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UPDATE 2-StanChart Kenya warns new COVID-19 wave could snuff out recovery

* 2020 pretax profit dropped 39% to 7.4 bln shillings

* Wealth management a bright spot last year

* Sets dividend of 10.5 shillings per share (Adds wealth management)

NAIROBI, March 25 (Reuters) - Standard Chartered Bank of Kenya reported on Thursday a 39% slump in pretax profit for 2020 and warned a rising third wave of COVID-19 cases could curb a nascent economic recovery.

The lender, which is controlled by Standard Chartered Plc , said pretax profit dropped to 7.4 billion shillings ($67.5 million) last year, as hard-pressed borrowers were pushed into default by the pandemic, driving up impairments.

The bank is concerned by a resurgence of infections in the East African nation, which is going through a deadly third wave marked by record high daily infections and deaths, Chief Executive Officer Kariuki Ngari told an investor briefing.

“The business that was just slowly starting to open up could start clamping down again. That will have an indirect impact on the company,” he said.

To try to weather the storm, StanChart Kenya has digitised most of its services to allow customers to bank without having to visit a branch, and it is also diversifying its products.

“Wealth (management) is where we have made a big difference,” Ngari said, referring to investment services in government bonds, mutual funds, stocks and insurance services.

The wealth management business, which contributed just over a fifth of revenue to retail banking, which in turn accounted for 46% of total group revenue, grew robustly last year.

Assets under management jumped more than 90% to 129 billion shillings, Ngari said, adding the bank had also started to allow customers to borrow against the amounts they have invested, opening another revenue stream.

StanChart Kenya shares were up 6% in early trading.

Still, last year’s total revenue fell by 5% as net interest income and income from services weakened. Costs rose by a percentage point.

Earnings per share dropped 35% to 13.95 shillings, but the bank set a dividend of 10.50 shillings ($0.0957) per share, saying its capital reserves were adequate.

$1 = 109.7000 Kenyan shillings Reporting by Duncan Miriri; Editing by Mark Potter

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