NAIROBI, Kenya, Mar 22 – CfC Stanbic Holdings Limited, a member of the Standard Bank Group has recorded an increase in earnings for the full year 2010 following a solid rebound in the performance of its insurance, brokerage and banking businesses.
The financial services group of companies collectively reported profit after tax of Sh1.78 billion in 2010 compared to Sh35 million in the previous year.
Kitili Mbathi, the managing director of CfC Stanbic Holdings Limited said the double digit growth in each of the firm’s businesses is an bold indicator of the improving business and economic climate in the country.
“The upturn in the Kenyan economy complements our push to offer innovative financial solutions that meet customer expectations and provide a compelling investment return for our shareholders,” said Mr Mbathi adding that the key activity in coming months will be the remaining steps in the restructuring and demerger of Insurance businesses.
CfC Stanbic Holdings Limited is the holding company of: CfC Stanbic Bank Limited, CfC Life Assurance Limited, The Heritage Insurance Company Limited and CfC Stanbic Financial Services Limited.
The company has completed the process of separating (demerging) its insurance business from its banking and financial services business.
This involved bringing in a strategic investor in the form of Liberty Holdings and consolidating the ownership of CfC Life Assurance Limited and The Heritage Insurance Company Limited under CfC Insurance Limited (CfCIH).
This restructuring will culminate in the listing of CfCIH on the Nairobi Stock Exchange (NSE) by way of introduction. In this process each existing shareholder of CSH will receive a share in CfCIH for every share he or she owns in CSH.
The separation of the banking and insurance businesses and listing them separately is part of a strategic push to raise the value of the firms through the sharper management focus of each of the businesses.
Following the improved performance last year, CfC Stanbic Holdings Ltd reversed a negative headline earnings per share of 20 cents in 2009 to Sh5.86 in 2010.
The group’s total operating income increased by 35 percent to Sh12 billion while non-interest revenue increased by 96 percent to Sh5.96 billion mainly driven by enhanced trading volumes and higher investment income.
With the demerger process at its final stage, the directors of the group have recommended a final dividend of 80 cents a share. In addition a dividend in specie and a cash dividend of 75 cents per share has also been declared for the eligible shareholders as part of the demerger of the group.
Unit performance
The Group’s banking business benefited from the global banking sector recovery stimulated by corrective actions taken across the globe and rising demand for credit in the Kenyan economy.
CfC Stanbic Bank recorded an 86 per cent rise in profit after tax from Sh794 million in 2009 to Sh1.47 billion last year buoyed by strong levels of interest and non-interest income.
Net interest income was up by nine percent from Sh3.8 billion to Sh4.1 billion while non-interest income increased by 73 percent to Sh4.4 billion.
The Bank continued its expansion into major towns to boost retail banking. It is expected that the licensing of the agency banking in the year coupled with development in mobile banking will improve financial services access to the previously unbanked population.
The Group’s financial services business was stronger due to higher brokerage commissions in line with the NSE rebound. CfC Stanbic Financial Services recorded a 228 percent rise in earnings from a loss after tax of Sh80 million in 2009 to a profit after tax of Sh22.5 million in 2010.
In 2010, the Group injected additional capital to CfC Financial Services in compliance with the Finance Bill Budget 2009/2010 increasing the minimum share capital of Investment Banks to Sh250 million.
A reversal of impairment losses on equities witnessed in 2009 and improved operating income for both Heritage Insurance Ltd and CfC Life Assurance moved the consolidated insurance group back to profitability.
The Heritage Insurance Company recorded a 357 percent rise in earnings from Sh43 million recorded in 2009 to Sh197.1 million in 2010 on the back of improved underwriting and investment income.
CfC Life Assurance Ltd also marked a return from loss making territory to register a 139 percent in earnings from Sh197.6 million in 2010 compared to a loss of Sh510 million in the previous year.
In 2011 the Kenyan economy is expected to grow by 5.7 percent, mainly aided by public spending on infrastructure and growth in Private Sector demand for credit.
Mr Mbathi says the anticipated upturn in the Kenyan economy raises the demand for financial services which form the back bone of economic growth.
“The Group will continue to strategically position itself in the market by providing relevant and cutting edge products and services to its target markets,” said Mr Mbathi.
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