“Standard Chartered Bank will report its annual results for the year ending 31, December 2015 in the first quarter of 2016. The bank projects that the net earnings for the year ending 31 December 2015 will be at least 25 percent lower than reported for the year ending 31, December 2014,” the bank’s board said on Friday.
The bank attributes the drop in net earnings to rise in Non Performing Loans(NPL) portfolio in last year with an NPL ratio of 10.8 percent as at June 2014. The bank however says it has taken assertive actions to manage NPLs, including further tightening risks of tolerance levels.
While positioning the bank for profitable growth, a redundancy charge will impact the 2015 performance.
Another reason for the expected drop in this year’s profits is that the 2014 financial results included a significant one-off net capital gain of Sh1.4billion relating to the disposal of a property.
“This warning is based on the un-audited results for the period to 30 September 2015, factoring in forecasts to the end of the year, and the preliminary evaluation made by the Board,” the bank said.
For the nine months of this year, ending September the banks net profit dropped by 20 percent compared to the similar period last year. The banks gross profits for the nine months decreased to Sh8.7billion from Sh11.2billion same period last year.
Going forward Standard Chartered Bank plans to tighten risk tolerance, create cost effective measures by investing more in technology and restructuring the commercial business.