Companies

StanChart profit jumps 50pc on lower expenses

ngari

Standard Chartered Bank Kenya chief executive Kariuki Ngari. PHOTO | DIANA NGILA | NMG

Standard Chartered Bank Kenya’s #ticker:SCBK net profit surged 50.9 percent in the half year ended June, helped by lower operating expenses and higher non-interest income.

The bank reported net earnings of Sh4.8 billion in the period compared to Sh3.2 billion a year earlier.

StanChart did not declare an interim dividend, noting that the Covid-19 pandemic presents health and economic challenges for the foreseeable future.

“Our first half of 2021 was one of recovery. Lockdowns, both locally and globally of various forms have come and been relaxed affecting economic activity,” Kariuki Ngari, StanChart’s chief executive, said in a statement.

“Profit before tax recovered strongly from last year, helped by strong underlying business momentum, improved loan impairments and operating cost efficiencies.”

Non-interest income rose 13.5 percent to Sh4.99 billion driven by improved performances in wealth management and financial markets.

Net interest income, which largely comes from loans and advances, fell by three percent to Sh9.12 billion, driven by lower average yields despite the loan book expanding seven percent to Sh130.28 billion.

However, operating expenses reduced by 15.8 percent to Sh7.32 billion, helped by reduced provisions for loan defaults and lower spend on staff.

“Loan impairment declined by 61 percent (to Sh638.5 million) reflecting the work we have done over the last few years to ensure our portfolios are in good shape and resilient to stress and supported by improving macroeconomic variables,” Mr Ngari said.

Most banks have reduced provisions amid increased loan recoveries and a brighter economic outlook compared to last year.

During the review period, staff costs declined by 3.7 percent to Sh3.21 billion, reflecting the saving that has come on the back of the voluntary early retirement programme that reduced the number of employees.

The lender last year spent Sh1.35 billion on the staff retrenchment programme, marking the seventh straight year of cutting staff numbers as it made more investment in digital banking services.

StanChart closed last year with 1,280 employees— a drop of 117 from the previous year.

The bank had 42 branches in 2016 but the number has come down to below the 33 it had in 2019.

Footfall in branches has been falling for the last three years in line with the growing preference for non-branch alternatives such as internet and mobile banking.