Standard Chartered Bank Zambia at 110 years: Older and Bolder
Banking, Standchart

Chairman Michael Mundashi opens his letter to shareholders with a bold statement of pride for the banks strengthen financial position as well as its achievement in remaining highly liquid in 2016. He commemorates the banks milestone by reminding us of how far they have come from their first branch in 1906 in Kalomo. He also welcomed his new CEO in Herman Kasekende to his board. It was awards galore for his bank in 2016 with accolades for “Best Bank in Zambia” among many illustrious nods.

Unlike his lamentations regarding the macro environment in another company he heads as board chair, the economic outlook in 2016 saw the economy performing well with recovery on multiple fronts according to the chairman. He cites the recovery of the Kwacha against the dollar as significant

When it came to performance, the audited accounts for the period 2015 to 2016, show the bank increased its revenue by 24.6% fueled by increases in net interest income and net fee & commission  income by 22%and 8% respectively. Deposits from customers were down by 8.9%. Significantly,impairment of loans and advances were down by 48.5% implying strengthening KYC as well astute risk management. Net cash generated from operating activities saw a sharp decrease of 62.7% influenced largely by prepayments and other receivables.Net interest margin remains strongly positive indicating prudent usage of its assets.

Although total assets and total liabilities reduced marginally by 4.7% and 6.5% respectively, shareholders will be pleased with the 94.4% rise in earnings per share (EPS). Earnings for the bank recorded a 94.1%increase on the back of 98.7% increase in PBIT. Dividend was up by 33.4%. To cap it off, return on equity rose from 28% in 2015 to 46% in 2016.

The bank will face competitive forces as the Bank of Zambia signals reduction in monitory policy rates. So far, the central banker has reduced rates twice in 2017 in order to ease access to liquidity and inadvertently provide a path of businesses to access cheaper finance from commercial banks. As an extant player, we believe that Standard Chartered bank will continue to be formidable in 2017. The CEO signals the key to the bank’s competitive advantage in bank’s strong capital base which has allowed it to support key sectors of the economy, including energy and mining.  Furthermore, advisory services to major private companies and Government institutions also formed a key element of the Bank’s activities in 2016. Consolidating this position will be critical in 2017.

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