Breaking Down Standard Chartered Kenya’s Strong Q3 2024 Results

Standard Chartered Bank Kenya Limited has announced its financial results for the quarter ending September 30, 2024, showcasing an impressive profit before tax (PBT) increase of 64% compared to the same period in 2023. The strong performance underscores the bank’s resilience and ability to navigate a challenging macroeconomic environment, leveraging topline growth and cost control measures.

Performance Highlights

Income Growth:

• Operating Income surged by 33% to KES 39,069 million, driven by:
• Net Interest Income growth of 17%, reaching KES 24,839 million.
• Non-Interest Income increase of 74%, totaling KES 14,230 million, fueled by robust gains in fees, commissions, and other income streams.

Expense Management:

• Operating Expenses rose moderately by 5% to KES 14,642 million, indicating disciplined cost management despite inflationary pressures.

Loan Impairments:

• Loan impairments increased 7% year-on-year to KES 1,958 million, reflecting the bank’s cautious approach to credit risk amid economic uncertainty.

Profit Margins:

• Profit Before Tax (PBT): Jumped 64% to KES 22,469 million.
• Profit After Tax (PAT): Climbed 63% to KES 15,846 million after accounting for taxation expenses of KES 6,623 million, which increased by 68%.

Balance Sheet Overview

Despite income growth, the bank experienced contractions in key balance sheet metrics:

• Loans and Advances to Customers: Decreased by 7% to KES 151,282 million.
• Customer Deposits: Fell 17% to KES 284,417 million, resulting in a loans-to-deposits ratio of 53%, an improvement from 48% in December 2023.

Liquidity and Capital Strength:

• Liquidity Ratio: A robust 65%, far exceeding the regulatory minimum of 20%.
• Core Capital Ratio: Increased to 20.94% from 17.77% in December 2023.
• Total Capital Ratio: Rose to 21.00%, up from 17.84%.

The figures underline the bank’s strong financial health and its ability to maintain a well-capitalized and highly liquid position.

CEO’s Statement

Kariuki Ngari, Chief Executive Officer of Standard Chartered Kenya, attributed the stellar performance to the bank’s strategic focus on client engagement and operational efficiency.

"We have delivered a strong set of results in the nine months to September 2024 against a challenging macro environment by helping our clients navigate through these challenges and find opportunities to grow their business and wealth," said Ngari.

He further expressed optimism about the economic outlook for Q4, citing declining interest rates, falling inflation, and a stable currency as signs of an improving macroeconomic environment. Ngari emphasized the bank’s readiness to support clients in achieving their growth objectives as the year concludes.

Segmental Performance

Revenue Streams:

• Fees and Commissions: Increased by 30% to KES 5,489 million.
• Foreign Exchange Income: Recorded a modest 6% growth to KES 6,683 million.
• Other Income: Delivered a remarkable 189% increase to KES 2,058 million, a turnaround from a loss of KES 2,302 million in Q3 2023.

Economic Outlook and Future Prospects

The Kenyan economy in 2024 has shown signs of stabilization, with Standard Chartered highlighting improvements in key economic indicators:

• Declining interest rates are expected to ease borrowing costs for clients.
• Falling inflation could improve consumer purchasing power and overall economic activity.
• A stable currency reduces foreign exchange risks for businesses and investors.

Ngari expressed confidence that the bank is well-positioned to close the year strongly, supported by its diverse revenue streams, sound risk management practices, and a commitment to helping clients achieve sustainable growth.

Challenges and Opportunities

Challenges:

• Increased loan impairments reflect lingering credit risks in certain sectors.
• A 17% drop in customer deposits may signal tighter liquidity conditions or shifts in consumer saving behaviors.

Opportunities:

• The bank’s liquidity and capital strength provide a buffer for continued lending and investment activities.
• The improving macroeconomic environment presents avenues for growth in retail and corporate banking.

Conclusion

Standard Chartered Kenya’s Q3 2024 results demonstrate the bank’s ability to deliver significant growth despite economic challenges. With a strategic focus on enhancing client services and maintaining operational efficiency, the bank is well-poised for continued success in the final quarter of the year.