Kenya’s Stanbic Holdings expects stronger earnings growth in the second half of the year as lower interest rates introduced by the Central Bank of Kenya stimulate economic activity and increase demand for loans.
The lender’s Chief Executive Officer, Joshua Oigara, told Reuters on Thursday that growing demand from small and medium-sized enterprises (SMEs) and retail borrowers would support revenue growth in the coming months.
The bank reduced its interim dividend by more than half on Wednesday after declining interest rates put pressure on net interest margins.
Despite the margin squeeze, Oigara said the outlook for the second half remains positive, with increased lending activity expected to drive performance.
Stanbic Holdings reported that first-half deposits increased by 28 per cent, while loans grew by 24 per cent, reflecting stronger investment activity and improved economic conditions.
Oigara identified sectors including roads, manufacturing and agriculture as major contributors to rising loan demand.
The bank recorded a 1 per cent increase in post-tax profit during the first half but expects stronger revenue growth in the second half and a higher full-year dividend.
Kenya’s banking sector has continued to attract financial institutions from across Africa, including Nigerian banks seeking opportunities linked to regional economic growth.
The improved lending outlook follows a series of rate cuts by Kenya’s central bank, which reduced interest rates 10 consecutive times through February.
The central bank also introduced a new loan-pricing formula aimed at lowering borrowing costs and improving access to credit.
Oigara declined to comment on reports that Stanbic Holdings had previously sought to acquire NCBA Bank before Nedbank’s reported interest, saying the lender is focused on organic growth and currently has no merger and acquisition target.
