Standard Chartered Bank of Kenya’s first-half pretax profit slumped 31 percent because of higher operating costs and increased provisions for bad loans, the bank said on Thursday.
Pretax profit fell to 5.59 billion shillings ($54 million) as net interest income edged down to 8.75 billion shillings from 8.76 billion shillings in the first half of 2014.
“Our first quarter performance was disappointing as revenues declined whilst costs and loan impairments increased. We have, however, seen a much stronger second quarter,” the bank said in a statement.
Loan provisions jumped 51 percent to 1.3 billion shillings, while operating expenses rose to 5.3 billion shillings from 4.8 billion shillings, though the bank said it expected non-performing loans (NPL) to drop over the next 12 months.
Read Also:
“One large name … deteriorated in Q1 2015 and we had to take a lumpy impairment charge in March 2015 which has increased the impairment charge compared to the same period last year and this has impacted our bottom line,” the bank said.
The bank, a division of Standard Chartered Plc, said its ratio of non-performing loans to total loans fell to 6.5 percent from 11 percent in the first half of 2014.
Bad debts jumped in the first half of last year after the bank started treating loans that had not been repaid for three months as bad rather than six months previously.
“We also see our NPL ratio coming back to within, or below, the industry ratio of 5.7 per cent in the next six to 12 months,” it said.
Loans and advances to customers rose slightly to 123.26 billion shillings from 122.75 billion shillings, while customer deposits were up 6 percent to 163.21 billion shillings.
Reuters
