NAIROBI, Kenya, Nov 16 – Standard Chartered Bank of Kenya has issued a profit warning for the full year period ending 31st December 2017.
The bank expects a 25 percent reduction in income compared to 2016 attributable to increased non-performing loans during the year and the effects of the interest rates capping introduced in 2016.
The bank says the impairment charge on the non-performing loans continues to be elevated and the turnaround of the affected accounts is not expected to be achieved this year.
Moreover, the capping of interest rates has contributed to a deceleration in credit growth.
“The warning is based on the unaudited results for the period to 30 September 2017, factoring in forecasts to the end of the year, and the preliminary evaluation made by the Board, with reference to figures and information currently available,” the bank said.
The bank reported a 39 percent drop in net profit to Sh4.7 billion in the third quarter of 2017, compared to Sh7.7 billion reported same period last year.
Net interest income for the Group fell slightly from Sh19.68 billion in Q3 last year to Sh19.4 Billion as of 30th September 2017.
Noninterest income fell from Sh6.6 Billion last year to Sh6.4 billion in the period under review.
Customer deposits hit Sh239 billion compared to Sh199 billion same period last year while the loan book went down to Sh114 billion from Sh120 billion in 2016.
“Management continues to implement the strategy that was refreshed in the latter part of 2015 with the focus being delivering cost efficiencies through investment in technology and funding incremental investments which build capacity in key areas of strength across business and tightening risk tolerance to create a more diverse and resilient balance sheet,” the firm noted.