Earnings UpdateStanChart Net Profit Jumps to Kes 6.4 Billion in Q3

Standard Chartered Bank Kenya (StanChart) has reported a 46.7 per cent jump in net profit for the nine months to September, helped by an increase in foreign exchange earnings and reduced operating expenses.

The Nairobi Securities Exchange-listed bank recorded Kes 6.35 billion in profit after tax from Kes 4.33 billion posted in a similar period last year.

The growth has been attributed to a 33.8 per cent rise in foreign currency trading to Kes. 2.53 billion, helping shore up the non-interest income. The non-interest income, which also includes fees and commissions from the bank and mobile banking transactions, increased by 19.1 per cent to Kes 7.56 billion.

High demand for dollars by traders after the reopening of the global economy and muted credit extension to the private sector due to COVID-19 uncertainties has seen commercial banks direct their cash to risk-free investments like government securities.

StanChart net interest income, largely from loans and advances, increased by 2.8 per cent to kes 14.71 billion. Total income grew by 7.8 per cent to Kes 22.72 billion, while operating expenses dropped by 5.1 per cent to Kes 13.37 billion, largely due to a 10.2 per cent drop in staff costs to Kes. 4.88 billion.

Most banks are yet to resume lending to the private sector despite the steady recovery of the economy compared to last year. The lenders made huge loan provisions following the economic fallout, but have since reduced them amid increased loan recoveries.

StanChart’s net loans and advances increased marginally by 10 basis points to Kes 131.74 billion, while customer deposits grew by 6.4 per cent to Kes. 258.37 billion. Non-performing loans rose by 4.8 per cent to Kes. 23 billion.

Its net earnings in the review period stood at Kes 6.3 billion, up from Kes 4.3 billion a year earlier.

StanChart Dividend and Outlook

StanChart declared a surprise interim dividend of Kes 5 per share, signalling its confidence about the economic outlook amid lifting of most restrictions aimed at curbing the spread of the Covid-19 pandemic.

“The directors are pleased to announce the payment of an interim dividend of Kes 5 for every ordinary share. The board recognises the importance of dividends to shareholders and believes in balancing returns with transformational investments for the business, whilst at the same time preserving strong capital ratios.” the lender said in a statement.

The dividend will be paid on December 29 to shareholders who will be on the register as of December 7.

The bank was among the big lenders including KCB  and Absa Bank Kenya which had suspended their tradition of paying interim dividends as the health crisis unfolded.

StanChart’s interim dividend indicates that its total payout for the year ending December could surpass 2020’s distribution of Kes 10.5 per share.

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