Stanbic Bank Kenya CEO Charles Mudiwa during an investor briefing on August 8, 2019. PHOTO | DIANA NGILA | NMG Stanbic Holdings has posted a 37.2 percent decline in six-month net profit on account of reduced income and increased provisioning for loan defaults as Covid-19 pandemic continues to batter the economy.
Net profit dropped to Sh2.55 billion in contrast to Sh4.06 billion posted in a similar period last year.
The profit of Stanbic Bank and its investment arm, SBG Securities, both declined pulling down the group’s performance.
Stanbic becomes the third tier I lender to post a fall in profit. Net earnings of KCB Group and Cooperative Bank fell by 40 percent and 3.6 percent respectively having raised their provisioning for loan defaults.
Stanbic’s net interest income dropped by 5.9 percent to Sh6.3 billion despite the loan book having grown by 32.7 percent to Sh235 billion. This was on the back of reduced interest rates in line with falling indicating rates.
Non-interest income, which comes from fees and commissions, dropped by 19 percent to Sh4.96 billion on the back of the Central Bank of Kenya’s order to zero-rate transfers between banks and mobile wallets such as M-Pesa.
The group increased provisioning for non-performing loans by 61 percent to Sh1.98 billion, piling pressure on the bottom-line through increased operating expenses.
Stanbic has restructured loans worth Sh38 billion between March and June as borrowers ran into economic shock after Covid-19 hit Kenya.
Gross non-performing loans rose by Sh3.3 billion or 18.4 percent to Sh21.2 billion during the period under review.
The lender will be hoping for a turnaround in the second half of the year given the relaxed Covid-19 control measures such as reduced curfew hours and opening up of movement across counties.
“We are starting to see positive growth in the economy following the ease of the lockdown, hence the next six months will be crucial to ensure we defend earnings and register growth,” said CEO Charles Mudiwa.