StanChart 2020 half-year profit down 31 pc

StanChart Chief Executive Kariuki Ngari. PHOTO/COURTESY: Capital FM

Standard Chartered Group (StanChart) registered a Ksh. 3.2 billion profit in the first six months of the year down from Ksh. 4.7 billion registered in a similar period in 2019.

The bank has attributed the 31 percent drop in profit to coronavirus-related defaults and reduced income from loans.

In the period under review, interest income fell to Ksh. 2.54 billion down from Ksh. 2.89 billion recorded in the first half of 2019. Non-interest income similarly dropped to Ksh. 9.39 billion down from Ksh. 9.85 billion in a similar period in 2019. The Group’s loan loss provision also increased 4.2 times to Ksh.1.6 billion in response to gross defaults rising 5.6 percent to Ksh.20.9 billion.

“Loan loss provision is up significantly year-on-year … driven primarily by the impact of Covid-19 and the resultant deterioration in the macroeconomic outlook,” StanChart said in a statement.

Deposit from customers in the period increased to Ksh. 256 billion down from Ksh. 228.4 billion as the number of job losses in the country skyrocketed with both public and private companies laying off workers to trim their operational expenses.

The lender is however optimistic that it will turn around its fortunes in the latter half of the year and the first half of 2021 following President Uhuru Kenyatta’s decision to strategically lift restrictions put in place to tame the spreading of the Covid-19 pandemic such as reducing working hours and restricting movement across counties.

The lender’s loan book however grew 11.9 percent to Ksh.134 billion up from Ksh. 120 registered in a similar period in 2019 billion while government and other securities increased by 3.2 percent with the lender upholding a liquid balance sheet at 66.7% percent.

“Over the last 24 months, our investments in digital capabilities have been unprecedented and building on these capabilities has enabled our transaction processing to remain resilient at the back of the COVID 19 pandemic – Today, 89 percent of transactions are being conducted digitally with a 62 percent and 90 percent penetration for our Retail and Corporate clients respectively,” said Kariuki Ngari Chief Executive Standard Group in a statement.

In the full year ended December 2020, the bank recorded a 1.7 percent jump in after-tax profit to Ksh. 8.24 billion up from Ksh. 8.1 billion recorded in a similar period in 2018. The bank attributed the marginal increase in after-tax profit to reduced interest expenses and provisions against debt.

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