Standard Chartered Bank Kenya Plc on Wednesday issued a profit warning indicating that its profits for the full year ending December 31, 2020, are set to decline by more than 25% with the economic effects of COVID-19 having seriously impacted the lender’s prospects.
In a statement to shareholders, Company Chairperson Patrick Obath indicated that the economic crisis has forced the lender to review its economic priorities. This includes more investment in the bank’s digital technology with the initial projection being that the business climate will improve in 2021 following the rolling out of COVID-19 vaccines in different economies.
“The global economic outlook for 2020 remains highly uncertain, largely due to COVID-19 resurgence and a re-introduction of containment measures in some countries,” said Mr. Obath.
“It has been a challenging year with the protracted health pandemic and economic crisis, and against this backdrop, SCBK’s current performance forecast indicates a substantial decline in the profit after tax for the year ending 31 December 2020 compared to the prior year,” he added.
Recently, the lender reported a 30% reduction in profitability for the nine months ended September 30, 2020, to Ksh4.3 billion compared to Ksh6.2 billion posted at a similar period the previous year.
The reduction was attributable to a higher loan loss provision with many customers expected to default on their loans due to a challenging business environment.
Mr. Obath however said that previous investment in digital channels is bearing fruit with many of the firm’s employees working remotely and many other corporate, institutional, and personal clients now engaging with the company via digital channels.
“Substantially enhanced digital channels are enabling us to stay close to our clients. Most of our client meetings are being held via video conferencing,” added the chairperson.
“Our network, made up of the markets in which we operate, remains a key differentiator that is enabling us to support our clients and their ecosystems in the recovery and reconfiguration of their trade and investment flows in the trade corridors where we are present,” said Mr. Obath.
The chairperson took solace from the strength of the lender’s balance sheet stating, “Our priority remains the wellbeing and safety of our staff, supporting our clients and the communities in which we operate,”