Dec 4, 2022

Mawazo Writing Africa

Writing about the main

StanChart earnings up on negative loan provisions

Standard Chartered Bank Kenya boosted its earnings in the first quarter of 2022 by posting a negative provision for loan losses on hopes of an economic turnaround due to the negative impact of the Covid-19 pandemic.

The Lender, which is listed on the Nairobi Securities Exchange (NSE), posted a negative provision for loan losses of Ksh86 million (US$741,379.31), resulting in a 15.48 percent increase in net profit to Ksh2.39 billion (USD 20.6 million) to Ksh 2.76 billion (USD 23.79 million million) in 2020.

“Our first quarter performance was strong despite volatile and challenging market conditions. The start to 2022 was strong. However, we remain vigilant about the challenging external environment, heightened by the Russian invasion of Ukraine and ongoing cases of Covid-19 in China, causing logistical challenges in shipping and thus leading to accelerated inflation globally,” said Chief Executive Kariuki Ngari last week.

Several lenders have built up massive provisions for loan losses during the Covid-19 pandemic in 2020, leading to a drop in profits. But there are signs that banks are now feeling enough positivity to reduce some of those reserves through negative provisions, creating room for earnings growth.

According to StanChart’s unaudited financial statements released last week The lender’s total operating profit for the three months ended March 31, the company increased 4.7 percent to Ksh7.4 billion (US$63.79 million) from Ksh7.07 billion (US$60.94 million). million US dollars).


Net interest income increased 7.2 percent to Ksh 4.92 billion (US$42.41 million) from Ksh 4.59 billion (US$39.56 million), while unfunded revenue was relatively flat at Ksh2.48 billion (US$21.37 million). Total operating expenses fell 5.43 percent to Ksh 3.48 billion (US$30 million) from Ksh 3.68 billion (US$31.72 million), with loan loss provisions falling from a peak of Ksh 413.21 million (3, USD 56 million) to negative Ksh 86 million (USD 741,379.31) for the same period last year.

Net loans and advances to customers increased 8.67 percent to Ksh 128.09 billion (1, 1 billion US dollars) of 117.87 billion Ksh (1.01 billion US dollars), while customer deposits at 265.38 billion Ksh (2.287 billion US dollars).

In April, the StanChart Plc, listed on the London Stock Exchange, announced that it would sell its operations in five African countries as part of a strategic review to divest less profitable subsidiaries and simplify the group’s business.

This leaves the Kenyan and Nigerian operations Subsidiaries as main units on the continent alongside operations in Tanzania, Botswana, Mauritius, Uganda, Zambia, Ivory Coast, Egypt and Ghana.

Barclays Plc announced plans in 2016 to enter the African market by selling it’s entire 62, 3 per cent interest in Barclays Africa Group or reduction to a minority interest over a period of two to three years. UK financial conglomerate Atlas Mara Ltd is also at the end of its pullout from the continent, calling its African investments “risky” and the macroeconomic environment in sub-Saharan Africa “challenging”.