Stanbic records Sh1.2bn profit drop in year of Covid

Stanbic Holdings Plc's net earnings shrunk by Sh1.2 billion to Sh5.2 billion for the year ending December 2020 as the Covid-19 pandemic hit the financial services sector in a year that saw the firm's borrowings shrink by Sh3.6 billion.

The lender reported that its total comprehensive income fell from Sh6.3 billion in 2019 to Sh4.9 billion last year, while net profit fell from 2019’s Sh6.4 billion - an 18.6 per cent drop.

Stanbic Bank, its subsidiary, reported that its profits had fallen from Sh6.2 billion in 2019 to Sh5.2 billion in 2020, as the lender’s operating income fell by about Sh2 billion.

The group attributed last year's performance to Covid-19 restrictions, subdued interest rates and weakening of the Kenyan shilling.

The firm reported that losses from foreign currency translation differences for foreign operations jumped from Sh84 million in 2019 to Sh170 million last year as the Kenyan shilling continued to take a beating from the dollar.

Group CEO Charles Mudiwa noted that the lender had endured a challenging operating environment and spent millions on Covid-19 relief interventions.

“Despite a challenging operating environment, I am proud that Stanbic stood shoulder to shoulder with our clients and the Kenyan community when it really mattered the most. We supported clients through our DADA proposition where we onboarded over 10,000 women while issuing loans worth Sh844 million to support them and their businesses,” he said.

In August last year, Stanbic reported that its profits had fallen by 35 per cent for the first half of 2020 to hit Sh2.5 billion. 

The group on Friday said it had borne costs for loan restructures amounting to Sh40 billion for individuals, Small and Medium-sized Enterprises (SMEs) and corporates through its loan moratoriums that benefitted 7,200 clients.

“The lender restructured loans worth Sh40 billion of which Sh3.1 billion were related to SMEs. Stanbic bore the costs of the restructures. Through its insurance franchise, over 400 retrenchment claims were fully paid to assist clients weather the challenges presented by Covid-19. The Group waived charges on digital channels to the tune of Sh283 million in foregone fee revenue and lowered interest rate in line with regulations saving clients Sh665 million in interest thereby reducing the interest income for the lender,” the firm said in a statement.

But the group’s balance sheet remained stable, with a 12 per cent increase in customer deposits and 4 per cent growth in customer loans and advances.