Defaults by big borrowers have plunged Standard Chartered Bank into a 39 per cent loss for the nine months to September this year.
Chief Executive Lamin Manjang said yesterday a downgrade on a ‘limited number’ of loan accounts coupled with the effect of lending rate caps contributed to the slowdown in earnings.
He said in a statement net profits had fallen to Sh4.7 billion in the January-September period, down from Sh7.7 billion in the comparable period of last year.
“We have further seen an increase in our non-performing loan book due to a limited number of accounts downgraded in the period,” said Mr Manjang of the subdued performance.
He issued a profit warning, projecting that the full-year profits would fall by at least a quarter from the figures reported last year, placing Stanchart as the biggest loser among the top-tier lenders since the introduction of interest rate caps.
Provisions for bad loans more than doubled to Sh3.8 billion, according to the reported adjustments to cater for the bigger projected defaults.
Manjang added that the prolonged electioneering period had resulted in a deceleration in credit growth as evidenced in the sharp contraction of the bank’s loan book.
Total loans shrank by Sh7 billion to Sh113 billion.