Standard Chartered Registers 25.4pc Decline in Earnings Per Share

Standard Chartered Bank Kenya released their FY17 financial results reporting a 25.4 percent year-to-year decline in Earnings Per Share to 19.64 shillings.

The decline was 9.4 percent higher than the expected estimate. It was exacerbated by a 20.3 percent year-to-year rise in interest expenses to 7.7 billion shillings as well as a 17.7 percent growth in operating expenses to 17.3 billion shillings.

The bank declared a final dividend of 12.50 shillings per share, which is a 10.7 percent decrease compared to 14.00 shillings per share in FY16.

The books closure for final dividend is slated for April 24th, 2018. Against FY17A results, a SELL recommendation with a target price of 175.08 shillings is maintained. The value represents a 24.9 percent downside potential.

The bank trades on a forward P/E and ROE of 10.4x and 14.9 percent against the sector P/E and ROE of 9.5x and 15.3 percent respectively.

On the brighter side, the non-funded income (NFI) grew by 3.5 percent year to year to 8.8 billion shillings, 10.5 percent above the anticipated FY17 estimate of 7.9 billion shillings. In line with the bank’s strategy to push most of their transactions through the alternate banking channels, the NFI contribution expectation will hopefully be maintained above 30 percent levels in FY18E.

Loan book also registered a 2.9 percent growth to 26.3 billion shillings.  The customer deposits also grew by 14.3 percent to 213.3 billion shillings.