StanChart Bank Kenya (SCBK) has posted a net profit of KSh 9.7 billion in Q32023. This is despite the lender halving its government bond holdings, taking a loss in process, and increasing bad loan provisions by 193%.
The profit represents an increase of 11.8% compared to KSh 8.7 billion over a nine-month period last year, .
“We have delivered a solid set of results for the nine months ended 30 September 2023 with Profit before Tax (PBT) increasing 11pc year on year,” Kariuki Ngari, the lender’s CEO, said in a statement.
- •Net Interest Income grew 34.5% to KSh 21.2 billion in Q3’2023 while Non-Funded Income declined 6.6% to KSh 8.2 billion.
- •Total operating expenses increased by 28.4% to KSh 15.8 billion, pushed up by a 193.4% rise in loan loss provisions, totaling KSh 1.8 billion.
- •Staff costs also rose by 19.8% to KSh 6.2 billion while the bank’s balance sheet size grew by 1.0%, reaching KSh 369.7 billion, driven by a 5.5% increase in net loans to KSh 143.6 billion.
“Strong top-line growth of 20% mitigated growth in operating costs of 20% attributed to inflationary pressure and investment spend on our digital capabilities,” the CEO added.
Customer deposits rose by 4.5% to KSh 298.8 billion while foreign exchange income increased by 49.8% to KSh 6.3 billion from KSh 4.2 billion in Q3’2022.
Bank Chooses Caution with Bonds
Notably, the bank reduced its holdings in government securities by 50.3% to KSh 55.6 billion in Q3’2023, taking a Kshs. 2.3 billion loss in the process, according to Nairobi-based investment bank Sterling Capital.
The decision to dump government bonds follows a directive by the bank’s parent company for its subsidiaries to lower sovereign risk exposure.
The lender has also increased its provision for bad loans by 193%, from Kshs. 621 million in 2022 to Kshs. 1.822 billion in 2023, which it says was informed by “the current challenging macro-economic environment.”
Share Price Rally Continues
The Bank’s directors recommended an interim dividend of KSh 6.0 per share.
- •SCBK closed its trading day on Wednesday, November 22, 2023, at KSh 160.25 per share on the Nairobi Securities Exchange (NSE), recording a 2.6% gain over its previous closing price of KSh 156.25.
- •SCBK began 2023 with a share price of KSh 142.75 KES and has since gained 12.3% on that price valuation, ranking it 14th on the NSE in terms of year-to-date performance.
Standard Chartered Bank is the 24th most traded stock on the NSE over the past three months (Aug 23 – Nov 22, 2023).
The counter has traded a total volume of 1.25 million shares—in 898 deals—valued at KSh 201 million over the period, with an average of 19,852 traded shares per session.
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