StanChart posts Sh4.7 billion profit

Standard Chartered after-tax profit rose five percent to Sh4.7 billion in the six months to June from Sh4.4 billion in a similar period last year.

The lenders’ ability to cover three quarters of its bad loans has given it space to reduce insurance on non-performing loans, thus cutting provisioning from Sh1.2 billion to Sh378 million.

This reduction helped StanChart grow at a time of flat incomes where interest on loans remained flat at Sh6.7 billion even though customers grew from Sh111 billion to Sh120 billion by June 2019.

“If you look at our cover ratio it is 76 percent above the 35 percent industry average,” StanChart chief financial officer Ms Chemutai Murgor said during an investor briefing on Monday.

However, even as the lender scaled down on provisioning its bad loans piled up from Sh18.5 billion last year to Sh19.7 billion.

StanChart cut exposure to government paper from Sh116 billion to Sh98 billion and as a result witnessed a decline in interest income from securities from Sh6.4 billion to Sh5.4 billion in the period.

While total interest income came lower, focus on expenses moved to customer deposits which saw a decline in interest earning deposits from Sh230 million last year to Sh228 billion.

As such the interest paid out to the bank’s depositing customers was down from Sh3.3 billion to Sh2.6 billion.

“Our cost of funds have remained significantly low since 81 percent of deposit is current and savings contributing to two percent cost of funds,” said Ms Murgor. The lender’s new boss Kariuki Ngari said focus will go towards digital partnerships, retail digital bank and being the primary tax payment channel in the country.