Stanbic Holdings HY Revenue Drops 37.5pct to KSh 2.5 billion

Stanbic Holdings bank reported that its net profit after tax dropped by 37.5 percent to Ksh 2.5 billion compared to Ksh 4.0 billion in its half-year results attributed to a decline in interest income and non-interest income.

Net interest income dropped by 5.9 percent to KSh6.3 billion. Non-interest income dropped by 19 percent to KSh4.96 billion.

Loan loss provisions increased by 84.8 percent to Ksh1.7 billion from Ksh.0.9Bn to cover for potential loan losses in the wake of the COVID-19 pandemic that has increased expected credit losses due to reduced borrower’s ability to pay for their loans.

Stanbic Bank saw a significant reduction in operating expenses to KES 5.2 billion representing a reduction of 15 percent from the same period last year. This was due to proactive measures taken to re-prioritize expenditure to cushion against the impact of Covid-19.

“We are starting to see positive growth in the economy following the ease of the lockdown, hence the next six months will be crucial to ensure we defend earnings and register growth,” said CEO Charles Mudiwa.

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“We suspect the bank’s strategy is to remain liquid in the near term by increasing their bank balances as opposed to investing in other asset classes in the current economic environment,” Analysts from Sterling Capital said.

“As a result, we expect to see a decline in profitability for FY2020 due to reduced net interest income.

Non-funded Income will remain subdued as a result of reduced transactions and a weakening currency that will reduce foreign exchange income.

We expect the bank to remain strategic in managing their expenses, especially staff costs, which we project will continue.”