Genghis Capital - Standard Chartered Bank Kenya Ltd (SCBK) Standard Chartered Bank Kenya Plc (NSE: SCBK) 1H18 Earnings Note

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Genghis Capital

Gerald Muriuki

EUR 26.30 For Business Accounts Only

Standard Chartered Bank Kenya Plc (NSE: SCBK) 1H18 Earnings Note

Standard Chartered Bank of Kenya (NSE: SCBK) announced a 30.3% y/y growth in 1H18 Profit After Tax. PAT growth was supported by a 7.5% y/y growth in Net Interest Income (NII) and a 12.2% y/y growth in Non Interest Revenue (NIR). The bank continues its risk-off approach with the customer loan book contracting 1.1% y/y while government securities rose 9.5% y/y. The risk off strategy enabled the bank to maintain a very liquid balance sheet, at a sector leading liquidity level of 71.3%. A major challenge has been Non-performing loans (NPLs) formation, with the bank's NPL ratio at 14.8%, which is above the 12.8% historical average and 12.0% sector NPL ratio levels.
Against a target price of KES 175.08, we maintain a SELL recommendation on SCBK. At the current market price of KES 209, the bank trades at a P/B of 1.6x, a premium to sector P/B of 1.5x.

Positives:

Non-interest revenue up by 12.2%
Net interest income growth of 7.5%

Negatives:
NPL ratio at record high levels, up 170Bps y/y (80bps q/q)
Efficiency levels down to 46.6%.

23/08/2018 5 EN

Underlying

Standard Chartered Bank Kenya Ltd

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KE0000000448 Nairobi Securities Exchange Kenya

Provider

Genghis Capital

Genghis Capital is an innovative and customer focused Investment Bank licensed by the Capital Markets Authority (CMA). Founded in 2008, Genghis is one of the leading investment banks in Kenya. Since its establishment, Genghis has achieved tremendous growth to offer a well-diversified portfolio of financial services that includes:

i. Securities(Equity/Debt) Trading
ii. Research
iii. Wealth Management services
iv. Investment Advisory & Management via the GenCap Unit Trusts
v. Corporate Finance & Transaction Advisory services

The Kenyan Capital Markets continue to develop in size, scope and sophistication. With this is an increasing demand for more specialized and personalized brokerage service and we at Genghis Capital are glad to be able to offer you this service. Our strength lies in ensuring our clients are up to speed with developments at the stock market and the economy. Research and technology remains our competitive and comparative advantage hence Experience, Expertise and Professionalism are some of the qualities you can expect from our team.

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Analysts

Gerald Muriuki

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Standard Chartered Bank Kenya Plc (NSE: SCBK) 1H18 Earnings Note

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