Standard Chartered Bank Kenya FY 2011 Earnings: My analysis

Standard Chartered's Income for the year ended 2011

	December 2011 Million Sh	December 2010 Million Sh
Net Interest Income	10,125	8,383
Non Interest Revenue (NIR)	6,099	5,766
Total Operating Income (TOI)	16,214	14,150
Total Operating Expenses (TOE)	7,398	6,022
Operating Profit	8,816	8128
Operating Margin %	54.4	57.4
Loan Loss Provisions (LLP)	446	561
PBT	8,255	7,681
PAT	5,836	5,376
Net Interest Margin %	6.2	5.9
Return on Assets (ROA) %	3.6	3.8
Return on Equity (ROE) %	28.7	26.4
NIR to TOI	37.6	40.7
Expense Ratio (Ex LLP) %	45.6	42,5
EPS	Sh19.75
Dividend	Sh11
Balance Sheet
Liquidity Ratio % CBK minimum 20%	34	55
Total Capital/Risk Weighted Assets (RWA) % CBK minimum 12%	14	14
Net Non Performing Loans/Net loans and Advances %	0.6	1.1

Commentary

These are tepid numbers from Standard Chartered Bank Kenya (SCBK); they have underperformed their peers by a mile. The only encouraging thing about these numbers is the turn around in the second half of 2011 after the bank unwound its portfolio of toxic bonds (Bonds held for trading purposes dropped to Sh468m in 2011 vs Sh4b in 2010). The bank is undergoing a transformation of some sort, they’re now more aggressive and leaning more towards consumer loans instead of corporate loans. The bank grew its loan book by 59.2% in 2011. Total operating income rose by 14.6% year on year to stand at Sh16.2b on the back of a 20.7% increase in net interest income whereas non interest revenue increased by 5.8% year on year despite a huge drop in bond trading income. SCBK was one of the key beneficiaries of the Shillings volatility in 2011, making Sh964m from trading in forex.

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Standard Chartered Bank Kenya FY 2011 Earnings: My analysis

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