A prolonged interest rate easing cycle in Kenya has continued to weigh on lender profitability, with Standard Chartered Bank Kenya Plc reporting a sharp contraction in first-quarter earnings as net interest margins came under sustained pressure even as the bank expanded lending, grew deposits to record levels, and improved asset quality through an ongoing balance sheet clean-up, underscoring a broader sector-wide shift in which volume growth and lower credit risk are increasingly offset by weaker income from core lending operations.
Standard Chartered Bank Kenya Plc has reported a 26.3% fall in first-quarter profit as declining interest rates squeezed margins, even as its balance sheet expanded and asset quality improved.
The lender posted profit after tax of $27.64 million for the three months ended March 31, down from $37.48 million a year earlier.
Net interest income fell 23.3% to $48.53 million, its weakest first-quarter performance since 2021, as interest income declined faster than funding costs.
Interest income stood at $55.70 million, while interest expenses rose to $7.11 million.
Total operating income declined 13.5% to $77.40 million, while costs were broadly flat at $38.10 million, pushing the cost-to-income ratio to 49.3% from 42.7% a year earlier.
Non-interest income rose 10.3% to $28.86 million, supported by fees, commissions and foreign exchange trading income, partially offsetting the decline in lending income.
Despite weaker earnings, total assets rose 8.1% to a record $3.19 billion, while customer deposits increased 12.6% to $2.48 billion.
Loans and advances climbed nearly 20% to $1.28 billion, the highest first-quarter loan book on record for the lender.
Asset quality improved, with gross non-performing loans falling 26.7% to $69.10 million, the lowest level since 2015. Net non-performing loan exposure narrowed to $1.25 million from $3.69 million a year earlier.
The results come amid a management transition at Standard Chartered Bank Kenya. Former Chief Executive Kariuki Ngari exited in April after more than two decades at the bank, with Birju Sanghrajka set to take over pending regulatory approval.
Chief Financial Officer Chemutai Murgor is also due to leave at the end of May after 25 years at the lender, to be succeeded by Gladys Warirah.
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Faustine Ngila is the AI Editor at Impact Newswire, based in Nairobi, Kenya. He is an award-winning journalist specializing in artificial intelligence, blockchain, and emerging technologies.
He previously worked as a global technology reporter at Quartz in New York and Digital Frontier in London, where he covered innovation, startups, and the global digital economy.
With years of experience reporting on cutting-edge technologies, Faustine focuses on AI developments, industry trends, and the impact of technology on society.
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