Standard Chartered Bank Kenya has posted impressive financial results for the third quarter of 2024, reporting a 63% surge in net profit to Ksh 15.8 billion for the first nine months of the year, up from Ksh 9.7 billion during the same period in 2023. The robust performance signals the bank’s resilience and ability to navigate an evolving economic landscape, driven by strong growth in both funded and non-funded income streams.
Key Drivers of Profit Growth
The bank’s third-quarter results highlight a significant increase in total operating income, which grew by 33% year-on-year, reaching Ksh 39 billion from Ksh 29 billion. Gross profits also saw a comparable increase of 33%, rising from Ksh 13.7 billion to Ksh 22.5 billion. The growth was primarily fueled by an uptick in both non-funded income (from fees, commissions, and foreign exchange activities) and net interest income, which grew by 74% and 17%, respectively.
Non-funded income, which is vital for banks as it diversifies revenue beyond traditional lending, saw a massive 74% growth, climbing from Ksh 8.2 billion to Ksh 14.3 billion. This remarkable increase was driven by higher fee and commission income, as well as robust forex trading results. Meanwhile, net interest income, which is a primary revenue stream for commercial banks, grew by 17%, reaching Ksh 24.8 billion, up from Ksh 21.2 billion in the same period last year.
CEO’s Outlook for the Future
Kariuki Ngari, the Chief Executive Officer of Standard Chartered Bank Kenya, expressed confidence in the bank’s performance and outlook for the remainder of the year. He credited the strong performance to a combination of strong revenue growth and disciplined cost management. Ngari noted that the bank’s focus on growing its topline income while maintaining cost efficiency had paid off, resulting in an impressive 64% increase in profit before tax for the third quarter.
Looking ahead to the final quarter of 2024, Ngari remained optimistic, citing an improving macroeconomic environment characterized by declining interest rates, falling inflation, and a stable currency. He emphasized the bank’s readiness to support clients through these economic shifts, positioning it for a strong finish to the year. “We are well-positioned to help our clients through this phase and are confident of a strong finish to the year,” Ngari said.
Challenges in Customer Loans and Deposits
Despite the strong financial performance, the bank reported a decline in both customer loans and deposits, which reflects some of the broader economic trends at play. Customer loans and advances fell by 7%, from Ksh 163 billion to Ksh 151.3 billion. This decrease is partly attributed to cautious lending practices amid an evolving economic environment. Deposits also dropped by 17%, from Ksh 342.9 billion to Ksh 294 billion, highlighting a shift in customer behavior and a possible impact of tighter liquidity conditions across the banking sector.
Strategic Focus and Long-Term Goals
While the decline in loans and deposits could be seen as a concern, the bank’s strong profit growth and revenue diversification demonstrate its resilience in challenging times. Standard Chartered’s strategic focus on growing non-funded income sources like fees, commissions, and forex trading has provided a cushion against fluctuating interest rates and loan demand. This approach not only strengthens the bank’s financial position but also ensures that it can continue to generate stable revenue streams despite any headwinds in the lending environment.
As the bank approaches the final quarter of 2024, it will be keen to capitalize on the favorable economic conditions and maintain its momentum into the new year. With a solid performance in the third quarter and a positive outlook for the rest of 2024, Standard Chartered Bank Kenya is on track for a strong finish to the year, well-positioned for future growth in an evolving financial landscape.
In conclusion, Standard Chartered Bank Kenya’s Q3 results offer a positive narrative for both the bank and the broader Kenyan banking sector, underlining the importance of diversification and effective cost management as pillars of sustained profitability. As Ngari noted, the bank’s robust performance in the face of challenges underscores its resilience and adaptability in a competitive market.
