Stanbic Holdings shares rallied to KSh 167.25 on Wednesday from KSh 157.75 after the lender reported it had registered a 12.8% growth in net profit.
- •The lender’s profits rose to KSh 13.7 billion in 2024 from KSh 12.2 billion in 2023, primarily driven by a drop in credit impairments.
- •The final dividend of KSh 18.90 brings the total dividend for 2024 to KES 20.74 – a 35% uptick from the 15.35 issued in 2023.
- •The Kenyan unit contributed the most to the total profits, 18% up to KSh 13.5 billion, while the South Sudan subsidiary recorded a 63% decline in profits after tax to KSh 176 million.
“We deliberately shielded our customers from high credit costs by not passing the entire impact of rising funding costs to them. This helped not only grow our average lending through the period but also keep credit defaults and impairments below industry levels,” Dennis Musau, Chief Finance and Value Officer (CFVO), said.
Bottomline growth was also supported by a mild 1.7% reduction in operating costs to KSh 17.7 billion in 2024 owing to the currency appreciation and effective cost management.
Revenues declined 3.8% y/y on account of decreases in both net interest income and non-interest income. Net interest income declined by 5.1% to KSh 24.3 billion attributed to the increased cost of funding reflecting the high interest rates environment.
Non interest income similarly decreased by 1.7% to KSh 15.4 billion driven by lower trading revenue and a one-off significant transaction in 2023, compensated by higher trading and transaction volumes. Customer deposits declined by 2.4% to KSh 339.01 billion in 2024 from KSh 347.2 billion which Stanbic said matched asset demand.
The bank’s new unit trust business, launched in 2024, currently commands about KSh 2.4 billion in assets under management. SBG Securities experienced an 87% drop in net profit to KSh 20 million with the Bancassurance unit recording 19% decline in profit after tax.
Loan Loss Provisions Cut By Half
The bank’s South Sudan subsidiary took a hit, which it attributes to the ongoing conflict in neighbouring Sudan. The South Sudan Branch faced unique challenges given the reduction in oil production in the country because of the Sudan war. Despite this, the Branch registered a KSh176 million profit after tax,” Musau added.
Customer loans decreased 17.3% to KSh 294.7 billion from KSh 356.2 billion partly driven by higher interest rates in 2024 which turned borrowers away. The lender attributed the decline to the appreciation of the currency and increased trade financing.
The listed lender downsized its loan loss provisioning by 51.8% to KSh 3.1 billion from KSh 6.2 billion mirroring reduced credit risk. Gross non performing loans decreased by 14.4%, and the bank’s gross NPLs ratio now stands at 9.28%, significantly lower than the 16% industry average.
The increased dividend per share will have investors get 59.8% of net earnings or KSh 7.5 billion compared with 49.9% or KSh 6.0 billion in 2023.