Bad loans and higher expenses drops Standard Chartered Bank Kenya net profit to 10.5 percent for the first quarter ended March.
Standard Chartered Bank Kenya net earnings in the review period stood at Sh1.8 billion compared to Sh2 billion a year earlier.
StanChart’s facility for bad loans rose 38 per cent to Sh1 billion, contributing to a 15.4 per cent jump in overall operating expenses to Sh4.3 billion.
Lamin Manjang, Standard Chartered Bank Kenya chief executive said that increased investment in technology and bad loans also contributed to the higher costs”.
StanChart has strengthened its investment in automated teller machines, Internet and mobile banking in a cost-cutting strategy that has seen it cut back hundreds of workers in the past three years.
The bank’s gross bad loans increased 15.7 per cent to Sh17.7 billion.
Interest income rose 7.7 per cent to Sh6.8 billion after the lender increased its purchases of government bonds and T-bills.
Its stock of treasuries increased 16.4 per cent to Sh112 billion, with loans to customers falling 2.5 per cent to Sh113.8 billion.
Banks have cut their loaning to the private sector and stacked government debt in the wake of interest rate controls, arguing that a large section of prospective borrowers cannot be profitably accommodated in the current interest rate ceilings.
StanChart’s interest expenses jumped 16.4 per cent to Sh1.9 billion, reflecting the impact of a 13.1 per cent increase in customer deposits to Sh231.9 billion.