Standard Chartered Bank shareholder return tops double digit

by | April 19, 2018 2:11 am

Standard Chartered Bank Limited has generated a double digit shareholder return to end 2017 financial year as the lender continues to navigate the headwinds.

Increase in foreign exchange income, surge in investment income, and lower loss on risk assets help the lender produce a return on common equity-closely watched measure of profitability-  to 33.33 percent in December 2017 from 16.85 percent the previous year.

For years, it has maintained a stable return even amid the recession of 2016 that saw Banks’ margins get squeezed.

Standard Chartered Bank has utilized each Naira collected as revenue in generating higher profit as net margins increased to 49.07 percent in December 2017 from 25.07 percent as at December 2016. A 49 percent profit margin indicates it earns N0.49 in profit for every Naira it collects.

Analyst say the gradual economic recovery is beginning to show face in the numbers of Standard Chartered Bank as evidenced in its double digit growth in earnings.

The gross domestic product of Africa’s largest oil producer expanded for three straight quarters last year after a 1.6 percent contraction in 2016, with year-on-year growth reaching 1.9 percent in the final three months of 2017. An increase in crude prices and the introduction of a new foreign-exchange system that ended a crippling shortage of dollars helped attract more investment flows into the country, while improving liquidity for the lender.

Experts say an improvement in unpaid loans, higher interest income from holding government debt and a rise in profit will help Standard Charged Bank bolster its capital buffers.

For the year ended December 2017, Standard Chartered Bank’s net income surged by 209.05 percent to N66.54 billion from N21.53 billion as at December 2016.

The growth in profit was largely driven by a 42.22 percernt and 62.50 percent increase in foreign exchange income and income from investment to N14.08 billion and N13 billon in the period under review.

Interest income spiked by 67.43 percent to N94.13 billion in the period under review as against N53.23 billion as at December 2016; driven largely by interest income on loans and advances.

Standard Chartered Bank’s impairment loss on risk assets declined by 50.44 percent to N6.11 billion in the period under review, the latest sign that the lender has put behind the economic downturn that resulted in banks writing off huge debt due to exposure to the oil and gas.

Non-Performing Loans (NPLs) fell to N31.98 billion in December 2017 as against N35.51 billion the previous year.

While other lenders in Africa’s most populous nation have tuned off the tap on lending due to cheap money from interest income on short term government securities, Standard Chartered Bank has intensified lending to critical sector of the economy.

Loans and advances increased by 23.46 percent to N596.22 billion in December 2017 from N482.92 billion as at December 2016.

Deposits from customers were up 10.34 percent to N880.300 billion in December 20147 from N797.77 billion as at December 2016.

Standard Chartered Bank has a shareholders’ fund of N199.58 billion in December 2017, this represents a billion at 56.13 percent increase from the N127.70 recorded last year.

Total assets were up 20 percent to N1.20 trillion in the period under review from N1 trillion as at December 2016.