Stanbic holdings profits in the first half of 2020 have dropped to Ksh2.55 billion from Ksh4.06 billion reported in a similar period last year. In the period under review, total revenues fell from Ksh12.8 billion in the first half of 2019 to Ksh11.3 billion in H1.2020.
Stanbic’s operating expenses fell by 15 percent to Ksh5.15 billion from Ksh6.04 in the first half of 2019. This was due to proactive measures taken to re-prioritize expenditure to cushion against the impact of Covid-19.
Stanbic CEO, Charles Mudiwa, described the first six months of 2020 as challenging due to the Covid-19 pandemic, locusts invasion and pockets of floods in some parts of the country.
In the period under review, the balance sheet grew to Ksh361.5 billion from Ksh313 billion in the first half of 2019. This was boosted by a 27 percent growth in customer deposits to Ksh256 billion.
The loan book grew from Ksh177 billion in H1.2019 to Ksh235 billion in the first half of 2020.
Covid19 Impact
In the wake of the coronavirus pandemic, Stanbic has restructured loans worth Ksh38 billion to protect individuals, SMEs, and large corporates against the economic shock following a national lockdown and a global restriction on travel that disrupted supply chains.
In the period under review, non-performing loans (NPLs) grew to 10.19 percent compared to 8.12 percent in H1.2019. Abraham Ongenge, Stanbic Chief Financial Officer (CFO), attributes the hike to long term outlook of the risk associated with restructuring some loans thus higher provisions.
The lender adopted measures such as fee waivers on digital channel transactions in compliance with the Central Bank of Kenya (CBK) directive.
Ongenge says that the waiver of digital transactions affected the fees and commissions revenue which fell to Ksh4.96 billion in the period under review from Ksh6.14 billion in H1.2019. In the period under review, digital transactions increased 87 percent thus reducing activities in the banking halls.
Furthermore, Ongenge added that adds that the Central Bank has cut rates by 200 basis points since repeal of the interest rate cap and Stanbic has passed down 100 basis points to their clients. This has translated into lower interest income which hit Ksh6.3 billion in H1.2020 compared to Ksh6.7 billion in a similar period last year.
Furthermore, the IFRS9 standards guidelines adopted require banks to take a long term view of the risk that they see in the portfolio to make an estimate of the provisions they will provide.
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