Africa focus lifts Standard Bank


Africa focus lifts Standard Bank

Published Date: 2019-08-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

Africa focus lifts Standard Bank

The bank's operations outside SA have reported a strong rise in profit, compensating for flat earnings in its home market.

Standard Bank's operations across the rest of the continent have cushioned it from a weak home market, helping grow first-half earnings. And it expects its Africa Regions operations to make an increasing contribution to profits as it continues to invest in the business.

While the banking group's SA personal and business banking (PBB) unit delivered flat earnings of R6.1 billion for the period, PBB Africa Regions more than doubled headline earnings to R471 million as it sold more products to a growing customer base. However, it said the business was negatively affected by declining rates and regulatory pressure on fees in countries including Angola, Lesotho, Malawi, Nigerian and Zambia. Its Wealth International division grew headline earnings by 54% to R664 million.

Corporate and Investment Banking (CIB) reported a 9% increase in headline earnings to R6.2 billion despite subdued market activity in key markets, a difficult business environment in SA and legislative and currency-related headwinds in some of the Africa Regions markets.

Net interest income (NII) from banking activities rose 9% to R31.3 billion in the six months to end-June and non-interest revenue (NIR) grew by 4% to R23 billion as pressure on fees and the move to cheaper digital channels put pressure on growth. That resulted in a 7% rise in total income to R54.3 billion. Its credit impairment charges increased by 20% to R4.25 billion.

Headline earnings rose 6% to R13.4 billion and its return on equity (ROE) came in at 16.2%, down from 16.8%. Its banking operations grew headline earnings by 10% to R12.8 billion and delivered an ROE of 17.5%. Group headline earnings per share rose 5% to 837.4c, with Africa Region's contribution to headline earnings increasing to 34% from 32% previously. It's lifted its interim dividend by 6% to 454c per share.

Like Nedbank two days earlier, the bank reported that its credit loss ratio increased from a low base, from 62 to 76 basis points.

It cut its economic growth projection for SA to 0.6% this year as fiscal constraints and weak consumer and business confidence weighed on consumption and investments. Sub-Saharan Africa was expected to remain on its recovery path into next near, supported by higher consumption and looser monetary policy. Regional real GDP is expected to growth 3.5% this year and stabilise at around 4% over the medium term.

Separately, the bank announced it would exercise a put option to sell its 20% residual stake in ICBC Argentina, formerly Standard Bank Argentina, to Industrial and Commercial Bank of China (ICBC). It sold 80% of the bank to its Chinese shareholder in 2012.

Although it had performed strongly since the change of control, it said Argentina remained off strategy for the group as a geography since its refocus on the African continent in 2011. It said the R600 million gain it would make from the transaction would be reinvested in its Africa strategy. The deal is subject to regulatory approval and it expects it to be completed in the last quarter of this year or early next year.

Its shares closed 0.1% higher at R171.21 on Thursday.

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