Stan­chart half year profit dips 34pc on rate cap

Lender’s toxic loans surge by a tenth to Sh16.9 bil­lion

Business Daily (Kenya) - - CORPORATE NEWS - David Herbling­tion­

Stan­chart Kenya’s net earn­ings for the six months to June dropped by more than a third weighed down by lower in­ter­est in­come as the in­ter­est rate cap nar­rowed the lender’s earn­ings from loans.

The Bri­tish lender posted an after tax profit of Sh3.4 bil­lion as at June 2017 com­pared to Sh5.2 bil­lion made in a sim­i­lar pe­riod a year ear­lier, a drop of 34.4 per cent.

Net in­ter­est earn­ings re­duced by Sh803 mil­lion to Sh9.1 bil­lion from Sh9.9 bil­lion in June 2016 – high­light­ing the im­pact of the rate caps which were not in place in the first half of last year.

Chief ex­ec­u­tive Lamin Man­jang at­trib­uted the per­for­mance to the cap­ping of lend­ing rates and in­tro­duc­tion of a floor on de­posit rates, slow­down in eco­nomic ac­tiv­ity in the run up to the Gen­eral Elec­tion and an in­crease in bad loans.

“Though we en­tered 2017 with cau­tious op­ti­mism, pres­sure oc­ca­sioned by ex­ter­nal chal­lenges par­tic­u­larly the Bank­ing (Amend­ment) Act, 2016, is re­flected in the per­for­mance as we con­tinue to wit­ness de­cel­er­a­tion in credit growth,” Mr Man­jang said in a state­ment.

The bank’s toxic loans surged by a tenth to Sh16.9 bil­lion as at June 2017, equiv­a­lent to 15 per cent of its loan book.

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