NAIROBI: Standard Chartered Bank slipped to fifth position in profitability in March from third position in December in a tight race that saw it overtaken by Co-operative and Barclays.
The publicly traded lender, owned 74 per cent by parent Standard Chartered Group of UK, reported a 27.9 per cent drop in post tax profit to Sh1.81 billion in three months to March 31, down from Sh2.51 billion a year ago.
Stanchart appears to have lost sight of runaway duo of KCB and Equity whose first quarter net profit rose 11.7 per cent to Sh4.36 billion and 10.7 per cent to Sh4.30 billion, respectively.
The bank, second oldest after KCB(1896) having been founded in 1910, has also fallen behind Co-operative that reported a 28.34 per cent jump to Sh3.17 billion and Barclays’ Sh2.12 billion after a 9.28 per cent growth.
It is however still above CfC Stanbic whose profit after tax dropped 28.6 per cent to Sh1.15 billion during the period, having joined the six-lender tier one league last year.
Stanchart’s net earnings were hurt by flat interest income at Sh4.42 billion, barely unchanged from Sh4.46 billion it posted 12 months earlier, while earnings from non-funded streams slowed by Sh300 million to Sh1.42 billion.
“Our first quarter performance is disappointing as revenues have declined whilst costs and loan impairment have increased,” the bank said in a statement. “The impact of the derisking of the loans portfolio has impacted the overall interest income levels together with compressed margins and low volatility in financial markets(that hit its custodial services business).”
Deposits from customers increased by sH13.76 billion to stand at Sh163.43 billion, while loans fell 10.6 per cent to Sh114.06 billion as it stepped up recovery efforts of the non-performing loans.
It managed to slash gross bad debt by a quarter, closing at Sh8.35 billion from Sh11.15 billion in March 2014, a 25.1 per cent reduction.
“However, the NPL ratio has improved significantly from a high of 11 per cent down to seven by the first quarter,” CEO Lamin Manjang said in the statement. “Our underlying business volumes generally remain strong, and we are rebuilding the balance sheet with good quality assets.”
Operating expenses reached Sh3.02 during the quarter, a 28.6 per cent increase compared to a similar period in 2014. Earnings per share also declined to Sh5.85 from Sh8.13, and the stock was trading 0.33 per cent less day-on-day to Sh305 on the NSE by noon on Friday.
The bank on Friday announced that Standard Chartered Bank Africa’s chief risk officer Benjamin Debrah will now sit on its board. Debrah, a Ghanaian, is based in Nigeria where he additionally oversees risk management for Stanchart there, having joined in early 2013 from Barclays Ghana where he was chief executive.
