Standard Chartered Bank shares dip despite rebound in first quarter profit

Standard Chartered Bank (K) Tuesday announced a 47 per cent growth in pre-tax profit for the quarter ended March 31, 2016.

The bank recorded a Sh3.7 billion profit before tax, up from Sh2.5 billion registered in the same period last year. However, despite the rebound in earnings, the bank's shares dropped to Sh195, up from Sh205 in Tuesday's trading at the Nairobi Securities Exchange.

Chief Executive Officer Lamin Manjing credited the growth to good performance in the bank's retail banking segment whose income went up by 22.9 per cent, driven by growth in mortgages and lending to small businesses. This segment particularly contributed 44 per cent of the total income.

Corporate and institutional banking also grew significantly, with income going up by 22.2 per cent. This contributed 48 per cent to total income. This growth was fuelled by strong foreign exchange earnings and income from government securities.

Commercial banking, which serves small and medium sized corporate clients had an income growth of 40.6 per cent compared to the first quarter of 2015.

"During 2015, we put in a new management structure for the commercial banking business, which is driving this segment to deliver sustainable higher returns over time. Commercial Banking contributes eight per cent of total income," said  Manjing.

However, the bank's underlying costs grew by 12.6 per cent in line with inflation, investments in digital technologies and costs involving strengthening branch networks.

Also gross non-performing loans (NPLs) increased by 4.8 per cent during the review period to Sh15.4 billion. But on the other hand, the lender's cover ratio increased to 58.6per cent.

Standard Chartered Bank (K) Tuesday announced a 47 per cent growth in pre-tax profit for the quarter ended March 31, 2016.

The bank recorded a Sh3.7 billion profit before tax, up from Sh2.5 billion registered in the same period last year. However, despite the rebound in earnings, the bank's shares dropped to Sh195, up from Sh205 in Tuesday's trading at the Nairobi Securities Exchange.

The bank also announced that it intends to continue with a conservative approach to managing the balance sheet, while maintaining a strong liquidity position and keeping a watchful eye on asset quality, given the current uncertainties in the external environment.