Stanchart rent costs fall to decade-low on branch closures

Stanchart rent costs fall to decade-low on branch closures

Standard chartered Bank Kenya’s #ticker:SCBK expenditure on rent has fallen to more than a decade low, supported by trimming of branch count as more customers switch to digital services.

The lender’s latest disclosures show that annual rental charges fell by 30 per cent from Sh308.22 million in 2019 to Sh216.64 million last year—the lowest in over 13 years. The fall is 62 per cent from the peak of Sh564.14 million paid three years earlier.

The fall in rental charges coincided with the decision to close eight branches last May as the Covid-19 pandemic reduced business activities and also pushed many customers to digital platforms such as mobile banking.

StanChart chief financial officer Chemutai Murgor said in an interview that the fall in rental spending was also partly due to the implementation of right of use assets accounting to recognise prepayments.

“The fall is partially on branch rationalisation and also the right of use assets implementation that entered second year. Last year we rationalised some of the branches on reduced footfall,” said Ms Murgor.

The bank had 42 branches in 2016 but the number has been coming down to below the 33 it had in 2019.

StanChart last year shut down T-Mall, Moi Avenue, Two Rivers and Upper Hill branches and directed customers to nearby outlets.

Ms Murgor said footfall in branches has been falling for the last three years in line with the growing preference for non-branch alternatives such as mobile banking.

“Since 2017, our footfall has fallen on average by 47 percent. But in 2021, some of the branches have seen over 90 per cent fall. We are therefore repurposing our branches so as to support our clients in the new ways,” said Ms Murgor.

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