LUSAKA (Business Telegraph) – Stanbic Zambia’s first half after tax earnings rallied 4.2% to K173.1mln year on year as Africa’s second largest copper producers largest financial institution by asset size and profitability adjusted for sovereign risks.
Weighed by a credit impairment of K130mln, quarter on quarter after tax earnings shriveled to K15mln from a 1Q20 posting of K157mln. Zambia’s long term issuer rating was in the period adjusted lower to CCC/Ca/C by Standards and Poor’s/ Moodys/Fitch.
Despite disease pandemic effects priced into the business ecosystem exacerbating COVID related credit shocks, Stanbic Zambia’s income lines remain strong as evidenced by its trading income which grew 74.5% to K184.2mln in foreign exchange revenues while interest rate trading income was fairly solid on the back of a rally in the short end of the Kwacha yield curve in part. The central banks presence in Open Market Operations in addition to its balance sheet expansion program has increased market liquidity which has resulted in a climb down in interest rates on the short end. This could signal a falling cost of funding favorable for commercial banks.
Income growth, bullish. Total income growth ebbed 20.9% higher to slightly under a billion Kwacha supported by interest earning lines that took a cue from credit extension despite loan repricing effects from a 225 basis points rate cut (in May) causing margin squeeze across the banking sector. Non interest income rose 45% as fees and commissions remained solid in addition to foreign exchange trading lines that outperformed.
The banks credit book grew 15.8% to K6.5bln reflecting its lending drive to retail and corporate clients in disease pandemic times. Observed in the quarter were innovations in the digital loans space to retail and small to medium sized entrepreneurs in addition to COVID relief packages.
73 miles ahead of all. Stanbic remains the most profitable bank as at half year of all 18 banks in the industry. Exponentially smoothed for COVID related credit risks, we do not forecast any factors that will cap earnings momentum leaving the bank well ahead of its rivals for which it is already miles ahead of.
The Kwacha Arbitrageur