Companies

Stanbic Bank first quarter profit rises to Sh2.2 billion

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Stanbic Bank Kenya Chief Executive, Charles Mudiwa. PHOTO | DIANA NGILA | NMG

Stanbic Bank, a subsidiary of Nairobi Securities Exchange-listed Stanbic Holdings #ticker:CFC, reported a 19.3 percent jump in net earnings in the first quarter ended March, helped by increased lending and higher income from fees and commissions.

The lender’s net profit stood at Sh2.2 billion in the review period compared to Sh1.9 billion a year earlier.

This came as interest income increased 12.9 percent to Sh5.1 billion, buoyed by a similar expansion in lending to Sh144.7 billion. Stanbic cut its investments in government debt marginally to Sh46.5 billion from Sh46.7 billion.

The bank’s transactions and forex trading operations proved lucrative in the review period, sending non-interest income up 17.7 percent to Sh3.2 billion.

Stanbic, however, suffered a sharp rise in defaults and forced it to raise its provisions substantially. Its stock of bad debts expanded 61 percent to Sh16.7 billion, raising loan loss provisions in its profit and loss account nearly 10 times to Sh631.5 million.

While the performance sets the lender’s parent company for significant earnings growth this year, the benefit could be reduced by a significant liability facing Stanbic Holdings.

The company risks making a payment of Sh1.4 billion this year arising from a commercial contract it had guaranteed.

Stanbic undertook to refund an unnamed customer the money it had paid another company in a contract known as advance payment guarantee which triggers claims whenever the cash recipient is unable to deliver the required goods or services.