Standard Bank reports earnings growth
STANDARD Bank Group lifted headline earnings a sturdy 27% to R42.9 billion for the 12 months to December 31 last year, underpinned by its assets’ growing franchise and positive momentum in its businesses.
Return on equity increased to 18.8%, up from 16.3%. The cost-to-income ratio fell to 51.4%, down from 53.9%. The credit loss ratio was up by 98 basis points (bps) from 83bps in 2022.
A final dividend of 733 cents per share was declared, equating to a payout ratio of 55%. Africa regions contributed 42% to headline earnings, with the top eight contributors being Ghana, Kenya, Mauritius, Mozambique, Nigeria, Uganda, Zambia and Zimbabwe.
CEO Sim Tshabalala said the strong performance reflected a differentiated franchise and good momentum in Standard Bank South Africa, which is the largest operating entity of Standard Bank Group.
As at June 30, 2023, Standard Bank Group had more than 18.2 million clients and employed more than 49 000
people. The number of active clients grew by 6% to 18.6% for the year under review.
Digital retail clients in South Africa increased by 8% as more clients transitioned to digital channels.
The group processed more than 2.8 billion digital transactions for retail clients and distributed more than R41bn on behalf of South African clients via digital wallet platform.
Client satisfaction scores improved across various channels, particularly digital in South Africa.
The Insurance and Asset Management franchise saw an improved insurance performance and growth in its assets under management, year-on-year.
Since the announcement of the Liberty minority buyout in 2022, more than R5.7bn in distributions had been received. The minorities of Liberty2Degrees (L2D) were bought out in 2023 – L2D holds a portfolio of commercial properties, including Sandton City, Nelson Mandela Square, Melrose Arch and Midlands Mall.
Tshabalala said their climate policy and sustainable finance targets included supporting a just transition that aimed to achieve environmental sustainability while creating decent work opportunities and promoting social inclusion.
The bank aimed for net zero emissions by 2030 from its newly-built facilities, and net zero emissions from all its facilities by 2040.
It aimed to achieve net-zero carbon emissions from its portfolio of financed emissions by 2050, said Tshabalala.
In 2023, more than R50bn of sustainable finance for corporate clients was mobilised, and more than R2bn in loans to SMEs was provided to help business owners access affordable and reliable alternative energy products.
In addition, more than R145m was disbursed to homeowners and more than R840m to businesses, for solar installations in South Africa.
Tshabalala said uncertainty was likely to remain elevated globally in 2023. Sub-Saharan Africa also experienced inflationary pressures and monetary policy tightening.
He said that in 2024, while global risks were expected to persist, the International Monetary Fund was forecasting a “soft landing”, with the major economies avoiding recession. Overall, the outlook was positive, but the region remained at risk to global shocks and climate events.
In South Africa, the bank forecast an improvement in GDP growth to 1.2% in 2024.
For the 12 months to December 31, 2024, average interest rates were expected to be marginally down and pricing to remain competitive. Balance sheet growth was expected to remain slow in the first half.
Net interest income was expected to be up low-to-mid single digits. Fee and commissions were expected to grow at mid-single digits supported by a larger client base, increased client activity and higher client spend.
Trading revenue was likely to decline off a high base in 2023, subject to market developments and client flow.
“While there is a heightened focus on costs, we need to continue to invest in our business to remain competitive and grow. Banking revenue growth is expected to be similar to banking cost growth,” he said.
Credit impairment charges were expected to peak in the first six months of 2024.