Standard Chartered Bank (Kenya) #ticker:SCBK reported a 31.1 percent net profit jump in the first quarter ended March, helped by lower costs.
The lender’s net earnings in the review period stood at Sh2.4 billion compared to Sh1.8 billion a year earlier.
At 31.1 percent, StanChart’s profit growth is the highest among the big banks that have so far published their first quarter results.
The lender cut its loan loss provision by Sh650 million to Sh415.1 million, pulling total operating expenses down 11.7 percent to Sh3.8 billion.
Lower provisioning came despite gross defaults jumping 19.1 percent to Sh21.2 billion.
Interest expenses also shrank by Sh570.3 million to Sh1.4 billion despite customer deposits remaining nearly flat at Sh232.7 million.
This indicates that the Nairobi Securities Exchange-listed company could have re-priced the rate on interest-bearing accounts downwards by a significant margin.
StanChart also benefited from a 5.6 percent increase in non-interest income, which rose to Sh2.3 billion.
The bank’s lower costs more than compensated for lower interest income which contracted by Sh436.3 million to Sh6.3 billion.
Reduced interest income came despite the loan book expanding 3.2 percent to Sh117.5 billion, partly reflecting the impact of higher defaults.
StanChart, which has in the past few years focused on cutting its payroll costs and entrenching its digital banking services, is expected to benefit from a relatively lower cost base going forward.
The bank spent Sh611 million last year to lay off staff, being 3.5 times higher than in the previous year as it deepened its digital banking strategy.
Details contained in the annual report for the financial year that ended in December 2018 show that the increase in redundancy charge came as the lender recorded a net reduction of 54 in the number of employees.
“Over the last three years we have worked to build a solid platform over which we can grow sustainably as well as having a positive impact on our clients, stakeholders and communities,” the bank’s chief executive, Kariuki Ngari, said in a statement.
“Focusing on clients by providing them with solutions that support their businesses is starting to bear fruit as evidenced by our first quarter performance.”