Standard Chartered Bank Kenya has cautioned that its earnings for 2025 will be cut by at least Sh5 billion after a tribunal ruling forced the lender to settle a long-running pension dispute with former employees.
In a profit warning issued on Tuesday, the bank said it expects its net income for the year ending December 31, 2025, to fall by at least 25 percent compared to the Sh20.06 billion profit posted in 2024.
This translates to a possible profit cap of Sh15.05 billion. The forecast is based on unaudited performance for the first eight months of the year, the projected last-quarter results, and the anticipated pension payouts.
“SCBKL projects that profit after tax for the year ending December 31, 2025 will be potentially 25 percent lower than the net earnings for the year ended December 31, 2024, primarily due to the judgment of the Retirement Benefits Appeals Tribunal Appeal No. 8 of 2021 dated April 28, 2022, and the directions in respect of the computations to be paid out to the appellants issued by the Tribunal on May 22, 2025,” the bank stated.
The announcement comes after the Supreme Court on September 5 upheld earlier decisions by the Court of Appeal and High Court, which endorsed the tribunal’s ruling in favour of 629 former workers.
The employees argued their pension benefits were undervalued during the 1999 shift from a defined benefit to a defined contribution scheme.
The bank confirmed it is ready to make payments estimated at up to Sh7 billion, although it noted that the final figure could fall below this amount.
The settlements are set to begin on September 22 at Nairobi’s Almary Green Business Park, where beneficiaries or their representatives will verify claims using pension statements and other supporting records.
By June 2025, StanChart’s retained earnings stood at Sh48.4 billion, up from Sh43.7 billion in December 2024, while its liquidity ratio remained strong at 64.47 percent, far above the required 20 percent.
The bank has stressed that it has adequate reserves to cover the liability.
In its half-year results, the lender reported a 21.3 percent decline in net earnings to Sh8.08 billion, largely on reduced income from forex trading, but kept its interim dividend at Sh8 per share.
The payout, totalling Sh3.02 billion, will be distributed on October 7 to shareholders on record as of September 11.
The results showed non-interest income dropped by 29 percent to Sh6.78 billion, with forex trading income shrinking by 59.5 percent to Sh1.99 billion.
Net interest income slid 7.4 percent to Sh15.3 billion as falling interest rates cut loan earnings by 18.2 percent to Sh9.4 billion.
However, lower rates eased the cost of customer deposits, which fell by 19.4 percent to Sh1.8 billion, helping cushion the blow to profitability.
