Stanbic Holdings Plc, a unit of Standard Bank Group Ltd., targets to keep its bad loans ratio below 10%, beating an industry average of about 15%, amid high interest rates, inflation and weak local currencies.
(Bloomberg) — Stanbic Holdings Plc, a unit of Standard Bank Group Ltd., targets to keep its bad loans ratio below 10%, beating an industry average of about 15%, amid high interest rates, inflation and weak local currencies.
The unit of Africa’s biggest bank by assets with operations in Kenya and South Sudan narrowed its non-performing loan ratio to 9.23% at the end of June from 10.36% a year earlier. The Central Bank of Kenya has increased interest rates by 350 basis points since May 2022, while the shilling has fallen 16% against the dollar this year, stoking inflation.
“If we can get it to below 9%, I will be very comfortable,” Chief Financial Officer Dennis Musau said of delinquent debt in an interview in the Kenyan capital, Nairobi. “Part of this outcome is we took a view on a couple of names and some of them we wrote-off completely.”
Read More: Kenya Bad Debt May Surge 200 Basis Points, EFG Hermes Says
Stanbic shares rose 2.1% on Thursday, the biggest jump in almost four weeks.
The lender wrote off about $40 million in the first half because it had “already sufficiently provided for” the debt. Its profit in the six months to June jumped 47% even after it doubled impairment charges, which gave the lender room to resume dividend distribution.
The announcement of a 1.15 shilling per share interim payout excited investors “as it could point to expectations of a higher total dividend for FY’23,” according to Sterling Capital Ltd. The total dividend could rise by at least 20%, according to Nairobi-based Standard Investment Bank.
Read More: Biggest Africa Lender Plans Kenyan Bank Acquisition by 2025
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.