Key Numbers In StanChart’s Q3 Earnings

Standard Chartered Group released its 3Q22 results recording a 37.1% y-o-y increase in profit after tax (PAT) to KES 8.7 BN.

Performance was supported by a 10.3% y-o-y increase in total operating income to KES 24.6 BN and a 78.6% y-o-y decline in loan loss provision expense to KES 621.0 MN.

EPS for the period stood at KES 22.61 (+37.1% y-o-y). A dividend of KES 6.00 per share was declared (3Q21: KES 5.00).

Net interest income grew by 7.3% y-o-y to KES 15.8 BN, on the back of a 4.1% y-o-y increase in interest income to KES 18.2 BN.

Interest expense declined by 12.6% y-o-y to KES 2.4 BN, supporting net interest income performance. As such, the net interest margin contracted by 11 bps y-o-y to 6.3%.

Non-funded income increased by 16.1% y-o-y to KES 8.8 BN. This comprised fees and commission income of KES 2.5 BN (-6.2% y-o-y), net income from forex dealings of KES 2.3 BN (+33.6% y-o-y), and other operating income of KES 739.0 MN (+23.4% y-o-y). Funded income reliance in turn declined by 22 bps y-o-y to stand at 64.4%.

Operating expenses (less loan loss provisions) increased 8.9% y-o-y to KES 11.6 BN on the back of an 11.5% y-o-y increase in staff costs to KES 3.6 BN and a 37.9% y-o-y increase in other operating expenses to KES 3.4 BN. The cost-to-income ratio stood at 47.4%, down 60 bps y-o-y.

Pre-provision operating profit was up by 3.2% y-o-y to KES 7.7 BN. Loan loss provision stood at KES 108.2 MN (-83.1% y-o-y), placing the cost of risk at 0.2%, 81 bps lower y-o-y. As a result, profit before tax was up 11.4% y-o-y to KES 7.6 BN.

Customer loans and advances shrank by 1.3% y-o-y to stand at KES 128.5 BN (+0.3% q-o-q). Investment securities saw a 1.9% y-o-y increase to KES 101.1 BN (+13.5% q-o-q) whereas held for dealing securities increased by 3.5% y-o-y to KES 2.8 BN (-77.2% q-o-q).  On the funding side, customer deposits went up by 3.1% y-o-y to KES 286.9 BN (+8.1% q-o-q). The loans-to-deposits ratio stood at 44.8%, down 198 bps y-o-y

Gross NPL declined by 0.5% y-o-y to stand at KES 22.7 BN, with the NPL ratio increasing 10 bps y-o-y to stand at 15.0%. The NPL coverage ratio was up by 502 bps y-o-y to 72.9%.

On a trailing basis, StanChart is currently trading at a P/E multiple of 4.6x against an industry median of 3.7x and a P/B multiple of 1.0x against an industry median of 0.7x. Its ROE stands at 20.6% while its ROA stands at 3.1%.