CfC Stanbic Bank’s quarter one profit jumps 78 per cent

CFC Stanbic Bank posted a 78.1 per cent jump in net profit for the first quarter, making it the fastest growing bank among top tier lenders.

The bank said net profit for the three months to March stood at Sh1.01 billion compared to Sh568 million in a similar period last year.

Like its competitors, the bank also benefited from a low deposit regime that also lifted the earnings of Equity, KCB and Cooperative banks. Interest paid on savings dipped by more than half after the CBK cut the policy rate to below 10 per cent.

CFC Stanbic, which is controlled by South Africa’s Standard Group, said its deposit costs dropped by Sh794 million — more than the Sh444 million increase in the net profits.

This helped offset the 43.8 per cent drop in income from lending to companies and households in line with an industry trend that saw the volume of new loans drop by Sh10 billion in the quarter compared to last year.

At 78.1 per cent, the bank recorded the fastest growth among the top tier banks that have so far announced first-quarter results including Cooperative Bank, KCB and Equity Bank, whose profits rose 33.8 per cent, 25 per cent and 22 per cent respectively.

“In our view, the improvement in NIM is significant, especially in the current cycle of declining rates, as it attests to management’s success in progressively shifting the balance sheet to better yielding personal and SME loans whilst cutting its exposure to high cost deposits,” said Standard Investment Bank in a note to their clients.

CFC Stanbic was the leading gainer of the day at the Nairobi Securities Exchange after the bank reported a 78.1 per cent jump in net profits. The bank’s share rose to Sh63 from Mondays’ close of Sh60 and has increased 61.4 per cent over the past six months.

Its non-performing loans rose to Sh340 million in March compared to Sh296.8 million in a similar quarter last year, reflecting a 14.8 per cent rise.
This was within the industry numbers.

The latest data from the Central Bank of Kenya (CBK) shows that non-performing loans held by commercial banks rose to Sh70 billion in March or 14.1 per cent higher than in December 2012.

National Bank of Kenya’s debt increased 172 per cent to Sh1.77 billion in March. High interest rates and economic shocks linked to the March 4 General Election.