Standard Chartered Bank Kenya earned Sh1.29 billion in revenues last year from corporate and investment banking (CIB) sustainable finance business, a ten-fold growth, highlighting the increasingly important income earner for local banks.
Sustainable finance revenue, according to the company, is income earned from “green, social, and sustainable” lending activity and from corporate clients that generate over 90 percent of their own revenues from activities and products considered “green and sustainable.”
The revenue from these activities grew from Sh129 million in 2022.
The growth in such revenues for the bank reflects the increased greening of Kenya’s economy, coming amidst regulatory and international pressures for all firms to report on sustainability issues.
For StanChart, income from sustainable finance was mainly driven by their lending to corporates and investment banking business, which cumulatively accounted for over 98 percent of such revenue last year, up from 84 percent in 2022.
The lender said in its sustainability report for 2023 that the rise was occasioned by its expanded lending to sustainability-linked projects and to clients seeking to fund their low-carbon transition efforts as well as the introduction of new products in the investment banking division.
“We rolled out key sustainable finance products on the deposit side to allow our clients to deploy their cash balances towards sustainable lending linked through the Bank. We also offered clients a total of twenty-nine sustainable funds,” the lender said.
The bank has also ventured into carbon trading as part of its sustainability agenda. Carbon trading is the buying and selling of carbon credits – which are essentially tokens for the reduction of carbon emissions paid for by emitters of similar amounts.
StanChart recorded its first sustainable finance earnings from financial markets, which amounted to Sh500 million, while similar income from transaction banking rose to Sh790 million from Sh109 million in 2022.
Sustainable finance income from its wealth and retail banking business, however, saw a 32 percent decline from last year’s Sh20 million to Sh14 million this year.
Its lending for sustainable projects last year totalled Sh3.1 billion, accounting for only 1.7 percent of its loan book last year, which saw a marginal rise to Sh177 billion as of December 2023.
This indicates that despite the growth, the sustainable finance business still comprises a very small part of the bank’s revenues, reflecting how small the sector is, despite the push for increased sustainable financing.
Last year, the lender’s total revenues rose 28 percent to Sh28.8 billion, meaning its income from sustainable finance was only 4.2 percent of its total earnings for the year, albeit an improvement from 2022’s 0.5 percent.
Investors around the world are increasingly expecting public companies to play a part in sustainability issues, including funding projects with a positive contribution to the environment and society.
