Standard Chartered Bank FY’2016 Results: The bank recommended payment of a final dividend of Ksh.14 per share

Standard Chartered Bank released their FY’2016 results, recording a core earnings per share growth of 43.9 percent to Ksh.25.9 from Ksh.18 in FY’2015. This was driven by a 10.3 percent growth in operating revenue that outpaced a 9.3 percent decrease in operating expenses.

Key points to note include:

  • Operating revenue increased by 10.3 percent to Ksh.28 billion from Ksh.25.4 billion. This was driven by Net Interest Income which grew by 7.1 percent to Ksh.19.4 billion from Ksh.18.1 billion in FY’2015, following a 12.7 percent growth in Interest Income to Ksh.25.8 billion from Ksh.22.9 billion in FY’2015. This was despite a 34 percent increase in Interest Expense to Ksh.6.4 billion from Ksh.4.7 billion in FY’2015. The Net Interest Margin was flat at 9.6 percent.
  • Non-Funded income increased by 18.5 percent to Ksh.8.6 billion from Ksh.7.3 billion in FY’2015. This was driven by a 22 percent increase in forex income to Ksh.2.8 billion from Ksh.2.3 billion in FY’2015, and a 58 percent increase in other income to Ksh.1.2 billion from 0.7 billion in FY’2015. As a result, the revenue mix changed to 69:31, Funded: Non-Funded from 72:28 in FY’2015.
  • Operating expenses decreased by 9.3 percent. This was driven by a 55.1 percent fall in Loan Loss Provisions (LLP) to Ksh.2.7 billion from Ksh.4.9 billion. This decline is mainly due to the one-off provisioning they had to make in FY’2015 after NPLs rose by 36.7 percent to Ksh.14.7 billion from Ksh.10.8 billion. However, staff costs increased by 15.3 percent to Ksh.7 billion from Ksh.6.1 billion in FY’2015.
  • The Cost to Income ratio (CIR) improved to 53 percent from 64 percent in FY’2015. Without LLP, the CIR deteriorated slightly to 44.7 percent from 44.6 percent in FY’2015.
  • Total assets increased by 7 percent to Ksh.250.3 billion from Ksh.234 billion in FY’2015. This was driven by a 6.6 percent increase in loans to Ksh.122.8 billion from Ksh.115.1 billion in FY’2015. Total liabilities increased by 7.1 percent to Ksh.206.4 billion from Ksh.192.7 billion in FY’2015, driven by an 8.5 percent increase in deposits to Ksh.186.6 billion from Ksh.172.4 billion in FY’2015.
  • The faster growth in deposits than loans led to the Loan to Deposit ratio decreasing to 65.8 percent from 66.9 percent in FY’2015.
  • The bank recommended payment of a total dividend of Ksh.20 per share, comprising of a final dividend of Ksh.14 per share, having paid an interim of Ksh.6 per share. This translates to an increase in the dividend yield to 9.2 percent compared to 7.2 percent for 2015.
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Going forward, we expect the bank’s growth to be driven by:

  1. Strong growth in the corporate banking sector
  2. Reduction in the level of non-performing loans due to the adoption of more prudent screening criteria.
Mr. Felix
A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.

Mr. Felix

A Math Nerd and a Computer Geek. Currently a Windows 10 Insider. Interested in AI, big data and AR/VR. Takes a keen interest in developments in the tech, business and social media spheres.

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