Stanbic Bank Kenya has reported net earnings amounting to Kshs. 3.6 billion which is 29.4% lower than Kshs. 5.1 billion the lender recorded during the same period in 2019.
The dim performance is attributed to an increase in loan loss provisions which surged by 76% in what the lender says is sufficient to cover future potential credit losses.
The bank noted the hardships to service outstanding loans during the period which resulted to 23% of its loan book being restructured.
“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 pandemic,” said Charles Mudiwa Stanbic Bank Chief Executive.
Uncertainties brought by the coronavirus pandemic saw Stanbic cut down operational expenses by 23% to Kshs. 7.74 billion, from Kshs 9.99 billion it reported during the same period last year.
Mudiwa says the decision by the Central Bank of Kenya to lower the base lending rate by 100 basis points to 7% in April, and which has since been kept unchanged saw the bank cut interest charges on existing loans, which in turn saved borrowers Kshs. 300 million.
“While this contributed to a 6.9% drop in net interest income compared to the third quarter of 2019, it was Stanbic’s way of giving back to the clients and supporting them further during the pandemic,” Mudiwa added.
The waiver of costs on selected mobile transactions also saw clients benefit from additional reductions estimated at Kshs 283 million during the quarter, the bank said.
The 18.4% drop in non-interest income was due to a 31.4% decline in mobile transaction fees and commissions on account of reduced business activity during the period, even though forex income rose 28.7% during the period.
Mudiwa is however optimistic of a favourable full-year outlook saying, “As our clients begin to chase a rebound strategy in recovering economy, we are confident that with our strong capital-liquidity ratios, we are well-positioned to support them find innovative ways to make their dreams possible.”