Standard Chartered Bank has suffered a 35 per cent decline in net profit in the first half of this year as it remained under the weight of bad debts brought forward from 2014.
Profit after tax stood at Sh3.9 billion in the first six months of 2015, representing a 35 per cent drop from Sh6.1 billion in a similar period in 2014.
Loans and advances to customers increased marginally by 0.4 per cent to Sh123.3 billion from Sh122.7 billion in the period under review.
Net interest income remained unchanged at Sh8.7 billion.
The lender set aside Sh1.29 billion as insurance against bad loans, up from Sh857 million set aside in the half of 2014.
OPERATING EXPENSES
Chief executive officer, Mr Lamin Manjang, said performance was subdued by the effects of the sharp increase in non-performing loans (NPLs) in 2014 coupled with the large gain on sale of property that has not been repeated.
“We have taken various risk mitigating actions through 2014 and into 2015 and we have been largely successful. One large account, however, 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,” Mr Manjang said in a statement.
Operating expenses rose by 10 per cent to Sh5.3 billion from Sh4.8 billion in the period under review. Non-interest income declined by 31 per cent to Sh3.4 billion from Sh4.9 billion.
In the period under review, NPLs declined by 55 per cent to Sh6 billion from Sh13.3 billion.
“We have taken decisive actions to derisk our portfolio and whilst this has resulted in a material drag to our income it has improved the overall quality of the portfolio and risk profile for the business,” Mr Manjang said.