StanChart confirms cuts in credit to businesses

129858924851_7474061099294Standard Chartered Bank is cutting down credit extended to businesses for this year.

The move has been influenced by the challenging economic environment which has made it difficult for funds borrowed to be paid on time.

Managing Director of the bank, Kweku Bedu-Addo says this should be seen as a short-term strategy to improve earnings.

“In this operating environment, you need to be careful of the risks you’re taking. We take the view that in this environment it is not optimal to grow assets aggressively”, he told Joy Business during a teleconference with investors on the bank’s half-year results.

He added that the bank will rather grow its assets selectively and concentrate on helping its clients improve on their working capital in order that they will be able to settle their debts.

“It is a question of emphasis, the reality is that the economy has gone through a serious downturn and it has impacted on a lot of clients. Most of them have very disrupted working capital cycle and if their working capital cycles are disrupted, it impacts how and when they can pay you so we are focusing all our attention there to sort it out”.

The Bank is, however, optimistic the current measures being implemented by government to stabilize the economy will soon yield results.

Mr. Bedu-Addo said the bank is expecting things to stabilize by next year.

Standard Chartered Bank’s profits for first half year went down from 110 million Ghana cedis to 75 million Ghana cedis over the same period last year.

Interest Income also jumped from 210 million Ghana cedis to 231 million Ghana cedis.

In a related development, some analysts fear the move by standard Chartered Bank could have some serious implications for operations of private businesses that are already struggling to secure credit at favourable interest rates.

They are also worried their woes could worsen further as other commercial banks could also take similar actions in an attempt to control their bad debts.