StanChart profit hits record Sh12.4 billion

Standard Chartered Bank of Kenya last year spent Sh205.63 million on redundancies.

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Standard Chartered Bank Kenya’s net profit for the year ended December 2022 grew by 38 percent to Sh12.44 billion, driven by higher interest income and revenue from foreign exchange trading.

The tier one lender said Tuesday that it will be paying its shareholders a final dividend of Sh16 per share following the improved financial performance—taking its total dividend payout for the year to Sh22 per share (2021: Sh19) when the Sh6 per unit interim dividend paid out in December is factored in.

Stanchart’s top line revenue rose by 16 percent to Sh34 billion, while operating expenses rose by a smaller margin of eight percent, to Sh15.6 billion.

Consumer, private and business banking was the biggest contributor to the lender’s revenue at Sh15.6 billion, helped by higher transaction volumes and growth in wealth management business.

The corporate, commercial and institutional banking unit contributed Sh13.6 billion to top line revenue, helped in part by reduced loan impairment costs.

“Our wealth management, transaction banking and financial markets products performed strongly…our costs were up by eight percent in comparison to the double-digit growth in income of 16 percent, enabling us to deliver a strong income-to-cost jaws of eight percent,” said Standard Chartered Kenya chief executive Kariuki Ngari.

The lender’s net interest and non-funded income grew at similar margins.

Net interest income was up 18.3 percent to Sh22.2 billion, with earnings from lending to government going up by 12.6 percent to Sh10.3 billion, while interest earned from customer loans rising by eight percent to Sh12.7 billion.

Its loan book stood at Sh139.4 billion at the end of the year, up from Sh126 billion in 2021, while its stock of government securities rose by Sh10.1 billion to Sh105.7 billion in the period.

Fees and commissions from forex trading were the main drivers of the 19.6 percent growth in non-funded income to Sh11.3 billion.

Most of the big banks have reported a surge in income from foreign exchange transactions in a period when global currencies have seen increased volatility in the wake of the Russia-Ukraine conflict.

Stanchart saw its earnings from the hard currency trading rise by 58 percent to Sh5.97 billion, offsetting muted growth in other fees from loans and ordinary banking business.

The lender is now set to distribute a total of Sh8.31 billion of its net earnings for the year in dividends (inclusive of the interim payout), representing a payout ratio of 67 percent for the financial year.

For the 2021 financial year, the total distribution stood at Sh7.18 billion, representing an 80 percent payout ratio.

The more conservative dividend stance reflects the general concerns in the banking sector about potential geopolitical and economic shocks, mainly arising out of the Russia-Ukraine conflict.

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