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Sunday, May 22, 2022
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Standard Chartered Bank.

StanChart earnings fall 23% as lender leads in profit drop

The bank had issued a profit warning in November last year with CEO Lamin Manjang citing a rise in non-performing loans.

by Chacha Mwita
March 23, 2018
in Banking
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NAIROBI, KENYA, MAR 23 — Standard Chartered Group has posted a 23.6 per cent drop in net earnings for the year ended December 31 2017, marking the biggest profit drop for a Tier one bank so far.

The Nairobi Securities Exchange listed lender’s net profit closed at Ksh6.91 billion, a significant drop from Ksh9.05 billion posted the previous year.

The earnings were weighed down by increased expenses coupled with lower interest income, as banks continue to report low earnings under the interest rates cap regime.

StanChart joins the Co-operative Bank of Kenya and Barclays Bank of Kenya in recording profits drop, in a year that also saw a slowdown in the economy due to the prolonged elections and a drought that hit the country.

During the year, the bank’s interest income from loans and advances to customers dropped 8.1 per cent to Ksh13.6 billion, from Ksh14.8 billion a year earlier.

This is despite a growth in the lender’s loan book which expanded by 29 per cent to close the year at Ksh126.29 billion from Ksh122.71 billion.

The bank however reaped from investments in government securities which earned it Ksh11.3 billion, a 11.9 per cent rise from Ksh10.1 billion the previous year.

Customer deposits also grew to Ksh213.3 billion from Ksh186.6 billion, a 14.3 per cent growth.

Non-performing loans (NPLs) however remained high affecting the bank’s profitability. Gross NPLs increased 17.2 per cent to Ksh17.62 billion from 15.04 billion.

Operating expenses closed at 17.27 billion, 17.6 per cent higher than 2016’s Ksh14.69 billion.

The bank had issued a profit warning in November last year citing a rise in non-performing loans.

“We have seen an increase in our non-performing loan book due to a limited number of accounts downgraded in the period,” CEO Lamin Manjang noted in quarter three of 2017, adding that the interest rate cap had also negatively affected business, where borrowers had been locked out.

This led to a near stagnation in credit growth, Manjang said.

StanChart joins it’s Tier 1 peers Co-operative Bank and Barclays which posted 10 per cent and 6.2 per cent drop in their respective earnings for the year.

READ:https://www.exchange.co.tz/coop-bank-profit-dips-10-on-lower-interest-earnings/

Co-op profit after tax dropped to Ksh11.4 billion from Ksh12.7 billion the previous year while Barclays posted a net profit of Ksh6.93 billion, down from Ksh7.39 billion recorded in 2016.

ALSO READ:https://www.exchange.co.tz/barclays-profit-drop-6-2-amid-name-change-absa-group-limited/

Another top bank is KCB Group which reported flat profit after tax performance posting Ksh19.7 bilion net earnings.

LINK:https://www.exchange.co.tz/kcb-nets-ksh19-7-billion-profit-despite-tough-business-environment/

StanChart’s board on Thursday recommended the payment of a final dividend for the year of Ksh12.50 for every ordinary share of Ksh5.00.

One interim dividend of Ksh4.50 for every ordinary share of Ksh5.00 was paid in October 2017. The total dividend therefore is Ksh17.00, Ksh3.00 lower than Ksh20.00 paid the previous year.

“The directors are also pleased to announce the payment of the final dividend on the non-cumulative, non-redeemable,non-participating, non-voting and non-convertible preference shares for the period June 30, 2017 to December 30, 2017 at the rate of six per cent per annum on the issue price of each share,”  StanChart said in its financial statement  signed  by chairperson Anne Mutahi and CEO Manjang.

 

 

Tags: Barclays Bank of KenyaCo-operative Bank of KenyaKCB GRoupKenyaNairobi Securities Exchange (NSE)Standard Chartered Bank

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Chacha Mwita

Chacha Mwita is a business reporter based in Kenya. He covers equities, capital markets, trade and the East Africa economic developments.

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