Stanbic Bank Kenya’s Q1 Profit Drops by 16% on Lower Forex Income

Stanbic Bank Kenya, a subsidiary of Stanbic Holdings Plc, reported a 16.6% decline in net profit for the first quarter ended March 2025, largely attributed to a sharp drop in non-interest income, particularly from forex trading activities.

According to reporting by Business Daily Africa, the bank posted a net profit of KSh 3.3 billion for Q1 2025, down from KSh 3.9 billion in the same period the previous year. The main contributor to the decline was a 27.2% slump in non-interest income, which fell to KSh 2.7 billion. Notably, forex trading income plunged to KSh 977 million from KSh 2.3 billion a year earlier.

Analysts from Sterling Capital noted that while most non-funded income line items showed improvement year-on-year, forex income stood out as the exception. “This was expected in quarter one of 2025 given the significant reduction in forex margins, especially with the relative stability of the Kenya Shilling during the period,” the analysts commented.

While the bank’s net interest income saw a marginal rise, this was due to a balancing effect between reduced interest income from loans and lower interest expenses on customer deposits. Interest income from loans dropped to KSh 7.1 billion from KSh 9.2 billion, amid a 4.6% contraction in the loan book, which closed the quarter at KSh 244 billion. On the other hand, customer deposits also decreased to KSh 337 billion from KSh 355 billion, allowing the bank to reduce interest paid out by KSh 1.8 billion.

“The hit on interest income was expected as the tough macroeconomic environment forced the bank to lend cautiously, coupled with the decline in lending rates,” added Sterling Capital.

In a strategic shift, Stanbic Bank significantly increased its investments in government securities, nearly doubling its holdings to KSh 80.8 billion from KSh 41.8 billion. Earnings from these investments rose to KSh 3 billion, up from KSh 1.3 billion in the same period last year. The bank also increased its trading securities portfolio fivefold, growing from KSh 6 billion to KSh 31.8 billion, positioning itself to benefit from falling interest rates by trading higher-yielding bonds.

Looking at the broader picture, Stanbic signaled a renewed focus on its core business. It grew its loan book by KSh 13.7 billion and increased customer deposits by KSh 16.1 billion in the three months leading to the end of December 2024. This suggests a more aggressive push for growth and greater appetite for customer funds as interest rates ease, reducing deposit costs.

Stanbic Bank Kenya remains the largest and most significant subsidiary of Stanbic Holdings, which is listed on the Nairobi Securities Exchange. During the review period, the bank reduced intra-group support, cutting its balances with related banking institutions nearly in half—from KSh 106.8 billion to KSh 57.9 billion.

Stanbic’s Q1 results come against the backdrop of a stabilizing macroeconomic environment in Kenya, characterized by subdued credit demand and a more stable local currency, which has significantly affected income from forex transactions.