StanChart Tanzania CEO on sale of retail business

Standard Chartered Bank Tanzania has announced its decision to sell its consumer, private, and business banking business in Tanzania to Access Bank, a subsidiary of Access Holdings. This move is part of Standard Chartered's broader plan to divest from seven markets in Africa and the Middle East, in order to concentrate on emerging markets. Herman Kasekende, CEO of StanChart Tanzania, recently sat down with CNBC Africa to discuss the implications of this strategic decision. According to Kasekende, the consumer, private and business banking sector only contributes a maximum of about 10% to the bank's top line and an even smaller percentage to the bottom line. With the sale of this segment, the bank will now shift its focus to areas that align more closely with its strategic goals, such as corporate and institutional banking, financial institutions, global subsidiaries, and large local corporates. Kasekende emphasized that the bank aims to leverage its expertise and network to benefit Tanzania in these key areas. He highlighted the significant role that the corporate and institutional banking segment currently plays in Tanzania, as the bank is the third most profitable in the country. The focus will continue to be on servicing the sovereign business and financial institutions, including facilitating funding for major infrastructure projects and providing banking services for global subsidiaries operating in the region. Kasekende assured that employees affected by the sale will be retained by the new owner, Access Bank. Access Bank has a track record of integrating staff and clients seamlessly following acquisitions in the region. Despite the economic challenges faced in 2023, such as inflationary pressures and tightening monetary policies, Standard Chartered Bank Tanzania has demonstrated resilience and growth. The bank reported a solid performance in the first half of 2023, with $23.5 million in profit before tax and a three percent increase in revenues, reaching $36.7 million. Loan impairments remained low at 2.4 percent, below the regulatory limit of five percent, while operating costs were efficiently managed, boasting a cost-to-income ratio of 34 percent, well below the regulatory limit of 55 percent. Deposits increased slightly to $510 million, and total assets grew by 17 percent to $800 million. Kasekende attributed the growth in profitability to increased interest rates and growth in non-funded income from capital-lite products offered to clients. The bank has also benefited from its innovative products and services in the corporate and institutional banking sector. Despite challenges in the liquidity landscape, exacerbated by global economic trends and rising commodity prices, Standard Chartered Bank Tanzania has implemented strategies to support clients facing dollar shortages for imports. By leveraging client inflows and working closely with the central bank, the bank aims to alleviate the liquidity stress and meet the demand for foreign exchange in the market.