Standard Chartered Kenya 2022’H1 Net Up 10% on Asset Quality

Standard Chartered Bank Kenya on Tuesday reported a nearly 10 per cent growth in its net profit to Ksh 5.4 billion for the six months ended 30 June 2022.

The results are compared to KSh4.8 billion a year earlier due to higher asset volumes and an expansion in net interest margin.

“We have seen healthy business momentum driving top-line growth with double-digit growth in net interest income and strong performance in wealth management and financial markets products,” Kariuki Ngari, Chief Executive Officer, said in an emailed statement.

“The strong momentum on income and low expected credit losses mitigated the 18% year-on-year increase in costs arising from our continued investment in transformational digital capabilities. Profit before tax is up 11%. We have achieved this by actively supporting our clients in what continues to be a difficult operating environment.”

According to Standard Chartered Bank Kenya – HY 2022 Earnings Update from Sterling Research, the bank continues to maintain its momentum on a QoQ basis; however, they are concerned that the steep growth in operating expenses without a reduction in loan loss provisions would wipe out the YOY growth in net income.

“Despite the bank’s strategy to reduce interest expense, we note commendable growth in customer deposits as beneficial in reducing SCBK’s cost of funds, a fact that should increase net interest margin FY2022.”

“We expect the bank to issue a KES.20 – KES.22 dividend FY2022, which represents a dividend yield of 14.3% – 17.7% based on the closing price on 15^th August 2022 – KES.139.75.

We maintain a BUY recommendation on the bank based on both its average dividend yield expectation of 16% and a fair value estimate of KES.144, which is against a share price of KES.139.75 (As at 15^th August 2022) represents a 19% upside.”