StanChart Cancels Dividends As Profits Dip By 31%

Standard Chartered Bank declined to declare an interim dividend as it released its financial results for the first half of 2020 with a drop in its profits by 31.2 percent.

The lender now joins the KCB Group who also declined to announce interim dividend after profits for the first half dropped by more than 42 percent in order to conserve capital.

Based on its previous payout of 5 shillings per share, the suspension of the payout during this period will save the lender 1.8 billion shillings.

The profits for the bank dropped by 31.2 percent with the bank attributing it to the effects of the Covid-19 pandemic that has hit hard on various businesses across the world.

The total earnings for the first half of 2020 came in at 3.2 billion shillings from 4.7 billion shillings in 2019. The bank says defaults from customers and restructuring of the loans led to the drop in profits.

“Over the last 24 months, our investments in digital capabilities have been unprecedented and building on these capabilities has enabled our transaction processing to remain resilient at the back of the COVID 19 pandemic – Today, 89 percent of transactions are being conducted digitally with a 62 and 90 percent penetration for our Retail and Corporate clients respectively,” said the bank in a statement.

The income for the lender went down by 5 percent to 13.8 billion shillings on a year-on-year driven by margin compression and a one-off revenue in the prior year.  The operating expenses stood at 3 percent lower to 7.1 billion shillings.

“Loan loss provision is up significantly year-on-year to 1.6 billion shillings, driven primarily by the impact of COVID-19 and the resultant deterioration in the macroeconomic outlook. The Bank remains strongly capitalized and highly liquid. Our priority is to use the capacity to support our clients through the COVID-19 crisis,” said the lender.

As Covid-19 came knocking, the lender was forced to restructure loans worth 22 billion shillings to give customers enough time to pay and to cushion them against Covid-19 effects.