Standard Chartered Bank Kenya grew its net profit in the first half of 2024 by 48.8 percent to Sh10.28 billion on higher income from fees and interest on customer loans.

The profit jump saw the lender declare an interim dividend of Sh8 per share, increasing the payout by a third compared to Sh6 per share that was issued in the 2023 financial year.  

The aggregate dividend payout amounts to Sh3.02 billion, with books closing on September 18, 2024 and the payment being made on or around October 8, 2024.

In the past two years, the lender had paid its interim dividend at the end of the third quarter of the year. Between 2016 and 2021, it was making the interim payment at half year, except in 2020 when lenders were generally held back from paying dividends as the banking sector navigated the economic impact of the Covid-19 pandemic.

StanChart said that its performance in the period was helped by higher transactional volumes that saw its non-funded income grow by 36 percent to Sh9.6 billion, while higher interest rates helped raise net interest income by 19.2 percent to Sh16.5 billion.

It also cut its loan loss provisions by a 23.3 percent to Sh1.56 billion following a decline in bad loans by Sh10.2 billion or 43 percent to Sh13.6 billion—resulting in a non-performing loan (NPL) ratio of 8.4 percent compared to 9.7 percent at the beginning of the year.

The lower provisions helped keep growth in operating expenses at a modest 3.1 percent to Sh11.6 billion.

“Loan impairment charge decreased by 23 per cent on the back of improved portfolio metrics and culmination of many years of actively working with clients to manage the difficult operating environment,” said the bank in a statement on Thursday.

In the first half of the year, banks have generally reported higher income from lending due to elevated lending rates in the economy, following an increase in the base lending rate by the Central Bank of Kenya (CBK) in order to tame high inflation and a volatile exchange rate.

The CBK raised its rate from 12.5 percent in December 2023 to 13 percent in February 2024, keeping the rate there until earlier this month when its monetary policy committee cut it to 12.75 percent. In the first half of 2023, the base rate was held between 8.75 percent and 9.5 percent.

StanChart’s loan book grew by 2.7 percent to Sh149.3 billion, while lending to other banks within the entities of the parent --Standard Chartered Plc-- rose by 7.3 percent to Sh117.3 billion.

Customer deposits on the other hand shrunk by 2.6 percent to Sh276.4 billion, attributed by the bank to revaluation on foreign currency deposits on the back of a strengthening shilling, as well as a reduction of local currency deposits.