Standard Chartered Bank Kenya grew its net profit by 62.7 percent in the nine months ended September, helped by higher income from lending and transactions. Â
The bank posted a net profit of Sh15.8 billion in the period, up from Sh9.7 billion a year earlier, marking the fastest pace of earnings growth among listed banks that have published their results.
Total interest income rose 23.9 percent to Sh29 billion, benefitting from increased lending and investment in government debt securities in a higher interest rate environment.
“We have delivered a strong set of results in the nine months to September 2024 against a challenging macro environment by helping our clients navigate through these challenges and find opportunities to grow their business and wealth,” StanChart’s chief executive Kariuki Ngari said in a statement.
“We are optimistic as we get into the fourth quarter of an improving macro environment characterised by declining interest rates, falling inflation and stable currency. We are well positioned to help our clients through this phase and are confident of a strong finish to the year.”
The company’s loan book expanded from Sh143.5 billion to Sh151.2 billion in a period when the lending rate on most bank loans rose past the 20 percent mark amid successive monetary policy tightening actions by the Central Bank of Kenya (CBK).
StanChart’s portfolio of T-bills and bonds also increased by Sh11.7 billion to Sh65.3 billion when the returns on these securities rose to high double digits.
Non-interest income, including fees and commissions, surged 73.5 percent to Sh14.2 billion, supporting the income from lending activities.
The bank’s bottom-line also benefitted from a modest rise in costs compared to the increase in revenue from transactions and loans.
Total operating expenses, for instance, rose by Sh846 million to Sh16.5 billion. Interest expenses rose sharply by 91.6 percent, with the lender taking action to limit the cost of holding deposits when interest rates on fixed deposit accounts rose significantly to peak at an industry average of 11.48 percent in June.
StanChart’s customer deposits shrunk by Sh14.4 billion to Sh284.4 billion, although they had risen in the last three months to September from a low of Sh276.4 billion in June.
The lender increased provisions for bad loans despite a sharp reduction in defaults, signalling increased conservatism. The provisions rose by Sh135.7 million despite the stock of non-performing loans falling by Sh11.4 billion to Sh12.1 billion.
The CBK started lowering its benchmark central bank rate (CBR) in August on the back of low inflation and a stronger shilling, a trend that is expected to incentivise banks to lend more to the private sector and help reduce defaults.
Falling returns on Treasury bills are also expected to reduce banks’ cost of funds, as the interest on fixed deposit accounts also declines.
