FEATURED

Kenya’s Stanbic Holdings Pl has registered a profit of Sh2.55 billion in the first half of 2020.

The lender says the performance reflects resilience  amidst Covid-19 pandemic, locusts invasion and pockets of floods in some parts of the country.

During the period under review, Stanbic maintained strong balance sheet growth as evidenced by a 27% increase in customer deposits partly offset by 6% decline in net interest income arising from margin compression on the back of government monetary action to cut interest rates to stimulate lending in the private sector.

Further, Stanbic Bank saw a significant reduction in operating expenses to Sh5.2 billion representing a reduction of 15% from the same period last year. This was due to proactive measures taken to re- prioritize expenditure to cushion against the impact of Covid-19.

Stanbic continues to support its clients by offering fee waivers on digital channel transactions in compliance with the Central Bank of Kenya directive. This partly impacted the fees and commission revenue reported in the first half of 2020.

In support of the community, Stanbic  together with its partners collaboratively spent over a total of Sh147 million in various interventions in an effort to collaboratively fight this pandemic. Through its women value proposition, D.A.D.A and in partnership with Rotary, Stanbic delivered  700 handwashing stations in different parts of the country and was a key partner in a consortium that brought in 192 ventilators to bolster our health sector’s readiness to grapple with the pandemic.

Additionally, Stanbic’s flagship women’s banking solution DADA which marked its first anniversary in June, reported that it has interacted with over 7,000 women, onboarded over 4,000 women, and issued loans worth over Sh765 million. Through the already established Sh20 billion fund dedicated to women, the Group  has reported intentions to increase this commitment. In addition, Stanbic was the first bank to announce customer interventions geared at providing relief from the adverse Covid-19 impact. The Group has since  restructured loans worth KES 38 billion worth of loans to protect individuals, SMEs, and large corporates against the economic shock following a national lockdown and a global restriction on travel that disrupted supply chains.

Mudiwa added that the Group will continue to focus on executing its client strategy to ensure that the Group grows its balance sheet while also driving transactional activity as the economy begins to show the first green shoots of growth. “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. We are refocusing our efforts on digital innovation to further exploit new opportunities.

Kenya Commercial Bank (KCB) Group Plc posted KSh7.6 billion in after-tax profits for the first six months of 2020, marking a 40% decline from the previous year. This was largely caused by increased provisions in the wake of higher credit risk due to the COVID-19 pandemic. 

Group CEO and Managing Director Joshua Oigara, while commenting on the eprfomance termed the period as the toughest in the bank’s recent history as the pandemic hurt economic activity across markets.  

“When the virus hit home in March, we made a commitment to look after our customers, staff and other stakeholders while pursuing business continuity. We intend to keep on this promise even under the current worsening operating environment,” said Oigara. 

Already, KCB Group has instituted a raft of interventions to cushion and support key stakeholders such as customers and employees. For the period under review, the Bank restructured facilities worth KShs. 101 billion to cushion customers against the effects of the crisis. 

According to the financials released on Wednesday, total operating income surged 17% to KSh. 45.0 billion in the period compared to KSh38.6 billion in June 2019.  

Net interest income was up 22% to KShs.31.1 billion from KShs.25.4 billion, riding on additional investments in Government securities and lending. 

Non funded income was up 6% to KShs. 14.0 billion from KShs.13.2 billion, driven largely by revenues from the digital proposition, growth in the forex income and additional income from National Bank of Kenya, the newest subsidiary of KCB Group. 

The continued focus on driving digital transactions saw the proportion of non-branch transactions rise to 98% up from 95% in Q2 2019 mainly driven by mobile, internet and agency banking. 

Total operating expenses were up 20% on the back of the NBK acquisition. The synergies from the acquisition and the Group-wide cost management drive are expected to improve this position in the second half of the year. 

The Group set aside Kshs. 11 billion as provision expense for potential loan losses that could crystalize as a result of the coronavirus pandemic, compared to KShs. 3 billion provision during a similar period last year. 

Balance sheet Growth Total Assets grew by 28% to KShs. 953.1 billion, funded by customer deposits and existing business growth. Net loans and advances grew 17% to close the period at KShs. 559.9 billion. On the funding side, customer deposits were up 35% to KShs. 758.2 billion. 

Asset Quality 

For the six months, the ratio of non-performing loans (NPLs) to total loan book increased to 13.7% from 7.8% in 2019, mainly due to consolidation of NBK and heightened defaults associated with the pandemic. The stock of NPLs increased to KShs.83.9 billion up from KShs 39.1 billion in 2019. 

During the period under review, shareholders’ equity grew 12% from KShs. 117.5 billion to KShs. 132.1 billion. This was driven by the growth in retained earnings over the 12-month period to June 2020. 

The Group maintained healthy buffers on its capital ratios over the minimum regulatory requirement. The Group’s core capital as a proportion of total risk weighted assets closed the period at 17.9% against the Central Bank of Kenya statutory minimum of 10.5%. Total capital to risk-weighted assets stood at 19.5% against a regulatory minimum of 14.5%. All banking subsidiaries met regulatory capital requirement with the exception of NBK which was below total capital requirement.  

Oigara said the Group plans to inject additional capital before the end of this year to ensure compliance and support the turnaround strategies expected to drive performance. 

“We project a continued strain on the business and economy in the remaining part of the year as the COVID-19 pandemic evolves. We will accelerate our support to customers, roll out cost management initiatives and seek avenues to boost efficiency though digitization to cushion the business from emerging pressures,” said Oigara.