Standard Chartered first quarter profit down 10.5 percent to Sh1.84b

NAIROBI, KENYA: Standard Chartered Bank of Kenya has posted a 10.5 per cent decline in net profit to Sh1.84 billion in the first three months of trading ended March 31, 2018.

The bank becomes the first tier I lender to register a drop in bottom-line during this period given that her peers- Kenya Commercial Bank, Equity, Cooperative Bank and Stanbic Bank- have all posted growth in profits.

In a statement, CEO Lamin Manjang attributed the decline to increased investment in digital system and increased provision to accommodate the new accounting standard.

"Total operating income is up year-on-year. However pre-tax profit is down 7.7 per cent primarily due to higher costs from increased investment in our 'Digital by Design' strategy and loan impairment which is now on an IFRS 9 basis," he said.

Pretax profit fell from Sh3 billion to Sh2.77 billion even as interest income grew from Sh6.3 billion to Sh6.3 billion. However, the growth was weighed down by 16.5 per cent rise in interest expenses to Sh1.98 billion as a result of higher deposit balances.

Loans and advances to customers declined by 9.9 per cent to Sh113.8 billion compared Mr Manjang said that the bank remains selective in asset origination "as we work to grow our balance sheet in a safe and sustainable manner."

Non-interest income increased 6.5 per cent year-on-year to Sh2.3 billion on the back of increased focus on non-funded income to diversify income streams.

Operating expenses grew by 9.6 per cent to Sh3.3 billion largely due to implementation of the "Digital by Design" strategy which aims to migrate over 80 per cent of transactions to    non-branch channels by 2020.

The Bank said it will continue to prioritise deployment of technology to promote efficiency and enhance risk management.