Standard Chartered Kenya has announced a pre-tax profit of KShs 2.7 billion for the period ended 31 March 2013. Total income remained flat at KShs 5.4 billion with loans and advances up by 22% to KShs 117.3 billion.
• Net interest income grew by 2% to KShs 3.7 billion driven by strong growth in volumes but weighed down by the significantly lower interest rates charged in line with falling interest rates in the market;
• Non interest income decreased by 9% to KShs 1.7 billion largely due to a 92% reduction in other income that decreased from KShs 507 million in 2012 to KShs 41 million. Other income comprises mainly of income on government securities sales. In 2012, they had a well-positioned book that enabled them to realise strong trading profits. This has not been repeated in 2013 as the interest rates have been relatively stable. This was however mitigated by a strong performance in foreign exchange dealing which grew by 42%. Due to a higher a higher number of large value transactions during the quarter, their fee and commission income also increased by 12% to KShs 0.9 billion;
• Net bad debt charge increased from KShs 134 million to KShs 254 million and is in line with the growth in their loans and advances portfolio. They continue to have a proactive approach to risk management and remain watchful;
• Total operating costs grew by 16% to KShs 2.4 billion driven by continued investment in infrastructure, technology and talent to support their business growth;
• Profit before taxation decreased by 16% to KShs 2.7 billion (2012: KShs 3.3 billion)
• Loans and advances increased by 22% to KShs 117.3 billion (2012: KShs 96.5 billion) while customer deposits increased by 20% to KShs 142.3 billion (2012: KShs 118.6 billion);
• Their investment in government securities increased from KShs 36.4 billion to KShs 47.9 billion on the back of significant growth in customer deposits. The high interest rates that prevailed for most of 2012 together with the usual notable impact of elections impacted the growth of loans and advances but they have seen good momentum in the last quarter.
Non-performing loans were KShs 2.2 billion compared to KShs 1.2 billion in 2012. This translates to 1.9% of gross total loans compared to 1.3% in 2012. The quality of the asset book remains good and is well diversified and conservatively positioned. Wholesale Banking loans continue to remain well diversified and largely short tenor.
The consumer book is predominantly secured and they have selectively grown their unsecured portfolio. Richard Etemesi, Managing Director and Chief Executive Officer, Standard Chartered, said:
“Although the quarter has been slow we have seen momentum pick up compared to Q4 of 2012 with revenues up by KShs 0.6 billion. Our costs are also 5% higher than what we achieved in Q4 of 2012 as our key investments last year were made in the second half. We remain confident in the outlook for the business as we expect this business momentum to pick pace especially as the uncertainties around the elections are now behind us. The business continues to demonstrate underlying strength and diversity and with the economic outlook brightening. Real GDP expanded from 4.4% in 2011 to 4.6% in 2012 and there is positive sentiment in 2013 for GDP growth to be between 5.0% and 5.5%. We will continue to look for opportunities and take advantage of these to build and grow our business. The Bank is in great shape, has good momentum, and is well positioned for the future.”