The Zambian Banking sector in 2016 ended with Standard Chartered Bank at the helm of commercial banking and they cemented further their strategic position by being the first to introduce Visa Infinite Credit Cards on the Zambian market. The banking ‘gurus’ with over 110 years of experience in the Zambian market saw a growth in their total revenue from the previous year. However, there was a lower total profit before tax in 2017 as compared to 2016. This lower total profit before tax is attributed to investments in capital projects as was stated by the Chairman of the Board Dr Caleb Fundanga. (Quote from Annual Report) “revenue which has been offset by higher year on year costs due to investments made in the business expected to yield results in the following years.” One of their strategic objectives going into 2018 was to enable digital-on-the-go for all their clients to further help reinforce their positioning in the market offering world class service and value to both their clients and their shareholders.
GDP growth meant that there was more money in the economy and that’s why we saw the current account deficit shrink. Activity in the economy had increased which brought about an increase in the amount of investment ‘I’ and Savings ‘S’ which was a plus for the banking sector. More people saved with the banks. Due to the favorable monetary policies which saw a reduction in the interest rates more people were encouraged to borrow. The number of borrowers and amounts being borrowed had increased hence bringing more revenue to the bank which was invested into capital projects that helped keep alive the bank’s strategic footprint. The activities and revenue increase brought about more employment at the bank and reduced the number of people that were unemployed on the job market.
From the Chairman’s statement we draw that Returns on shareholder’s investments closed off at 33% in 2017 compared to 46% in 2016. This was attributed to the growth in revenue which was offset by higher year on year costs due to investments made in the business expected to yield results in the following years. A further look at their financial statements revealed a slip in the net interest income of 2%. Interest income was the value generator as it contributed 59% of the total revenue. EBITDA slipped by 13% The bank experienced a slip in their loans to asset and return on asset ratios by 4% and 2% respectively. Both their Earnings per share and dividend per share slipped, meaning shareholders will not receive as much as they did in 2016.
Numbers do not lie as Stanchart has had a stupendous performance winning numerous awards and responding to the dynamic needs of consumers by being a leader in innovation in how it rolled out innovative upgrades to their Standard Chartered Bank Zambia Plc Mobile App which saw the Bank enter strategic alliances with Mobile Network Operators (MNO’s). With these alliances Mobile Money services such as transfer of funds from one’s bank account to another’s mobile wallet and vice versa were made possible. It is projected that the Bank’s performance in 2018 will remain resolute as they continue to build on the firm and secure foundations made in 2017.
We look forward to analyzing their 2018 annual report as it will give insight into how the bank will position itself in 2019.
