CfC Stanbic registers 52pc rise in net profit

NAIROBI, KENYA: CfC Stanbic has posted improved results with its half-year profits increasing to Sh3.3 billion from Sh2.2 billion registered over a similar period last year.

CfC Stanbic Group, which has a branch in South Sudan and an investment arm - SGS Securities, attributes its performance to improved revenues from trade in South Sudan as well as its investment banking portfolio.

According to the group's latest trading results, net interest income increased to Sh4.3 billion in June 2014 from Sh3.6 billion in June last year, representing a 19 per cent increase. This increase is driven by growth of 24 per cent in customer loans.

The pre-tax profit of CFC Stanbic, which is controlled by South Africa's Standard Group increased from Sh3.2 billion to Sh4.3 billion, representing a 34 per cent increase.

"We consider infrastructure projects such as the standard gauge railway and upgrade of the Jomo Kenyatta International Airport (JKIA) as well as oil and gas projects as market opportunities that exist in Kenya," said Greg Brackenridge, Chief Executive CfC Stanbic.

Net fees and commission income increased by 34 per cent mainly attributable to revenues earned from trade finance in South Sudan and transactional fees in Kenya driven by a growing customer base.

According to CfC Stanbic chief finance officer Abraham Ongenge customer loans and advances have grown by 24 per cent mainly due to term lending, which is 45 per cent of the entire loan book.

"The other portion of the loan book comprises 16 per cent mortgages, 25 per cent overdrafts and 14 per cent vehicle asset finance," he explained.

The portion of non-performing loans increased substantially by Sh876 million, from Sh1.3 billion to Sh2.3 billion, mainly within corporate and investment banking.

"These exposures were fully secured and the discounted value of securities held explains the lower credit impairment charge," Ongenge said while explaining the trading results.

Customer deposits on the other hand, grew by 14 per cent from Sh83.1 billion to Sh94.8 billion - the highest increase recorded in recent times. It was followed by fixed deposits at 18 per cent while call and savings accounts both grew by 7 per cent, according to the results.

The announcement of the financial results comes at a time when the local banking sector continues to show signs of growth. It recorded 12 per cent increase in profit before tax to Sh37.03 billion in the second quarter of 2014 compared to the first quarter of 2014 that recorded Sh33.4 billion.

According to the Central Bank of Kenya(CBK) latest statistics, total income stood at Sh104.0 billion in the second quarter being an increase of 9.4 per cent from Sh95.05 billion in the first quarter of 2014 while total expenses increased by 8.3 per cent from Sh61.46 billion in March 2014 quarter to Sh66.56 billion in June 2014 quarter.