StanChart net profit dips 10.5 per cent on bad loans
Standard Chartered Bank Kenya #ticker:SCBK has reported a 10.5 per cent decline in net profit for the first quarter ended March, weighed down by higher expenses and provisions for bad debt.
The lender’s net earnings in the review period stood at Sh1.8 billion compared to Sh2 billion a year earlier.
It is the first big bank to report lower profit in the period, bucking the trend by Equity, ticker:EQTY KCB #ticker:KCB and Co-op bank #ticker:COOP which announced 21.4, 14.1, and 6.8 per cent net profit growth to Sh5.8 billion, Sh5.1 billion and Sh3.4 billion respectively.
StanChart’s provision for defaults rose 38 per cent to Sh1 billion, contributing to a 15.4 per cent jump in overall operating expenses to Sh4.3 billion.
The bank’s chief executive Lamin Manjang in a statement said that increased investment in technology and loan impairment also contributed to the higher costs.
The lender has intensified its investment in automated teller machines, Internet and mobile banking in a cost-cutting strategy that has seen it retrench hundreds of workers in the past three years.
Interest income rose 7.7 per cent to Sh6.8 billion after the lender ramped up its purchases of government bonds and T-bills.
Its stock of treasuries increased 16.4 per cent to Sh112 billion, with loans to customers falling 2.5 per cent to Sh113.8 billion.
Banks have trimmed their lending to the private sector and piled into government debt in the wake of interest rate controls, arguing that a large section of prospective borrowers cannot be profitably accommodated in the current interest rate ceilings.
StanChart’s interest expenses jumped 16.4 per cent to Sh1.9 billion, reflecting the impact of a 13.1 per cent increase in customer deposits to Sh231.9 billion.