•Stanbic Bank CEO Charles Mudiwa termed 2020 a challenging year for everyone, including the bank's clients.
•The bank raised its loan loss provisions by 76 per cent compared to 2019, which management says was to ensure adequate provision of future potential credit losses.
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Stanbic Bank Kenya has posted a Sh3.6 billion after-tax profit for the period ended September 30, underpinned by solid balance sheet growth and improved operational efficiency.
Announcing the quarter three results, Stanbic Bank CEO Charles Mudiwa termed 2020 " a challenging year for everyone" including the bank's clients.
"We made an intentional decision to walk the journey with them and financially cushion them against the adverse effects of the Covid- 19 pandemic," Mudiwa said in a statement.
To cushion its clients against the ravaging effects of the pandemic, Stanbic Bank, restructured and provided moratoriums to clients on 23 per cent of the client loans book at no cost.
As a result, the bank raised its loan loss provisions by 76 per cent compared to 2019, which management says was to ensure adequate provision of future potential credit losses.
Stanbic Bank also benefited from deliberate actions taken to improve its operational efficiency resulting in a 23 per cent drop in operating expenses from Sh9.99 billion last year to Sh7.74 billion.
With the Central Bank Reference Rate (CBR) dropping by 100 basis points in 2020, Stanbic reduced the interest charged on existing loans, passing on this benefit to clients, and in the process saving them Sh300 million.
While this contributed to a 6.9 per cent drop in net interest income compared to Q3 2019, Mudiwa noted that it was Stanbic’s way of giving back to the clients and supporting them further during the pandemic.
The waiver of costs on selected mobile transactions also saw clients benefit from additional reductions estimated at Sh283 million during the quarter.
The lender has been encouraging customers to use digital platforms for transactions as they observed the health ministry's protocols.
This combined with a lower trade finance activity occasioned by a general slowdown in the economy contributed to a 31.4 per cent drop in mobile transaction fees and commissions line.
This was also partially offset by a 28.7 per cent rise in the bank’s forex income line resulting in a net 18.4 per cent drop in non-interest income.
Client deposits rose by 18.2 per cent , a result of the bank’s digital strategy that has enabled customers to conduct more transactions and activities either online or on digital platforms.
“Through our mobile app, we have enabled our clients to open accounts remotely and safely at their convenience. Nearly all transactions can be carried out digitally. Today, 90 per cent of our transactional volumes are conducted on digital channels,” said Mudiwa.
The reported profit is however a 30 per cent drop from the Sh 5.1 billion reported in a similar period last year.
Shareholder funds however continued to grow by 6.7 per cent as at the end of September 2020.
"The bank' s capital and liquidity ratios remain robust and have improved year on year," Mudiwa noted.
While Stanbic bank has been keen to support its customers during the pandemic, it has rolled out various social initiatives worth approximately Sh160 million.
In collaboration with other corporate partners and dedicated staff, the bank donated 192 Oxygen Therapy Devices, Personal Protective Equipment (PPEs), 700 handwashing stations and foodstuffs in support of frontline health workers in Kenya and the communities in which the bank operates.