Standard Chartered – full year 2021 results

Standard Chartered Bank Kenya Limited today releases its results for the year ended 31 December 2021.

Kariuki Ngari, Chief Executive Officer, said: “2021 was an exceptional year for the Bank despite the ongoing pandemic driven challenging conditions with profit before tax improving 70 per cent. Income returned to growth after the dip last year occasioned by the impact of the pandemic, increasing 7 per cent with strong underlying business momentum. We continue to transform how we serve our customers through innovations, partnerships and digitisation whilst maintaining a tight control on expenses with underlying efficiencies funding continual investment. Loan loss provision reduced as we worked closely with our clients to support them manage through the pandemic. The Bank remains well capitalised, with a highly liquid balance sheet, with total capital ratio of 17.76 per cent and a liquidity ratio of 71 per cent respectively.”

Summary financial performance

All commentary that follows is on comparisons made to the year ended 31 December 2020.

Total operating income increased 7 per cent. Within this:

Net interest income decreased 2 per cent with increased volumes more than off-set by lower average yields. The lower yields were however partially mitigated by lower cost of funds on the interest-bearing liabilities.

Non-interest income increased 25 per cent with strong performances in Wealth Management and Financial Markets.

Operating expenses decreased 10 per cent with underlying efficiencies funding investment in transformational digital initiatives.

Credit impairment declined 46 per cent to KShs 2.1 billion and the overall portfolio remains stable and resilient. The Bank is well-positioned to support our clients as the local and global economies recover but remains vigilant to the impact of the Russian invasion of Ukraine on economic recovery, continued impact of COVID-19 – which although considerably reduced, emergence of new variants could lead to new downsides.

Basic earnings per share increased by KShs 9.54 / 68 per cent.

A final dividend per ordinary share of KShs 14.00 has been proposed which, together with the interim dividend paid in December 2021, brings the total ordinary dividend per share for the year to KShs 19.00 – an 81 per cent year-on-year growth.

The balance sheet remains strong and highly liquid.

Loans and advances to customers increased 4 per cent. Asset quality remained stable.

Customer deposits increased 4 per cent. Funding quality remains high with current and savings accounts making up 91 per cent of total customer deposits.

The liquidity ratio at 71 per cent remains well above the regulatory threshold of 20 per cent.

The total capital ratio of 17.76 per cent is above the regulatory minimum and within our capital risk appetite.

Refreshed strategic priorities

We have refreshed our strategic priorities to reflect the evolving macroeconomic environment. We will continue to focus on our differentiated corporate Network and Affluent personal businesses and through our augmented digital capabilities we can now selectively extend our reach into the Mass Retail segment. We will also lead with a differentiated Sustainability offering because we know we can make a difference where it matters most.

These four strategic priorities will be underpinned by three critical enablers. People and Culture: we are investing in our people, giving colleagues skills they need to succeed, and evolving to a more innovative and agile operating model. New Ways of Working: we are fundamentally changing the way we work, to ensure we deliver the best outcomes for clients. Innovation: we are driving innovation to continuously improve client experience, increase our operational efficiency and tap new sources of income.

We have a huge opportunity to build a better future with our customers and communities. We believe that we can fulfil our Purpose – to drive commerce and prosperity through our unique diversity – without people being left behind, without the planet being negatively impacted, and without creating divisions that diminish our sense of community. To help us deliver our Purpose, we have defined three ‘Stands’, areas where we have long-term ambitions: Accelerating Zero (the climate Stand), Lifting Participation (the equality Stand) and Resetting Globalisation (the fairer globalisation Stand). Representing some of the main societal challenges of our time, these are not separate from our strategy, but integral to delivering it, stretching our thinking, action, and leadership.

Dividend

The Board will be recommending to the shareholders at the forthcoming Annual General Meeting, the payment of a final dividend of KShs 14.00 for every ordinary share of KShs 5.00. An interim dividend of KShs 5.00 was declared and paid in December 2021. This will bring the total dividend for the year to KShs 19.00 per ordinary share which is 81 per cent higher than that paid in 2020.

Concluding remarks

Our refreshed strategic priorities and strong capital base put us in a great position to take advantage of emerging opportunities in 2022. We will continue to focus on executing our strategy as outlined.

We however remain cognisant of near-term risks in 2022, to highlight a few: inflationary pressure due to rising oil prices; the Russian invasion of Ukraine and the consequent economic fallout; and 2022 being an election year, a period typically associated with increased political uncertainty, we anticipate a temporary slowdown in credit demand and investment.

Finally, I would like to highlight the remarkable efforts of our colleagues again this year. Their commitment and endurance in challenging circumstances has delivered a seamless service to our clients and communities that we serve.