Stanbic Bank Kenya, a key subsidiary of Stanbic Holdings listed on the Nairobi Securities Exchange, reported a slight uptick of 2.7 per cent in net profit to Sh3.9 billion for the first quarter of 2024. However, this positive figure obscures a more challenging operating environment for the bank. The primary issue lies in an 8.2 per cent decrease in total operating income, falling to Sh10.2 billion from Sh11.1 billion in the same period last year. This decline is primarily attributed to a significant drop of 34.8 per cent in foreign exchange trading income, mainly due to reduced volatility in the local currency and constraints in accessing dollars.

Despite these setbacks, Stanbic achieved some positive results. Net interest income rose by 18.5 per cent to Sh6.4 billion, driven by increased earnings on loans, propelled by higher interest rates and risk-based pricing strategies. However, this gain was offset by a substantial 172 per cent rise in interest expenses on customer deposits, pushing total interest expenses up by 133 per cent to Sh5.6 billion.

On the cost front, there was a notable 16.1 per cent decrease in non-interest expenses to Sh4.7 billion, providing some relief amidst the income decline. Additionally, the bank maintained its loan loss provisioning costs at Sh1.1 billion, reflecting a positive trend as non-performing loans decreased by 17.2 per cent to Sh24.2 billion from Sh29.2 billion a year ago.

Overall, Stanbic Bank Kenya’s performance in the first quarter underscores its resilience in navigating a challenging income landscape. While the decline in operating income raises concerns, the bank’s efforts to manage expenses and capitalize on increased loan interest rates demonstrate its ability to achieve profit growth despite adverse conditions.