Standard Chartered’s Profit Falls 34% as Loan Loss Provisions Soar.
Standard Chartered Bank Kenya has posted a 34% decline in its full-year net profit for the year that ended on 31st December 2020. The bank’s net profit dropped to KSh 5.44 billion at the end of 2020 from KSh8.24 billion in 2019 as revenue fell and loan loss provisions shot up.
“We delivered a resilient performance in 2020 in extremely challenging conditions brought about by the pandemic,” said Chemutai Murgor, the bank’s Chief Financial Officer
Net interest income, the bank’s main source of revenue, dropped by 1.8% to KSh19.1 billion in 2020, from KSh19.4 billion a year ago, while non-interest income decreased to KSh8.3 billion from KSh9.2 billion in December 2019.
The tier-one lender drastically increased its loan loss provisions in 2020 as it anticipated a sharp increase in bad loans due to the pandemic induced economic downturn. Loan loss provisions soared to KSh3.88 billion at the end of 2020, compared to KSh573 million in the same period in 2019.
Standard Chartered bank reduced its retail lending in 2020, loans and advances to customers dropped to KSh121.5 billion from KSh128.7 billion the year before. However, the bank’s customer deposits increased to KSh256.5 billion from KSh228.4 billion, a 12% jump.
The bank’s Chief Executive Officer Kariuki Ngare told reporters that Kenya’s rising covid19 infections pose a challenge to the bank, but the lender will continue to accelerate its initiatives to meet its objectives.
Standard Chartered Board of directors recommend a dividend of KSh10.50 for every ordinary share held, 16% lower than the KSh12.50 dividend per share declared in 2019.