StanChart 3Q19 Revenue Drops Marginally to KSh6.2bn on Reduced Income

StanChart Record 30.4% Profit Decline on Covid-19 Loan Defaults

Stanchart CEO Kariuki Ngari I Courtesy

Standard Chartered Bank Kenya on Tuesday reported a 1.3% y/y decline in 3Q19 EPS to KES 17.76  for the quarter ended September 2019.

The performance was attributed to flat growth in operating income (+0.6% y/y growth in Net Interest Income -NII coupled with 1.1% y/y decline in Non-Interest Revenue -NIR) exacerbated by 9.8% y/y growth in staff costs. 

“Our digital investments to transform the Bank, develop and scale new business models continue apace. This has been positively received by our clients and key client digital adoption measures continue to improve. We have over 70 digital services and products on our mobile app enabling over 80% of transactions to be conducted digitally,” said Kariuki Ngari, Chief Executive Officer.

The loan book grew 6.8% y/y (-1.3% q/q) while the government and other securities fell 10.7% y/y (-2.4% q/q) though the bank continues to maintain a very liquid balance sheet (67.5%). 

Loan loss provisions (LLP) declined 61.2% y/y to KES 0.7Bn while operating expenses before provisions grew 12.0% y/y to KES 11.8Bn. 

A major challenge over the past 3 years has been Non-performing loans (NPL) formation, which worsened in the third quarter (compared to the second quarter) to 14.9%, above the 12.7% sector average.

“Going forward, we are concerned of the steep rise in staff costs but the investment in digital channels (83% of transactions are carried out on digital channels) and the launch of the retail digital platform early in the year is expected to cushion Cost to Income from rising significantly above the current level,” Genghis Capital Standard Chartered Bank of Kenya Ltd 3Q19 Earnings Note.

Source: Genghis Capital

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