Lusaka Securities Exchange listed Standard Chartered Bank Zambia’s (ISIN:ZM000000094) after tax earnings for the first quarter of 2021 took a positive cue from a more positive country risk outlook for Africa’ second largest copper producer by a catapult in profitability to K150.2 million compared to its steep loss levels a year ago. Recently Fitch rating agency upgraded the Southern African nations long term issuer rating (LTIR) to ‘CCC’ from ‘CC’ on the local currency side.
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The implications of this, is a lower risk weight for sovereign assets such as government securities and credit exposures linked to the sovereign as counterparty. Standard Chartered’ s impairment stock unwound to positive territory at K38.2 million compared to K86.9 million raised in 1Q20 was a significant driver of the banks performance in the first quarter. The bank remains one of the few banks in the market that apply International Financial Reporting Standard Number (9) to reflect accurate asset valuations.
As a manifestation of the banks lean model after business re-organization cost to income ratio in the first quarter headlined 34.0% from 133.0% from year ago. Non-interest expense line for the quarter significantly leaned 72.2% to K100.0 million, another strong performing line offsetting a 1.8 times total income amplification to K334.5 million despite most income lines ebbing in earnings compared to a year ago.
The market remains keen to see payoffs from the strategy and business re-organization skew towards digital channel innovation following closure of some of its physical branches earlier last year.
The Kwacha Arbitrageur