StanChart sees growing middle-class boosting 2014 growth
25 March 2014, 13:24
Nairobi - Standard Chartered Bank of Kenya expects east Africa's burgeoning middle class to drive growth in 2014 after it recorded a 16 percent rise in 2013 pretax profit, its chief executive said.
The lender, which is controlled by Standard Chartered Plc, said its net interest income jumped by 18 percent to 16.8 billion shillings, driving pretax profits to 13.4 billion shillings.
Lamin Manjang, who took over the leadership of the bank this year after running its business in Oman, attributed the positive outlook to a range of opportunities across personal, corporate and project financing.
"On the consumer banking side, the growing middle class clearly is an area that plays into our focus in terms of strategy, therefore we see the outlook for 2014 as being quite positive," the chief executive told Reuters.
He said the bank would also benefit from a range of planned infrastructure and energy investment projects by the government, as well as the country's nascent oil and gas sector, that would bring it new business.
Kenya is racing to alleviate infrastructure bottlenecks by constructing new roads and a modern railway line. It is also expanding its main airport in the capital Nairobi.
It is also building new power plants and electricity lines to meet growing demand for energy and to cut the cost per unit of electricity, which is viewed as too high.
Manjang said bad loans, which rose to 3.8 billion shillings, representing 3 percent of gross loans, from 2.2 billion shillings in the previous year or 2.2 percent of total loans, had started to improve this year.
Standard Chartered plans to open only two new branches this year, 50 percent fewer than last year, and instead make "significant" investments in mobile phone and Internet banking.
"We will give more focus on the digital channels because we see this as the wave of the future. This is what our clients want," Manjang said.
Mobile phone-based financial services have helped the east African nation of 40 million people to raise its financial inclusion to 70 percent of the population in recent years.
Kenyan banks including the largest lender by depositors, Equity Bank, and the biggest by assets, KCB, posted double-digit earnings growth last year, though rising bad debts curbed earnings.
Standard Chartered raised its dividend per share to 14.5 shillings from 12.5 shillings in the prior year.
Its shares rose by as much as 2.2 percent to 315 shillings each, after the results, before giving up some of the gains to trade at 310 shillings each in mid-morning.
The bank launched Islamic banking earlier this month to take advantage of a low reach in that area. Islamic banking accounts for about 2 percent of the market, in a country where the Muslim population makes up 15 percent of the population.