Stanbic Group half year profit hits Ksh.4.1 billion

Stanbic Holdings PLC on Thursday announced a 14 percent increase in its half year earnings to Ksh.4.1 billion for the period closing June 30, 2019.

Growth for the group which operates largely in Kenya under the Stanbic Bank banner is attributable to increased lending and tightening efficiencies.

Stanbic’s loan and advances to customers grew to Ksh.161.9 billion from Ksh.136.5 billion in the preceding 2018 half while customer deposits retained a similar growth trajectory to hit Ksh.201.6 billion.

The improvement on lending to customers and businesses is on the back of falling yields from government with the bank choosing to instead pump more cash to real economy with the share of investments in the Treasury falling to Ksh.97 billion.

Improved risk profiling has boosted the change of strategy in lending with Stanbic on-boarding no further credit risks as the share of the bank non-performing loans slide to eight percent against a 12.5 percent industry average.

Further the bank has recorded improved coverage in its share of bad loans to 38 percent in the six months from a lower 30 percent.

“We are now more informed and are seeing efficiencies in credit scoring through new data on client behaviour,” said Stanbic Holdings Chief Financial Officer Abraham Ongenge.

The enhanced efficiency has seen the bank’s income from interests surge by 20 percent to Ksh.6.7 billion with non-interest funded income similarly jumping to Ksh.6.1 billion from Ksh.5.6 billion in H1 2018.

The notable growth in half year earnings has however been achieved on the back of a tentative operating environment defined by ongoing changes to the regulatory environment in both the banking and insurance segment.

“We have managed to navigate the complex operating environment by abiding to our strategy which remains pegged on income diversity and resilience,” Stanbic Bank Kenya Chief Executive Officer Charles Mudiwa said.

Further, the first half of the year has seen the continuation of holds to interest earnings on commercial earnings and inflationary pressure from a hike in food and fuel costs.

Even so, Stanbic Holdings kept its operational expenses on mute at Ksh.6 billion from 5.7 billion in June 2018 boosted by a step up in the digitization of services.

At the same time, the bank recorded a flat growth in its cost of funds to see its cost to income ratio (CIR) fall to 47 percent to reflect on the lender’s continuing efficiency squeeze.

Stanbic Group has however recommended a reduced dividend Ksh.1.25 payout to shareholders for the six months period.