Send-off package trims Stanbic profit

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Send-off package trims Stanbic profit

Stanbic Bank chief executive Charles Mudiwa with human capital head Darliah Mbugua during a briefing in August. PHOTO | DIANA NGILA 

Stanbic Bank #ticker:CFC sent 88 employees on early retirement and paid them a Sh773.1 million package which had a one-off drag on the lender’s earnings in the period to September 2019.

The firm posted a 7.8 percent jump in net profit from Sh4.7 billion in the third quarter last year to Sh5.1 billion in the nine month to September 2019.

“The exceptional item presented in the statement of comprehensive income relates to costs for the voluntary early retirement programme,” the lender said.

Despite being under the rate cap regime, Stanbic increased loans by Sh20.6 billion to Sh161 billion by September and will be stuck with these low earning assets after it committed to keep current loans under the terms offered before caps were repealed.

“Stanbic Bank would like to assure its existing and new clients that the bank, will not revert to the punitive interest rates era unguided. Significantly, all existing loan contracts before the repeal will be upheld under the same terms and conditions and will not change for the duration of the loan period,” CEO Charles Mudiwa said in a statement.

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The bank registered an increase in loans income from Sh10.3 billion to Sh11.7 billion, helping push total interest income including government securities from Sh13.8 billion in 2018 to Sh15.3 billion in September this year.

Increased loans, however, exposed the bank to higher rates of default in a deflated economy as gross dud loans jumped from Sh10.6 billion to Sh18.9 billion in the period under review.

As a result the lender’s loan loss provision jumped 33 percent to Sh1.6 billion from Sh1.2 billion in the third quarter of last year.

The lender, however, attracted an additional Sh10 billion in deposits from Sh181.4 billion to Sh191.2 billion.

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