StanChart posts 42.7pc rise in net profit to Sh9bn

Standard Chartered Bank of Kenya Tuesday shrugged off the effects of the interest rate caps to post a 42.7 per cent increase in net profit for 2016.

The rise in profit was helped by additional lending to government and lower cost of bad loans.

The lender has reported net earnings of Sh9.05 billion for year to December, compared to the Sh6.34 billion a year earlier.

StanChart’s profit growth is so far the highest among the listed lenders that have announced their profits.

KCB Group reported a near-flat net profit in the period, while Barclays dropped 12 per cent, Equity’s declined 4.1 per cent while Co-op Bank and DTB Bank improved 8.2 per cent and 17 per cent respectively.

Banks blame their sluggish growth in earnings to the coming into force of the interest-capping law enacted last September, with most shying away from offering personal and SME loans due to their relatively higher risk profile.

READ: Equity’s lending to Treasury tops Sh100bn after interest rates cap

Loan loss provisions

StanChart’s earnings were boosted by a 55 per cent drop in its loan loss provisions to Sh2.2 billion, which reduced its operating expenses bill.

Gross non-performing loans grew by Sh341 million to Sh15 billion.

The bank closed 2016 with a “government securities available for sale” portfolio of Sh81.6 billion, representing an increase of Sh14.1 billion from the previous financial year.

StanChart’s interest income from government securities increased by 44.3 per cent to Sh10.06 billion, greatly boosting total interest income which also increased by 2.9 billion to Sh25.8 billion.

The lender still felt the impact of interest capping law since, despite its loan book growing by Sh7.6 billion to Sh122.7 billion, interest income from this segment declined by Sh69 million to close the year at Sh14.8 billion.

The bank will at its May 25 annual general meeting declare the payment of a final dividend of Sh14 per ordinary share, adding to the Sh6 per share paid out in August.

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