Stanchart posts 24pc jump in profit, promises rate cuts

Standard Chartered Bank Kenya has announced a pre-tax profit of Sh8.1 billion for the period ended 30 June 2014. This is up 24 per cent compared to Sh6.5 billion in the same period last year.

Interestingly, the volume of non-performing loans has increased significantly even as the financial institution moves to cut its base lending rates, now considered one of the lowest in the market at 14 per cent.

Chief Executive, Lamin Manjang said the bank is confident in the outlook for the business as it expects business momentum to pick pace. "On the retail front we shall continue to invest in digital channels to deepen our client reach and to ensure our customers enjoy a differentiated experience," he added.

"Our business is well positioned to continue being the right partner to our clients. This is in line with our strategic intent – we will continue banking the people and companies driving investment, trade and the creation of wealth across our footprint," said Manjang.

According to the bank's trading results, non-performing loans were Sh14.6 billion compared to Sh3.8 billion in the same period last year and at the end of 2013.

Corporate and institutional clients non-performing loans increased during the period although this was due to a small number of problem accounts.

While the loan book expanded, customer deposits did not recorded a significant increase due to stiff competition from retail banks. Stanchart had its loans and advances increase by 11per cent to Sh131.7 billion from Sh 118.4 billion over a similar period last year. Customer deposits remained flat at Sh 147 billion.

Net interest income grew by 9 per cent to Sh 8.8 billion driven by strong growth in volumes but weighed down by the significantly lower interest rates charged in line with falling interest rates in the market.

The bank's non- interest income increased by 31per cent to Sh 5.0 billion largely from the sale of a property. On a headline basis, non-interest income decreased by 9 per cent.

Income from foreign exchange dealing remained flat at Sh 1.2 billion on account of a low rates and low volatility environment resulting in margin compression, and off-setting effects of volumes growth.

Stanchart is ranked among top performers, closely on the back of Kenya Commercial Bank, which posted a 14 per cent after-tax profit for the half year ending June 2014.