Covid-19 seems to be hitting hard on the Kenyan commercial banks as seen among those who have released their financial years for the first half of 2020. KCB Group became the first lender to register a huge drop in profits by more than 40%.
As the heat from Covid-19 continues to manifest across economies, the Standard Chartered Bank of Kenya has reported a drop in profits 31.2 percent for the first six months of 2020 June.
The lander has attributed the drop in profits to defaults that have been occasioned by the Covid-19 pandemic, as well as reduced income from loans as customers sort to restructure their debts.
In the six-month period, the earnings for the lender came in at 3.2 billion shillings, a drop from 4.7 billion shillings at the same time in 2019.
The loan provision for the lender rose 4.2 times to 1.6 billion shillings in response to gross defaults. This brought the rise to 5.6 percent to 20.9 billion shillings.
“Over the last 24 months, our investments in digital capabilities have been unprecedented and building on these capabilities has enabled our transaction processing to remain resilient at the back of the COVID 19 pandemic – Today, 89% of transactions are being conducted digitally with a 62% and 90% penetration for our Retail and Corporate clients respectively. Over 72% of our head office staff have continued to work from home supporting clients and ensuring there is no hold up on their banking requests thus demonstrating the resilience of our technology capabilities,” said the bank in a statement.
The bank’s income dropped to 5 percent to 13.8 billion shillings year-on-year driven by margin compression and a one-off revenue in the prior year. Operating expenses were 3 percent lower to 7.1 billion shillings.