Standard Chartered Bank Kenya (StanChart) has posted a 45.6 percent growth in net profit in the first quarter ended March on the back of higher interest income and revenue from transactions and foreign exchange trades.
The lender’s net profit in the period stood at Sh4 billion, up from Sh2.7 billion a year earlier as operating income jumped 45.2 percent to Sh10.76 billion.
Non-interest income has grown ahead of interest income at 55.5 percent to hit Sh3.9 billion from Sh2.5 billion at the same time last year.
Growth in the segment was driven by a 114 percent rise in forex trading income to Sh2.19 billion from Sh1.02 billion. StanChart’s net interest income meanwhile rose by 40.1 percent to reach Sh6.9 billion.
The higher net interest income was realised from the combination of increased earnings from loans and lower interest expenses, which inform the cost of the bank’s funding.
The interest expense eased by 5.4 percent to Sh701.8 million despite customer deposits growing 14.2 percent to Sh302.9 billion, indicating that the bank benefited from an increase in non-interest bearing accounts.
The lender’s loan book expanded seven percent to Sh137.1 billion, helping to lift its total assets by 14 percent to Sh388.6 billion.
StanChart’s investment in government securities like bonds and Treasury bills, meanwhile, shrunk by 6.2 percent to Sh95 billion.
The bank’s capital allocation mirrors the industry’s ongoing diversification of investment portfolios away from government lending as more institutions implement risk-based pricing of loans, making ordinary lending more profitable.
The bank’s total operating expenses surged 47.2 percent from Sh3.5 billion to Sh5.1 billion largely from an acceleration in loan-loss provisioning to Sh790.9 million.
At the same time last year, the lender had written back all of its loan impairment costs to the profit and loss accounts.
The sharp increase in provisions came despite StanChart’s gross non-performing loans rising marginally to Sh22.59 billion from Sh22.56 billion, indicating increased conservatism.
StanChart is the third large bank to announce its performance in the first quarter, with lenders generally expected to set new earnings records this year.
Equity Group, for instance, posted a 6.6 percent net profit growth to Sh12.3 billion, with the performance helped by higher interest income as well as revenue from fees and commissions.
Stanbic Bank, the main operating subsidiary of Stanbic Holdings, recorded an 84.3 percent growth in net income to Sh3.89 billion.