Stanchart half year profit dips 34pc on rate cap
Lender’s toxic loans surge by a tenth to Sh16.9 billion
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.