Standard Bank scores 5% profit growth

DURBAN – STANDARD Bank reported a 5 percent increase to R12.7 billion in headline earnings for the six months to June, boosted by 32 percent growth in its Africa regions. 

The group said on Thursday that the top five contributors in Africa regions were Angola, Ghana, Mozambique, Nigeria and Uganda. 

Chief executive Sim Tshabalala said their focus on Africa was and would remain their main source of sustainable competitive advantage. 

Standard Bank is the largest African bank by assets with footprint across 20 African countries. 

Return on equity (ROE) improved to 16.8 percent from 16.1 percent as compared to the first half of 2017. 

Tshabalala said., “In South Africa, while consumer confidence has improved, delays in resolving key policy issues remain an obstacle to business confidence, fixed investment and growth. Inflation is expected to remain inside the 3 percent to 6 percent target range, supporting a flat interest rate outlook for the rest of the year.” 

Personal and business banking (PPB) grew its headline earnings by 8 percent to R6.6bn, while corporate and investment banking (CIB) grew its headline earnings by 7.5 percent to R5.7bn.

Headline earnings from PBB Africa regions improved to R201 million, up from R91m and in South Africa PPB grew headline earnings by 5 percent to R6bn.

Headline earnings per share (Heps) increased to 794 cents a share, up from 756c. Non-interest revenue rose 8 percent to R22bn, while net interest income was up by 1.3 percent to R29.1bn. 

The bank declared an interim dividend of 430 cents a share has been declared, an increase of 8 percent compared to last year. Renier de Bruyn, an investment analyst at Sanlam Private Wealth, said South African revenue growth remained sluggish as a result of slow loan growth, similar to the experience of Nedbank and Absa in their recent results. 

“Standard bank, however, benefited from a large decline in bad debts, but was less impressive at managing down their cost base to compensate for the revenue slowdown compared to Nedbank and Absa,” De Bruyn said.

He added that Standard bank’s rest of African operations were boosted by the curing of previously impaired loans, benefiting from the impact of the higher oil price on the bank’s oil industry clients. 

“The improved foreign exchange liquidity following the devaluations of the Nigerian and Angolan currencies also benefited trading income. Excluding these two tailwinds, the growth in the rest of Africa would have been somewhat less impressive,” De Bruyn added.

The bank said gross customer loans expanded 15 percent and deposits from customers grew 15 percent during the period. 

The total number of active customers grew 4 percent to 5 million customers, driven by strong growth in Kenya, Ghana, Mozambique, Nigeria, Swaziland and Zimbabwe.

Brad Preston, ahead of listed investments at Mergence Investment Managers, said Standard Bank results were slightly below consensus expectations at the earnings level.

“Given the low top line growth in the SA  franchise the rest of Africa operations certainly show the most promise of higher growth,” Preston said. 

Nesan Nair, a senior portfolio manager at Sasfin Securities, said the results were in line with expectations and results from Africa were better, but this was also the case for Nedbank and Absa, which was also a function of currency translations.

 “It might be too early to read too much into the African operations just yet,” Nair said. 

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