Standard Chartered Bank Zambia Plc is an extraordinary organization with a rich history in Zambia stemming over 110 years. Based on its brand positioning which its clients greatly appreciate it has the potential to grow the overall business. However, risk management within the banking sector has continued to be part of their strategy in order to stay ahead and mitigate possible social and economic headwinds. In 2018, Standard Chartered introduced a new Enterprise Risk Management Framework (ERMF). The ERMF significantly enhanced its Risk Management approach in particular, around risk culture, strategic risk management, Principal Risk Types (PRTs) and control framework. Moreover, The ERMF reported and managed all risk types both non-financial and financial in their business model in accordance with the adopted ERMF.
In 2018, Standard Chartered continued to be a major key player, as demonstrated by the profitability in the year and the continued growth of their balance sheet. Returns on shareholders’ investments closed off at 38% in 2018, compared to 33% in 2017. This was attributable to growth in revenue. Costs increased by 9% owing to the redundancy provisions booked in 2018, in as a result of the Delivery Channel Optimization Plan announced in November 2017 (Annual Report, 2018). The Bank is in the process of rationalizing its Retail branch network, and merging the Global Banking and Commercial Banking units and related processing functions. Impairments increased by 36% due to the adoption of IFRS 9 in 2018. The earning per share increased by ZMW0.138: 2018 compared to ZMW0.126: 2017. However, the dividend per share reduced from 0.17:2017 compared to 0.13:2018 (Annual Report, 2018).
In 2018, Gross Domestic Product (GDP) growth continued on a positive trajectory, with preliminary data indicating a growth rate of 4 per cent. This was driven largely by positive performance in manufacturing, construction and mining, as well as a fairly stable supply of electricity. However, noticeable headwinds included under-performance of the agriculture sector, weak credit growth in the private sector, and continued elevation in non-performing loans. In 2019, macroeconomic stability is projected to be sustained, aided by continued implementation of reforms and various policies to support delivery of fiscal consolidation. A key reform enacted in 2018 was the Public Finance Management Act, which for the most part, applies to both central and local government systems (Annual Report, 2018). Inflation is projected to remain within the single digit range, with growth driven by both public and private sector investments. However, the Downside risks to growth prospects for Standard Chartered in 2019 include continued global trade tension, weak credit growth, drop in stock price, addressing domestic arrears and the high level of external debt (Annual Report, 2018; 2017). Currently, the banking sector in Zambia is well capitalized and liquid to withstand both internal and external shocks. Therefore, Standard Chartered Bank remains committed to supporting its clients at large with their strength in the global market and ability to pro-actively adapt to the changing business environment through effective risk management.
On the LuSE, the Standard Chartered bank security has moved in tandem with the LUSI (all share index) over the last 12 months. It dipped sharply in share price at the end of May 2019 to K1.90 from K2.40.