StanChart’s first quarter profit drops to Sh1.8bn

What you need to know:

  • In a bid to recover bad debt, the stock of non-performing loans had declined by 38 per cent to Sh6.3 billion at the end of the first quarter of this year compared to Sh10.2 billion during the same period in 2014.
  • As a result, the NPL ratio has improved from a high of 11 per cent down to 7 per cent by the first quarter, Mr Manjang said, noting that the bank is keen on rebuilding its balance sheet “with good quality assets”.

Standard Chartered Bank has recorded a 28 per cent drop in profitability first quarter of 2015 on account of general slowdown in business and a growing bad debt portfolio. ’

The bank reported Sh1.8 billion in after tax profit for the first three months of the year down from Sh2.5 billion recorded over a similar period in 2014.

“The first quarter performance was subdued largely due to the after effects of the sharp increase in our non-performing loan book in 2014. As we stepped up the recoveries of these non-performing loans, the loan book declined in the first quarter,” StanChart chief executive officer Lamin Manjang said.

Interest income from loans and advances declined by 8 per cent to Sh3.66 billion in the period from Sh3.98 billion in a similar period 2014. Non-interest income also declined by 17.6 per cent to Sh1.4 billion down from Sh1.7 billion in the period under review.

BAD DEBT

In a bid to recover bad debt, the stock of non-performing loans had declined by 38 per cent to Sh6.3 billion at the end of the first quarter of this year compared to Sh10.2 billion during the same period in 2014.

As a result, the NPL ratio has improved from a high of 11 per cent down to 7 per cent by the first quarter, Mr Manjang said, noting that the bank is keen on rebuilding its balance sheet “with good quality assets”.

“We are seeing momentum in the growth in the loan book coupled with further positive actions that the impact on the performance will begin to be mitigated. We also see our NPL ratio coming back to within or below the industry ratio of 5.7 per cent in the next 6 to 12 months,” Mr Manjang said.