Stanbic pays Sh944m franchise fees

Stanbic Bank branch on Kimathi Street Nairobi. FILE PHOTO | DENNIS ONSONGO | NMG    

By EDNA MWENDA More by this Author

Stanbic Holdings paid its South Africa-based parent company Standard Bank franchise fees of Sh944 million in the year ended December, a 28.9 percent increase

from the prior year when it remitted Sh732 million.

The Nairobi Securities Exchange-listed firm did not give further details on the payouts but such fees, rare among the local listed banks, are typically paid to the franchise owner for business support, use of its brand or access to its marketing muscle.

Stanbic disclosed the payouts to the Johannesburg-based company in its latest annual report.

The franchise fees brought the total amounts paid to Standard Bank to Sh1.92 billion in the review period, up from Sh1.45 billion a year earlier.

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Africa’s biggest bank also charged its Kenyan subsidiary Sh595 million for IT services, rising from the previous Sh574 million. Stanbic was also charged Sh387 million in “other operating costs”, with the expense more than doubling from Sh149 million.

Standard Bank packages products and lending opportunities across multiple markets for its subsidiaries. It also pays part of the remuneration for Stanbic’s chief executive Patrick Mweheire.

“The chief executive also has an oversight role over the region and therefore his costs are borne by Stanbic Holdings Plc and the Standard Bank of South Africa. The costs disclosed above relate to the share of Stanbic Holdings Plc,” Stanbic said in the remuneration report.

The multinational is set to earn Sh3.7 billion dividends from its local operation in which it holds a controlling 74.92 percent stake.

It raised its ownership to the current level by buying a cumulative 59 million shares in June last year, spending more than Sh5 billion in the transactions which featured a combination of a tender offer and on-market purchases.

Stanbic increased dividend payouts by 40 percent after the net profit for the year ended December 2022 grew 26 percent to hit the highest level in the lender’s history.

Net earnings hit Sh9.06 billion from Sh7.21 billion posted in the prior year as the interest income grew on increased lending and non-funded income rebounded.

Net interest income grew from Sh14.4 billion to Sh18.9 billion as loans and advances to customers rose by Sh37.5 billion to hit Sh266.83 billion at the end of December.

Read: Stanbic Bank risks Sh9.6bn pay for failed Juba plane deal

Non-interest income — mainly drawn from fees and commissions— rose from Sh10.62 billion to Sh13.14 billion to support the net earnings.

The group’s operating expenses, however, rose from Sh12.7 billion to Sh14.97 billion, partly on increased provisioning for non-performing loans.

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