The Standard Chartered Bank Kenya Limited officially released its 2020 full year financial results yesterday. 2020 has been a very tough year for many financial institutions and other organizations following the COVID-19 pandemic. Towards the end of last year, some companies issued profit warnings, signaling a tough economic period. Some companies like Kenya Airways and CIC Insurance posted losses in the 2020 financial year, but few others like Safaricom PLC and British American Tobacco still posted profits from their Half Year and Full Year Financial Results. Majority of the companies that posted profits saw profits decline compared to the previous financial year.
Here are the summary 2020 financial results for Standard Chartered :
Summary financial performance
- Operating income declined 4.5 per cent reflecting the subdued economic activity in 2020;
- Net interest income declined 2 per cent due to lower interest rates coupled with pandemic relief measures;
- Non- interest income decreased 10 per cent with reduced volumes more than offsetting a particularly strong performance in Financial Markets;
- Operating expenses increased by 1 per cent with the impact of COVID-19 resulting in a net reduced spend on travel & entertainment and other discretionary costs more than offset by the continued focus on investing in new digital capabilities;
- Loan impairment increased by KShs 3,309 million to KShs 3,882 million. This was mainly driven by a KShs 1,549 million increase in impairments across all client segments as a direct result of the pandemic and includes a net increase in the judgmental management overlay of KShs 970 million that the Bank proactively reserved for forward-looking risks.
- Having made substantial provisions against expected credit losses during the year, conditions have stabilised somewhat in 2021. However, despite these encouraging signs, the credit risks facing the Bank are likely to remain elevated during what is likely to be a difficult economic recovery ahead.
The balance sheet remains strong and highly liquid.
- Customer deposits increased 12.3 per cent while net loans and advances to customers decreased 5.6 per cent. The focus on digital migration and ongoing investment in technology platforms continues to drive growth in the deposits. Funding quality remains high with current and savings accounts making up 88 per cent of total customer deposits.
- The liquidity ratio at 71.49 per cent remains well above the regulatory threshold.
- The total capital ratio of 18.47 per cent is above the regulatory minimum and within our capital risk appetite.
On 19 June 2020, the bank had announced that in response to the unprecedented challenges facing the world due to the COVID-19 pandemic, the Board had decided after careful consideration to vary the recommendation to pay a final dividend for 2019 of KShs 15.00 per ordinary share to KShs 7.50 per ordinary share which increased the total capital ratio by 106 basis points. This decision enabled the Bank to provide support to individuals, businesses and communities while keeping staff safe, and investing to transform the business for the long term.
The Board is recommending the payment of a first and final dividend for the year of KShs 10.50 for every ordinary share of KShs 5.00. The Board recognises the importance of dividends to shareholders and believes in balancing returns with investment to transform the business for the long-term, whilst at the same time preserving strong capital ratios that enable support for our clients and communities in which we operate.