StanChart says profit to fall by 25 per cent

Standard Chartered Bank Kenya CEO Lamin Manjang during the bank's annual general meeting held at the Safari Park Hotel on May 28, 2015. Standard Chartered Bank on November 26, 20145 warned that its full year revenues for the year 2015 are set to be lower than expected. FILE | DIANA NGILA | NATION MEDIA GROUP 

In Summary

• The bank’s Chief Executive Officer Lamin Manjang attributed the shortfall to uncertainty surrounding the capital gains tax as well as non-performing loans, which he noted ate significantly into the lender’s margins.

By BRIAN NGUGI
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Standard Chartered Bank Thursday warned that its full year revenues for the year 2015 are set to be lower than expected, in the face of a difficult business environment and a huge chunk of bad loans.

The lender reported a net profit of Sh10.4 billion for the full year ended December 31, 2014, compared to Sh9.2 billion in 2013.

“Standard Chartered projects that net earnings for the year ending 31 December 2015 will be at least 25 per cent lower than reported for the year ended 31 December 2014,” said the lender in a profit warning notice.

It cited three factors, including non-performing loans (NPLs), a recent reorganisation and a one-off capital gain of Sh1.4 billion disposal of property.

The lender said while it was taking corrective actions to rectify its bad debts, including further tightening of risk tolerance levels, its current bad loans will affect hugely its full year earnings.

“Standard Chartered Bank’s non-performing loans portfolio increased in 2014 with an NPL ratio of 10.8 per cent as at June 2014. The impairment charge continues to be elevated and there may be further deterioration before the year end,” said the lender.

It also blamed a reorganisation of its business, saying this would impact on its overall earnings in the short term.

“While positioning the bank for profitable growth, there will be a redundancy charge, which will impact our full year 2015 performance.”

Earlier on Wednesday, the lender announced it had posted a 25.6 per cent decline in profit after tax of Sh6.1 billion for the nine-month period ended September 30 this year, as compared to Sh8.2 billion during the same period last year.

The bank’s Chief Executive Officer Lamin Manjang attributed the shortfall to uncertainty surrounding the capital gains tax as well as non-performing loans, which he noted ate significantly into the lender’s margins.