Tough conditions impact StanChart Kenya’s half-year results
Standard Chartered Kenya has reported a decline in the bank’s half year earnings while at the same time taking an interesting route of increasing its loan provisions. CNBC Africa’s Arnold Kwizera caught up with the bank’s CEO Kariuki Ngari for more.
Wed, 21 Oct 2020 10:20:31 GMT
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AI Generated Summary
- Standard Chartered Kenya reports a decline in half-year earnings amidst the COVID-19 pandemic, emphasizing increased loan provisions to safeguard client interests and support recovery.
- Proactive restructuring of client facilities and significant provision allocations showcase the bank's commitment to prudent risk management and client support.
- Technology adoption, business viability assessments, and collaborative fiscal-monetary policies emerge as key strategies to drive growth and resilience in the banking sector.
Standard Chartered Kenya has recently reported a decline in the bank's half-year earnings, a result of the challenging economic landscape brought about by the COVID-19 pandemic. In an exclusive interview with CNBC Africa, the bank's CEO, Kariuki Ngari, shed light on the strategies employed by the bank to navigate these tough conditions.
Ngari acknowledged the impact of the pandemic-induced shutdown on economic activities, which consequently led to a decline in the bank's revenue. He emphasized that the bank took a cautious approach, increasing its loan provisions significantly to safeguard against potential distress among clients. This move, though bold, was deemed necessary to ensure the bank's resilience in supporting clients through the recovery phase.
The CEO explained that amid the pandemic, the bank restructured facilities amounting to over 222 billion shillings, providing clients with relief options ranging from three to nine months. This proactive measure aimed to assess each client's ability to overcome financial challenges and make informed decisions on provision allocations.
Notably, Standard Chartered's loan provisions saw a fourfold increase to 1.6 billion Kenyan shillings, reflecting a strategic focus on protecting client interests even in distressing times. While this move may have impacted the bank's earnings per share, Ngari emphasized that it was the right decision rather than a bold one, aligning with the bank's commitment to prudent risk management.
Addressing the roadmap for the banking sector in the upcoming financial year, Ngari highlighted the importance of reflecting on the challenges faced in 2020 and supporting businesses towards recovery. He emphasized the role of technology in driving operational efficiency and reducing costs for clients. Additionally, assessing the viability of businesses post-pandemic and tailoring support accordingly will be crucial for banks moving forward.
In terms of the broader economic outlook, Ngari underscored the significance of coordinated efforts between fiscal and monetary authorities to restore investor confidence and attract capital inflows. By maintaining fiscal discipline and implementing supportive policies, governments can signal stability and resilience to investors, facilitating a quicker economic rebound.
Looking ahead, the banking sector's focus will be on assessing the outcomes of support measures implemented during the pandemic and charting a sustainable path for businesses to thrive. As the industry gears up for a new fiscal year, the ability to adapt to evolving market dynamics and client needs will be paramount in driving growth and resilience.