Stanchart leans towards corporate lending
Staff Writer | Wednesday April 1, 2015 18:00
In a challenging operating environment characterised by compressed interest margins, tight liquidity, falling profitability and weak household incomes, the listed top 5 bank said it remains well capitalised and liquid with a better Loan to Deposit Ratio (LDR) than its peers of 81 percent.
Announcing results for the full year ended December 2014, the bank said that strong support to their corporate and institutional clients boosted lending to businesses, which in turn propelled total loans and advances by 28 percent to P8.1 billion.
“In the year, income grew by seven percent while loans and advances to customers increased by 29 percent, demonstrating the strength of our proposition and capabilities.
“During the course of the year, we continued to implement the revised strategy and organisational structure, and added another segment, commercial clients, to our portfolio. “This performance is attributable to the strength of our transactional banking offering combined with our financial markets risk management expertise,” the bank stated in a statement accompanying the financials.
Commercial clients focus specifically on growing the medium sized enterprises, leveraging the bank’s product capabilities to add value to clients.
Standard Chartered’s strategy is in line with other banks’, which have become more risk averse towards personal lending, due to falling real disposable incomes, and sluggish economic growth.
On the back of the compressed margins coupled with the rising costs of attracting new deposits, the bank’s net interest income fell marginally from P613 million to P595 million. Interest expenses rose 43 percent to P246 million in line with the 28 percent recorded growth in deposits to P10 billion.
While interest income fell, fee and commission income rose 21 percent to P478 million as the bank also profited from a focus on transactional banking. On the other hand, expenses increased by 15 percent to P665 million, largely due to a once-off staff related costs resulting in the bank’s profit after tax remaining flat at P319 million for the year.
While corporate lending was the toast of the financials, retail loans also delivered a sound performance, registering income growth of eight percent, with assets increasing by 16 percent, on the back of continued strong growth in personal lending as well as assets growth of other product lines. A dividend of P60 million (20.16 thebe per gross share) was declared and paid during 2014 and a further dividend of P30m (10.10 thebe per gross share) was paid early in 2015.