Stanbic Bank Kenya has reported a Sh10.1 billion profit after tax for the nine months ending September 30, 2024, marking a 9% increase from the Sh9.3 billion recorded in the same period in 2023. The performance highlights the bank's ability to navigate a complex economic landscape characterized by decelerating credit to the private sector and reduced consumer spending.

The growth in profitability was primarily driven by a 5% rise in net interest income to Sh18.9 billion, supported by a 12% expansion of the bank's balance sheet, which grew to Sh463 billion. This was achieved despite a significant 147% surge in total interest expenses to Sh19.8 billion, largely due to a 171.7% spike in interest paid on customer deposits, reflecting the high-interest-rate environment. The bank's total assets grew by 11.7% to Sh462.6 billion.

In a statement released on Thursday, November 21, 2024, Stanbic Bank Kenya and South Sudan Chief Executive, Dr. Joshua Oigara, noted the bank's resilience. “We are navigating a challenging macroeconomic environment characterized by slower economic growth in the second half of 2024 amid easing inflation,” Dr. Oigara said. “However, our bank demonstrated remarkable resilience in the first nine months of the year by registering growth both in our Kenya and South Sudan operations.”

Divergent Income Streams and Cost Management

While net interest income grew, non-interest income fell by 18% to Sh10.4 billion. The bank attributed this decline to significant non-repeated transactions in 2023 and a contraction in trading margins. Foreign exchange trading income, a key component, shrunk by 14.4% to Sh6.2 billion.

A key success in the period was effective cost management. Operating costs saw a 5% decrease, a result of previous investments in technology to improve client experience and foreign exchange gains from the appreciation of the Kenya Shilling earlier in 2024. Furthermore, credit impairment charges fell by a substantial 40% to Sh2.7 billion, down from Sh4.5 billion in Q3 2023, which the bank credited to prudent credit risk management and improved recoveries.

Asset Quality and Balance Sheet Dynamics

Despite the positive results, the bank's asset quality showed some strain. Gross non-performing loans (NPLs) increased to Sh24.8 billion, pushing the NPL ratio up to 11.3% from 9.6% in the same period last year. This remains below the current banking industry average of 16.7%, indicating comparatively strong risk management. The loan book to customers contracted by 12.8% to Sh218.8 billion as the bank appeared to shift its asset allocation. This was contrasted by a strong 82.3% year-on-year growth in holdings of government securities, which rose to Sh74.2 billion.

Customer deposits showed continued confidence in the institution, growing by 7.3% to Sh327.8 billion. The bank's liquidity ratio stood at 50.0%, well above the statutory minimum of 20%, and its total capital adequacy ratio was 17.8%, also comfortably above the 14.5% regulatory requirement, underscoring the bank's solid financial footing.

Looking ahead, the Kenyan banking sector is expected to remain stable, supported by adequate capitalization and ongoing digital innovation. However, challenges such as elevated non-performing loans and increased funding costs persist across the industry. Stanbic's performance, particularly its ability to manage costs and grow its balance sheet, positions it to navigate the evolving economic conditions. The board of directors did not declare a dividend for the third quarter.