Standard Bank Group’s expansion across Africa pays off well

The Standard Bank Group’s diversification strategy across the continent has paid off in the first half of the year. Photo: Reuters

DURBAN – The Standard Bank Group’s diversification strategy across the continent has paid off in the first half of the year, as South Africa continues to face low economic growth with ongoing uncertainty weighing on business confidence, spending and investment. 

Standard Bank, Africa’s largest bank by assets, reported a 6 percent increase in headline earnings to R13.36 billion and return on equity of 16.2 percent for the six months to end June, driven by the strong underlying momentum in its core operations.

Earlier in the week, its competitor Nedbank reported a 2.6 percent growth in headline earnings for the six months to end June. 

Standard Bank’s banking activities reported a 10 percent increase in headline earnings to R12.8bn, with Africa Regions’ (AR) contribution to banking headline earnings increasing to 34 percent, up from 32 percent compared to last year. 

The group said the top six contributors to AR’s headline earnings were Angola, Ghana, Kenya, Mozambique, Nigeria and Uganda. 

However, the group said the persistent uncertainty associated with the US-China trade war and the threat of a global slowdown weighed on markets in the first half of 2019. 

Standard Bank chief executive Sim Tshabalala said the group’s African-focused strategy has delivered continued headline earnings growth, driven by the strong underlying momentum in their core operations.  

“While there may be headwinds in certain markets, the diversity of our businesses and breadth of our footprint provide us with some shelter,” Tshabalala said.  

The group also reported a 5 percent increase in headline earnings per share to 837.4 cents a share, and net interest income increased by 9 percent to R31.27bn. The group declared a 6 percent increase in dividends to 454c. 

Its business units also showed growth during the period, with Personal and Business Banking growing headline earnings by 8 percent to R7.20bn while Corporate and Investment Banking increasing its headline earnings by 9 percent to R6.2bn. 

Other banking interests recorded a headline loss of R320 million. ICBC Standard Bank plc recorded a loss of $129.5m. “This disappointing result comprises two primary components, an operating loss of $19.5m and a provision of $110m arising from a single client relationship,” the group said. 

BUSINESS REPORT

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