Jane Fraser

Standard Chartered Bank Kenya has reported a significant surge in its sustainable finance revenues, reaching Sh1.29 billion last year, marking a ten-fold increase from the previous year. This growth underscores the rising importance of sustainable finance as a major income source for local banks. The revenue is derived from “green, social, and sustainable” lending activities and clients whose operations are predominantly green and sustainable. The substantial increase in sustainable finance revenue reflects Kenya’s broader economic shift towards sustainability, driven by regulatory and international pressures. For Standard Chartered, the growth was primarily fueled by expanded lending to sustainability-linked projects and corporate clients focusing on low-carbon transitions. The bank’s investment banking division also introduced new sustainable finance products, enhancing its revenue streams. In addition to its lending activities, Standard Chartered has ventured into carbon trading, generating Sh500 million from financial markets and Sh790 million from transaction banking, up significantly from 2022. However, the bank’s sustainable finance income from wealth and retail banking saw a decline, indicating that despite the progress, this sector remains a small portion of the overall revenue. Overall, sustainable finance income now represents 4.2 percent of Standard Chartered’s total revenues, up from 0.5 percent in 2022. While this signifies a positive shift, it highlights that the sector still comprises a small fraction of the bank’s overall earnings, reflecting the early stages of sustainable finance development despite growing global investor expectations. #SustainableFinance #GreenBanking #InvestmentBanking #CarbonTrading #FinancialGrowth #KenyaEconomy #StandardChartered #CorporateSustainability

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In our Cytonn Report this week, we analysed the performance of the Global, the Sub-Saharan Africa Regional, the Kenya Macroeconomic, Kenya’s Equities, Fixed Income and the Real Estate markets for Q1’2024. Below are the highlights; a) Global Markets Review: According to the World Bank’s June 2024 Global Economic Prospects, the global economy is projected to grow at a rate of 2.6% in 2024, similar to the estimated growth of 2.6% recorded in 2023. The latest projection is 0.6% points lower than the IMF’s projection of 3.2% growth, with the downward revision being on the back of the continued tightening of monetary policies by the Central Banks around the world aimed at curbing the elevated inflationary pressures. Notably, advanced economies are expected to record a 1.5% growth in 2024, remaining unchanged from the 1.5% expansion recorded in 2023. However, emerging markets and developing economies are projected to expand by 4.0% in 2024, marginally downwards from an estimated growth of 4.2% in 2023; b) Sub-Saharan Africa Regional Review: According to the World Bank, the Sub-Saharan economy is projected to grow at a moderate rate of 3.4% in 2024, which is 0.8% higher than the 2.6% growth estimate recorded in 2023. The expected recovery is primarily driven by private consumption growth as declining inflation boosts the purchasing power of household incomes. Nevertheless, the risk of debt distress remains high with more than half of countries facing unsustainable debt burdens as the region’s public debt to GDP ratio is expected to remain high at 57.0% in 2024, albeit a decline from 60.0% in 2023. The public debt is expected to remain high due to increased debt servicing costs as a result of continued currency depreciation and increased interest rates in developed economies. Additionally, many countries are providing subsidies in order to mitigate inflationary pressures, which could worsen public finance, increase public debt, and weigh down on debt sustainability; c) Kenya Macroeconomic Review: According to the Kenya National Bureau of Statistics (KNBS) 2024 Economic Survey, the Kenyan economy recorded a 5.6% expansion in FY’2023, faster than the 4.9% growth recorded in FY’2022. The main contributor to Kenyan GDP remains to be the Agriculture, Fishing and Forestry sector which grew by 6.5% in FY’2023 compared to a contraction of 1.5% in FY’2022. All sectors in FY’2023, except Mining and Quarrying, recorded positive growths, with varying magnitudes across activities. Most sectors recorded improved growth compared to FY’2022, with Agriculture, Forestry and Fishing, Accommodation and Food Services, and Real Estate Sectors recording the highest growth improvements of 7.9% points, 6.8% points, and 2.8% points, respectively. The average inflation rate for the first half of 2024 came... Click the link below to read the Cytonn H1’2024 Markets Review: https://lnkd.in/dfejeAGS

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Nairobi has been underwater this week. As I navigated a particularly treacherous section of a flooded road, I wished I had a boat or a ship :-). The city is rapidly growing to the heavens, but the supporting horizontal infrastructure is not developing similarly. This situation is not unique to Nairobi - it's happening in many cities in Africa and globally (have you seen the 'apocalyptic' flooding in Dubai?) Climate change is real. As the UNFCCC UN Executive Secretary aptly stated in a recent Chatham House speech, "a quantum leap in climate finance is needed". Yet climate change is just one of many developmental challenges to which we must direct significant financial resources. Where will all these significant financial resources come from? My colleagues Evans Osano, DBA, Michael Fuchs, Amos Mugi, FRM and I at FSD Africa have been working on a financial innovation in response to the recommendations of the Independent Review of Multilateral Development Banks' (MDBs) Capital Adequacy Frameworks. The proposed innovation, alongside other MDB reform initiatives, could unlock several hundred billion dollars in additional finance for the world's development priorities. We are proposing a local currency solution for MDB portfolio transfer - one that will facilitate the transfer of select MDB portfolios to domestic institutional investors, freeing up MDB capital for further on-lending while deepening domestic capital markets. This could potentially direct billions of African institutional capital to development priorities, such as the infrastructure needed for cities to be more resilient to climate change impacts. And many more social and economic priorities. FSD Africa seeks a dynamic Fund Manager to co-create and implement this innovative solution. The deadline for EOIs is 30 April 2024.

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