Kenyan Listed Banking Sector Quarterly Earnings and Operating Metrics

Stanbic Holdings' Summary of Performance - Q3'2022 • • Profit before tax increased by 37.7% to Kshs 9.7 bn, from Kshs 7.0 bn in Q3'2021, similarly, tax expenses increased to Kshs 2.7 bn in Q3'2022 from Kshs 1.9 bn recorded in Q3'2021 leading to a 36.8% increase in profit after tax to Kshs 7.0 bn in Q3'2022, from Kshs 5.1 bn in Q3'2021 Total operating income increased by 31.4% to Kshs 23.0 bn, from Kshs 17.5 bn in Q3'2021, driven by a 26.8% increase in Net Interest Income (NII) to Kshs 12.7 bn, from Kshs 10.0 bn in Q3'2021, coupled with a 37.5% increase in Non-Funded Income (NFI) to Kshs 10.3 bn, from Kshs 7.5 bn in Q3'2021 Total operating expenses increased by 27.2% to Kshs 13.3 bn, from Kshs 10.5 bn in Q3'2021, driven by a 14.4% increase in staff costs to Kshs 5.1 bn in Q3'2022, from Kshs 4.5 bn in Q3'2021. Additionally, loan loss provisions increased by 88.7% to Kshs 2.9 bn from Kshs 1.5 bn recorded in Q3'2022 • The balance sheet recorded an expansion as total assets grew by 25.9% to Kshs 371.4 bn, from Kshs 295.0 bn in Q3'2021 • Asset Quality - The bank's Asset Quality improved, with NPL ratio declining to 10.1% in Q3'2022, from 11.5% in Q3'2021, attributable to 34.2% increase in Gross loans, which outpaced the 18.0% increase in gross non-performing loans recorded in Q3'2021 Revenue Diversification - The bank's NFI recorded a y/y increase of 37.5% to Kshs 10.3 bn in Q3'2022 mainly attributable to significant increase in Foreign Exchange income by 162.9% to Kshs 9.2 bn from Kshs 3.5 bn recorded in Q3'2022 Going forward, the factors that would drive the bank's growth would be: Digital transformation. The bank improvement in its financial performance is attributable to its digital transformation strategy through mobile banking which has led to increase in transactions. Through mobile banking the banks has been able to grow its customer base which has been driving its profitability. In our view, we expect the inclusivity and wide customer reach through mobile banking will be a key driver in the bank's growth Cytonn 70

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