Standard Chartered Bank has announced a 24.2 percent y/y decline in profit before tax to Sh10.1 billion for the 2017 financial year, which is according to the prediction of Sh10 billion by Kestrel Research. The bank also reported a 24 percent y/y decrease in earnings per share to Sh19.64 which was above the expectations of Kestrel Capital. On the other hand, dividends per share in FY17 were Sh17 in contrast to Sh20 in FY16 which was above expectations.
Net interest income was according to expectations at Sh18.6 billion which represented a 4.3 percent y/y decrease. Non-interest income rose by 2.1 percent y/y to Sh8.8 billion which was marginally above predictions.
The bank’s operating income decreased by 2.3 percent y/y to Sh27.3 billion which was marginally above predictions. Additionally, loan loss provisions rose by 90.3 percent y/y to Sh4.2 billion according to expectations.
Operating expenses (excluding loan loss provisions) surged by 4.7 percent to Sh13.1 billion which was marginally higher than expected.
According to Kestrel’s impact on investment thesis, there will be no change excluding the possible reversal of rate caps. “Our future value (FV) estimate for StanChart stands at KES 208.84 against a current price of KES 216 per share. This estimate further assumes, StanChart’s low loan to deposit ratio normalizes to 75% by FY19 benefitting yields on interest-earning assets.”