLs were at Sh4.46 billion, up from Sh2.75 billion in December 2008 — or a 51 per cent rise.