African Reserves Loans

StanChart earnings rise on negative loan provisions

By JAMES ANYANZWA

Standard Chartered Bank Kenya boosted its profits in the first quarter of 2022 by making a negative provision for loan losses in hopes of an economic recovery from the adverse effects of the Covid-19 pandemic.

The lender, which is listed on the Nairobi Stock Exchange (NSE), recorded a negative loan loss provision of Kshs 86 million ($741,379.31), leading to a 15.48% growth in net profit to 2 .76 billion Ksh ($23.79 million) against 2.39 billion Ksh. ($20.6 million) in 2020.

“Our performance in the first quarter was strong despite volatile and challenging market conditions. The start of 2022 has been strong. However, we remain mindful of the challenging external environment which has been aggravated by the Russian invasion of Ukraine, the persistence of Covid-19 cases in China, resulting in shipping logistics issues, thus causing an acceleration inflation globally,” said Managing Director Kariuki Ngari. the week.

Several lenders built up huge loan loss reserves during the Covid-19 pandemic in 2020, leading to lower profits. But it appears banks are now seeing enough positivity to draw down some of those reserves through negative provisioning, creating room for earnings growth.

According to unaudited StanChart financial statements released last week, the lender’s total operating income for the three months to March 31 rose 4.7% to Ksh 7.4 billion (KSh 63.79 million). dollars), against 7.07 billion Ksh (60.94 million dollars).

Growth

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Its net interest income increased by 7.2% to Ksh4.92 billion ($42.41 million) from Ksh4.59 billion ($39.56 million), while income unfunded remained relatively stable at Ksh 2.48 billion ($21.37 million). Total operating expenses decreased by 5.43% to Ksh 3.48 billion ($30 million) from Ksh 3.68 billion ($31.72 million) as loan loss provisions decreased to 86 million Ksh ($741,379.31) from a high of 413.21 million Ksh ($3.56 million) in the same period last year.

Net loans and advances to customers increased by 8.67% to Ksh128.09 billion ($1.1 billion) from Ksh117.87 billion ($1.01 billion), while Customer deposits amounted to Ksh 265.38 billion ($2.287 billion).

In April, London-listed StanChart Plc announced it would sell its operations in five African countries as part of a strategic review aimed at getting rid of less profitable subsidiaries and simplifying group operations.

This will leave it with Kenyan and Nigerian subsidiaries as its most important units on the continent in addition to operating in Tanzania, Botswana, Mauritius, Uganda, Zambia, Ivory Coast, Egypt and Ghana.

Barclays Plc announced in 2016 its intention to exit the African market by selling its entire 62.3% stake in Barclays Africa Group or reducing it to a non-controlling stake over a period of two to three years. British financial conglomerate Atlas Mara Ltd is also set to exit the continent, calling its African investments “risky” and sub-Saharan Africa’s macroeconomic environment “difficult”.