Stanbic Zambia sets new record earnings ‘highwater mark’, FY19 PAT of K450million

The largest by asset size and most profitable bank in Africa’s red metal hotspot Zambia, Stanbic has just set a new earnings high watermark level when it grew its FY19 after tax profit by an astronomical 95.7% margin to K449.3million. This is the first time any financial institution is posting such aggressive earnings surpassing the historical high the market has ever seen being Standard Chartered’s K361million in 2016.

“In the service industry you are only as good as your last significant milestone, while we celebrate our achievements thus far we commit to continuing to build on our successes and will not allow our recent achievements to dampen our commitment to the highest service standards. We wish to thank our customers for being part of our success,” Stanbic Bank Chief Executive Leina Gabaraane said.

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Income growth very bullish. The banks total income grew 28.1% year on year to K1.72billion propelled by 27.6% ebb in interest income to K1.38billion on the back of income generated on loans and advances that rallied 26.3% and higher premiums on government securities that climbed 27.2%.

Market cost of funding still fairly high. The banks interest expense rose 40.1% to K259.3million weighed by a 30.8% increase in cost of deposits reflecting the markets cost of funding. Funding costs in the copper producer remains a a reflection of fiscal posture manifesting in the shape of the Kwacha demand curve.

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Credit impairments leaned significantly. A fair share of write backs in excess of K162million contributed to the earnings sprint with FY19 impairments leveled to K5.7million from K167.7million a year ago. Stanbic’s credit book grew 3.6% to K5.38billion as it’s balance sheet remains the biggest in the market at K14.92billion. Stanbic’s off balance sheet risk remains the largest in the 18 bank industry as the blue bank retains its top slot in provision of trade services such as letters of credit and guarantees.

Stellar performance in tough environment? Stanbic Zambia‘a balance sheet reflects an optimal mix of both the corporate and retail books that have leveraged off digital versus traditional banking. This is evidenced by various income lines where the blue bank is either a top performer or in top contention. The bank also leveraged off an elevated yield curve for interest income through duration in government securities. The nations energy poverty did not incapacitate the banks innovativeness through power supplement products such as yasha malaiti. The year 2019 was not the easiest of years with risks to growth all manifesting through energy bottlenecks, fiscal imbalances, rising inflationary pressures and a bearish currency/interest environment which Stanbic was able to weather to stay afloat to remain profitable.

On track to be a K1billion PAT bank in half a decade.The bank remains a key growth partner in Zambia’s developmental agenda. At this pace, Stanbic could be the first K1billion PAT bank in the next half a decade.

The Kwacha Arbitrageur