Stanbic obtains a Sh4 billion Parent Loan to Strengthen its Capital Base

In order to increase its capital, Stanbic Holdings received a $30 million (Sh4.1 billion) subordinate loan from Standard Bank, the parent company based in South Africa.

The primary recipient of the loan was Stanbic Holdings’ principal operating subsidiary, Stanbic Bank Kenya.

“Counterparties and covenants to the subordinated debt facilities are as follows … USD 30 million obtained from Standard Bank of South Africa in 2022. There are no covenants relating to this financing,” Stanbic Holdings says in its latest annual report.

The loan’s interest rate is 9.38 percent, and it has a maturity date of September 30, 2032. It was disbursed on September 28, 2022.

It supplements a prior loan from Standard Bank issued in February 2018 for $30 million.

The supplementary capital of Stanbic Kenya increased from Sh6.77 billion in the quarter ended in June 2022 to Sh9.86 billion in the quarter ended in September 2022. This represented a Sh3 billion increase.

The bank’s ability to expand its loan book and other business operations is thanks to the increase in capital.

Net earnings for the bank’s first quarter ended in March increased by 84.3 percent, from Sh2.11 billion to Sh3.89 billion.

The increased total operating income, which increased 64.7 percent to Sh11.15 billion, is what caused the increase in profitability.

The fastest rate of growth was seen in non-interest-funded income, which increased by 89.4% to Sh5.74 billion.

The non-funded income was primarily driven by forex trading income, which increased by 2.4 times to Sh4.26 billion.

Stanbic’s net interest income meanwhile grew by 44.9 percent to Sh5.42 billion from Sh3.74 billion previously.

The growth in interest income was partially anchored on an 11.7 percent loan book growth to Sh230.7 billion.

The bank’s customer deposits meanwhile grew twice as fast or by 23.8 percent to reach Sh291 billion from Sh235.11 billion.

Non-interest expenses nevertheless spiked in the period to push up Stanbic’s cost base as provisions for bad loans soared by 132 percent to Sh1.14 billion from a lower Sh491 million a year ago.

The growth in the cover for bad loans is attributable to a jump in gross non-performing loans and advances which hit Sh29.29 billion in the quarter ended March from Sh24.56 billion in the corresponding 2022 period.

The bank has stated it maintains a strong growth momentum on all revenue streams going into the half year period that ends next month.