Stanbic Holdings Plc has reported a modest 2% increase in net profit for the first half of 2024, totalling KES7.2bn ($55.49mn), the Star newspaper reported on August 8.

This growth comes amidst a challenging economic environment marked by Kenya’s credit rating downgrade and civil unrest. The bank’s performance reflects a combination of enhanced net interest income and a significant 30% expansion in its balance sheet, which grew from KES384bn ($2.96bn) to KES498bn ($3.84bn), Africa Press Arabic reported on 8 August.

Financial performance amid economic turbulence

The bank’s net interest income rose by 4% to KES12.6bn ($97.11mn), driven by a larger average lending book and higher asset yields. Operating costs decreased by 7% due to last year's investments aimed at improving client experience and gains from the appreciation of the Kenyan shilling. The cost-to-income ratio stood at 40.4%, indicating efficient cost management, BNN Bloomberg reported on August 8.

Customer deposits surged by 39% to KES 360bn ($2.77bn). The non-performing loans (NPL) ratio closed at 9.4%, and credit impairment charges dropped by 22% due to improved portfolio quality and strengthened risk management practices. The return on equity (ROE) improved to 21%, up from 20.5%, signalling the bank’s commitment to delivering incremental returns for shareholders, Stanbic Holdings said in a press release on March 6.

Economic challenges and strategic resilience

Joshua Oigara, CEO of Stanbic Holdings, acknowledged the mixed economic landscape impacting Kenya. While the appreciation of the Kenyan Shilling provided some stability, the country faced severe floods and civil protests, which disrupted economic activities and required significant recovery efforts.

In parallel, Standard Bank Group Ltd., which includes Stanbic Holdings, has been grappling with similar challenges. Patrick Mweheire, regional chief executive officer, noted the strain caused by Kenya’s credit rating downgrade and ongoing civil unrest. Despite these hurdles, Standard Bank remains confident in its ability to manage bad debt effectively. The bank has managed to reduce impairments by 22% to KES1.96 bn ($15mn) year on year, achieving a gross NPL ratio of 9.4% against the industry average of 16%.

Community impact and strategic investments

The Stanbic Kenya Foundation has made notable strides in its community impact initiatives. Partnering with organisations such as the USADF, GIZ, Bill and Melinda Gates Foundation, American Towers Company and Microsoft Corporation, the Foundation launched the ‘Future Ni Digital Skills’ programme. This initiative aims to enhance digital literacy among youth, women and communities, to train up to 10,000 individuals.

The Foundation also focused on empowering SMEs through collaborations with GIZ and USADF. By providing tailored financial support and capacity-building resources, Stanbic has supported over 50,000 SMEs, contributing to increased household incomes and job creation. Additionally, the Foundation issued concessional loans totalling KES119mn ($0.92mn).

Outlook and future goals

Both Stanbic Holdings and Standard Bank are cautiously optimistic about their future performance. Stanbic Holdings aims to further improve its NPL ratio and maintain strong financial returns, while Standard Bank is focused on achieving mid-20% returns on equity and addressing macroeconomic challenges, Standard Bank Group said in a press release on 6 March.

Stanbic Holdings and Standard Bank Group have demonstrated resilience and strategic agility in navigating a turbulent economic environment. Their commitment to financial performance, community development and effective risk management highlights their ongoing efforts to support economic growth and stability in the region.