In a recent development, Sterling Capital, headquartered in Nairobi, disclosed that Standard Chartered Bank Kenya Ltd has made substantial adjustments to its investment portfolio, particularly reducing its exposure to Kenyan government bonds. This move comes in response to a directive from the bank’s parent company, aiming to mitigate sovereign risk exposure, a decision influenced by the recent financial challenges experienced by Ghana. Despite the traditionally attractive yields associated with Kenyan government bonds, Standard Chartered has opted to decrease its investment in these instruments by over 50%.
The bank’s prudent approach is in response to mounting concerns surrounding the risk of default among African nations and the pressing need for debt restructuring in light of funding gaps in international markets. In reaction to this challenging economic landscape, Standard Chartered has notably tripled its provisions for potential loan losses. This strategic move occurs despite a 35% surge in the bank’s lending income, indicating a deliberate shift toward a more defensive financial stance.
This conservative strategy appears to be paying off, as Standard Chartered has witnessed an exceptional surge in share value, marking its most significant increase since the early to mid-2000s. Alongside this financial success, the bank has announced an interim dividend of six shillings per share for its investors.
Examining the strategic adjustments made by Standard Chartered Bank Kenya Ltd., InvestingPro data reveals a robust financial profile for its parent company, Standard Chartered. With a market capitalization of approximately $21.7 billion and a price-to-earnings (P/E) ratio of 12.86, adjusting down to 11.11 over the last twelve months as of Q3 2023, the company’s valuation metrics suggest a potentially attractive investment. While revenue growth has been modest at nearly 5% over the same period, it indicates steady business performance.
InvestingPro Tips underscores that the company has consistently increased its dividend for three consecutive years, demonstrating its commitment to shareholder returns. This aligns with the recently reported interim dividend by its Kenyan subsidiary. Analysts have also revised their earnings expectations upwards for the upcoming period, signaling confidence in Standard Chartered’s future profitability. This positive outlook is further supported by predictions that the company will remain profitable this year.
SCBK closed its last trading day (Wednesday, November 22, 2023) at 160.25 KES per share on the Nairobi Securities Exchange (NSE), recording a 2.6% gain over its previous closing price of 156.25 KES
Photo ( Standard Chartered)
22nd November, 2023
Delino Gayweh
Serrari Financial Analyst
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