Standard Bank Group, Africa’s biggest bank by assets, lifted headline earnings a share 34% to 1 280.6 cents in the six months to June 30 due to its differentiated franchise and Africa-focused strategy.
The dividend was raised by the same percentage to 690 cents, equating to a payout ratio of 54%.
Headline earnings increased a substantial 35% to R21.2 billion. The South African banking franchise headline earnings grew 17% to R8.4bn. The Africa Regions headline earnings were up 65% and contributed 44% of group earnings.
“We continued to support our clients and our teams managed the business well through an uncertain geopolitical environment and volatile market conditions.” CEO Sim Tshabalala said yesterday in a statement.
The top six contributors to Africa Regions’ headline earnings were Ghana, Kenya, Mozambique, Nigeria, Uganda and Zimbabwe.
The group welcomed actions in Ghana, Kenya, Nigeria and Zambia to reduce sovereign credit risks. The most notable change was the liberalisation of the Naira which, although negative for inflation in Nigeria in the short term, was promising for growth and investment in the medium to long term, the bank said.
Sovereign credit risk remained high in Malawi and had increased in Angola and Mozambique. In February 2023, South Africa and Nigeria were grey-listed by the Financial Action Task Force.
Standard Bank’s prior year numbers were restated after the introduction of IFRS 17 Insurance Contracts (IFRS 17) from January 1, 2023 and which was applied from January 1, 2022.
Tshabalala said the group’s performance was underpinned by robust earnings growth across the three banking businesses, and improved earnings and returns in the insurance and asset management businesses.
The results were in line with targeted profitability, efficiency and return-on-equity to 2025. He said the bank had held some R1.8 trillion in deposits for clients in the first half, and paid out R45 billion in interest to its individual, corporate and government clients.
The banking businesses benefited from client franchise growth, larger balance sheets and increased transaction volumes, as well as market and interest rate tailwinds.
Revenue growth was well ahead of cost growth which supported a decline in the cost-to-income ratio to 50.5%.
Credit impairment charges increased across all portfolios due to the difficult macroeconomic environment and the deteriorating outlook, as well as client-specific strain.
The credit loss ratio increased to 97 basis points, at the upper end of the group’s through-the-cycle range of 70 to 100 basis points. Banking operations recorded headline earnings growth of 42% to R18.7bn.
The insurance and asset management business unit (which now combines Liberty Holdings with the other insurance and asset management businesses in the group) reported improved operational performance and headline earnings grew to R1.4 billion from R1.1bn.
The life insurance operations increased indexed new premiums and the short-term insurance business lifted gross written premiums. Group assets under management increased by 6% to R1.4 trillion.
During the period, more than 20 000 South African clients were proactively assisted through various client assistance initiatives, said Tshabalala.
The group mobilised R28bn in sustainable finance for clients, of which 40% was for clients in Africa Regions. The group also raised R6.6bn in green and sustainability-linked treasury finance.
Tshabalala said downside risks to global growth remained and high interest rates were now expected to remain higher for longer.
The International Monetary Fund (IMF) forecast global real gross domestic product (GDP) growth of 3% for 2023 and 2024. The IMF expects sub-Saharan Africa to grow at 3.5% and 4.1% in 2023 and 2024 respectively. Significant currency devaluations, for example, in Angola and Nigeria, were likely to drive elevated inflation in the short-term.
Standard Bank Research expected local interest rates to remain flat at 8.25% for the rest of the year and real GDP growth to be 0.8% for 2023.
“Moderating inflation, interest rate cuts and increased electricity supply should drive an improvement in confidence, demand, and investment in 2024,” the bank said.
For the 12 months to December 31, 2023, banking revenue growth was expected to be stronger than previously guided in March 2023, but moderate relative to the strong first half of 2023 and first half of 2022 performance, the bank predicted.
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