Stanbic Holdings has reported a 13 per cent increase in Profit after Tax (PAT) to Sh13.7 billion for the year ending December 31, 2024, even as key revenue streams weakened and operational costs came under pressure.

The profit growth was achieved despite lower total income, which dropped by 3.8 per cent, and a sharp increase in interest expenses, raising questions about the sustainability of the earnings boost.

While interest income surged by 27 per cent from Sh37.9 billion to Sh48.2 billion, this gain was almost neutralised by a 93 per cent rise in interest expenses.

As a result, Net Interest Income—the core revenue driver—declined by 5 per cent, suggesting the bank’s profitability was not driven by stronger lending margins but by cost-cutting measures and lower credit impairment charges.

Non-Interest Revenue, another crucial income stream, fell by 1.7 per cent, attributed to narrower margins and the absence of a one-off significant transaction from 2023.

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Although the bank pointed to increased trading and transactional volumes as a compensatory factor, the overall decline suggests a struggle to maintain previous revenue levels.

Despite these challenges, Stanbic reported a 13 per cent increase in earnings per share and a 70 basis points rise in Return on Equity, largely reflecting cost control efforts rather than a fundamental improvement in revenue generation.

The balance sheet was described as “largely stable,” indicating a cautious approach to growth amid market uncertainties.

Dr Joshua Oigara, the Chief Executive of Stanbic Bank Kenya and South Sudan, attributed the bank’s performance to strategic investments in technology, talent, and business solutions, which he said had enabled it to maintain resilience.

"We had a robust performance in 2024, fuelled by our ongoing focus on platforms, solutions, and processes that drive business growth while maximising value for our stakeholders," Oigara stated.

"Our investments in technology, talent, and innovative business strategies have positioned us to deliver resilient earnings and create a positive impact across Kenya and South Sudan."

To bolster competitiveness, the bank said it upgraded its core banking system and revamped its mobile banking platforms.

It also expanded its services by launching an asset management business and introducing new offerings for Private Banking and SME clients.

However, whether these initiatives will translate into stronger revenue growth remains to be seen.

Dennis Musau, the Chief Financial and Value Officer, acknowledged the pressure from rising funding costs but noted that the bank absorbed some of these costs to protect customers from higher credit charges.

"We deliberately shielded our customers from high credit costs by not passing the entire impact of rising funding costs to them. This helped not only grow our average lending through the period but also keep credit defaults and impairments below industry levels," Musau remarked.

"Our continued focus on extracting efficiency from our operations continue to bear fruits as evidenced by the 2 per cent overall reduction in operating costs.”

Despite the revenue pressures, the Board of Directors proposed a 35 per cent increase in dividends to Sh20.74 per share, up from Sh15.35 per share in 2023.

While this signals a commitment to shareholder returns, the sustainability of such payouts amid declining income and surging interest costs remains uncertain.