Stanbic Bank Kenya has announced a 3.6 billion shillings after-tax profit for the period ended 30 September 2020 underpinned by solid balance sheet growth and improved operational efficiency.
Announcing the Q3 results, Stanbic Bank Chief Executive Charles Mudiwa said, “2020 has been a challenging year for everyone including our clients, so we made an intentional decision to walk the journey with them and financially cushion them against the adverse effects of the COVID- 19 pandemics.
To cushion its clients against the ravaging effects of the COVID-19 pandemic, Stanbic Bank, restructured and provided moratoriums to clients on 23% of the client loans book at no cost.
As a result, Stanbic Bank raised its loan loss provisions by 76% compared to 2019 to ensure adequate provision of future potential credit losses.
Stanbic Bank also benefited from deliberate actions taken to improve its operational efficiency resulting in a 23% drop in operating expenses from Kshs 9.99 billion to Kshs 7.74 billion, a year on year comparison (YTD Sept 2020 vs YTD Sept 2019).
With the Central Bank Reference Rate (CBR) dropping by 100 bps in 2020, Stanbic reduced the interest charged on existing loans, passing on this benefit to clients, and in the process saving them Kshs 300 million. While this contributed to a 6.9% drop in net interest income compared to Q3 2019, Mudiwa noted that it was Stanbic’s way of giving back to the clients and supporting them further during the pandemic.
The waiver of costs on selected mobile transactions also saw clients benefit from additional reductions estimated at Kshs 283 million during the quarter. Mudiwa explained that customers have been encouraged to use digital platforms for transactions as they observed the Ministry of health protocols. This combined with a lower trade finance activity occasioned by a general slowdown in the economy contributed to a 31.4% drop in mobile transaction fees and commissions line. This was also partially offset by a 28.7% rise in the bank’s forex income line resulting in a net 18.4% drop in non-interest income.
Client deposits rose by 18.2%, a result of the bank’s digital strategy that has enabled its clients to conduct more transactions and activities either online or on digital platforms. “Through our mobile app, we have enabled our clients to open accounts remotely and safely at their convenience. Nearly all transactions can be carried out digitally. Today, 90% of our transactional volumes are conducted on digital channels,” said Mr. Mudiwa.
As a result of efforts across the Bank, Stanbic Bank’s pre-provision profit before tax remained stable, a significant achievement in a tough year. Due to the impairments caused by the COVID-19 pandemic, the bank has had a 30% decrease in Profit After Tax which stands at Ksh3.6 billion from Ksh 5.1 billion for a similar period last year. Shareholder funds continued to grow by 6.7% as of the end of September 2020.
The bank has also invested in Small and Medium Enterprise (SME) capacity building sessions which include survival boot camp sessions and digital marketing skills that will better enable its clients to weather the socio-economic storm that the pandemic has brought forth. So far, five hundred (500) SMEs have benefited from the programs and an additional five hundred (500) have been equipped with essential digital marketing skills.