StanChart advanced US$70m to domestic businesses in 2020

Chief Executive, Standard Chartered Bank, Mansa Nettey

Despite advancing credit in excess of US$70 million in 2020, primarily to domestic businesses in the country, Standard Chartered Bank PLC (Stan Chart) says the demand-side appetite for credit has been on the decline, ostensibly as a result of the disruptions to supply chains caused by the pandemic.

Speaking at the bank’s 2020 Annual General Meeting (AGM) and addressing concerns over the low level of advances to businesses by commercial banks, with Stan Chart recording a 4 percent dip in loans and advances to customers, Head Client Coverage, Corporate, Commercial and Institutional Banking, Xorse Godzi, stated that the bank did not tighten its purse strings; on the contrary, the lender extended a sizeable amount of credit but was also met with customer passivity.

“When we do our internal analysis, the number of clients that we provided first-time loans to, in the commercial banking portfolio was the highest last year. So as a bank, we haven’t withdrawn our financial intermediation as a result of COVID-19.

What you need to understand is that in the financial intermediation processes, there are two players – the banks and businesses. As you can see from the Bank of Ghana statement, the banks are well capitalised but you have also got to have businesses willing to take on loans and I think that where we have a bit of a problem in the country, businesses who are really working in the productive sectors of the economy are not expanding as much. We need to have sufficient demand for loans for us to respond,” he explained.

He said banks are actively looking to support the real economy, granted the investment is viable, adding, “last time we checked, when we did an analysis of our loan book, we granted over $70 million worth of new loans last year to both new and existing customers, this is fresh funding to domestic corporates in the country.” 

FY 2020

The resilience demonstrated by banks in the face of the ongoing pandemic, particularly during the first wave, appears to be the norm rather than the exception, with Standard Chartered recording post-tax profit of GH¢ 478 million, a 67.9 percent improvement over GH¢ 281.9 million for 2019. This was contained in the bank’s audited Annual Report and Financial Statements for the year under review.

Also, profit before tax (PBT) stood at GH¢675.3 million, a 59 percent year-on-year jump, whilst operating expenses declined to GH¢288million, being a 12 percent drop from the previous year. Additionally, loan impairment was GH¢59.3 million, as opposed to the 2019 provision of GH¢99.8 million.

In the Corporate, Commercial & Institutional Banking segment — which supports SMEs and multinationals — revenue hit GH¢ 595million, which was 28 percent better than the GH¢465million recorded in 2019.

In 2020, 93% of Corporate and Institutional Banking clients submitted instructions for transactions electronically compared to 87% recorded for 2019. Annual percentage growth in revenue has increased from 8% in 2018 to 28% in 2020 attributed to “improved year-on-year performance from Trade and Financial Market Sales.”

On the retail banking side of things, total income went up by 10% YoY from GH¢ 271m to GH¢298m attributed to growth in income from deposits – up 24% from GH¢ 1.85 billion in 2019 to GH¢ 2.29 billion in 2020 – and Wealth Management.

Despite a 540 basis points (bps) drop in its capital adequacy ratio to 24.9% in 2020 versus 30.3% in 2019, Stan Chart remains highly liquid, at almost double the regulators threshold.

This allowed for the recommendation and approval of an ordinary share dividend of GH¢1.74 per share amounting to GH¢234 million in total.

Commenting on the bank’s performance in an unusual operating landscape, Chief Financial Officer, Kweku Nimfah-Essuman, said, “The actions taken in recent years to improve the quality of our balance sheet sheltered us from some of the worst effects of COVID-19, as we recorded a lower credit impairment compared to prior year.”

Offering guidance for the current financial year, Chief Executive Officer, Mansa Nettey, said despite the prevailing socio-economic uncertainty, the bank remains committed to its stakeholders and would continue to take actions that are in their best interest.

“Our performance in 2020, despite the distractions within the local and global operating environment, demonstrates that our strategy is right. We have a strong balance sheet, best-in-class suite of products… we remain strong and profitable and equipped to weather the remaining effects of the pandemic and well positioned to benefit from the subsequent return of favourable economic conditions,” she said.

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