Banking

Standard Bank still sees interest rate cuts in South Africa

Luke Fraser

 ·12 Mar 2026

Standard Bank still expects 75 basis points of rate cuts in 2026 and 2027, despite the conflict in the Middle East.

While the South African Reserve Bank (SARB) was widely expected to cut interest rates this year amid lower inflation, the US and Israel’s attacks on Iran have raised questions about the path of inflation.

The oil price quickly surged, which will likely lead to much higher fuel prices in South Africa. The situation is changing quickly, but expectations of interest rate cuts this month—and for the foreseeable future—have turned sour.

However, in its latest financial results for 2025, Standard Bank said that inflation is still expected to average 3.6% in 2026 and 3.3% in 2027.

This will lead to expected interest rate cuts of a cumulative 75 basis points in 2026 and 2027, with 25 basis point cuts forecast in May and September 2026 and one further cut in 2027.

These cuts would take the repo rate to 6.0% and would continue the interest rate-cutting cycle started by the Reserve Bank in 2024.

South Africa’s real GDP growth is also expected to be 1.5% in 2026 and to improve to 1.8% in 2027.

“The group’s diversified franchise is well placed to benefit from the improving macroeconomic environment and the associated increase in economic activity,” it said.

“The improvements should support group balance sheet growth and reinforce existing strong earnings momentum.”

However, Standard Bank admitted that geopolitical developments in the Middle East continue to introduce uncertainty.

Although its guidance includes current information, an escalation of the conflict could affect underlying macroeconomic assumptions, such as trade, inflation and growth.

Financial results

“In 2025, Standard Bank Group delivered another strong performance and successfully achieved the 2025 financial targets set out in August 2021,” said Standard Bank Group CEO Sim Tshabalala.

“Headline earnings per share grew by 12%, and return on equity improved to 19.3%, underpinned by the group’s diversified and growing franchise.”

Over the year, the group saw headline earnings reach R49.2 billion. The banking businesses saw strong performance, driven by balance sheet growth and robust fee and trading revenue growth.

Credit impairment charges were lower year on year, which it said was supported by an improving macroeconomic environment, while costs were also well managed.

The group’s board also approved a final dividend of 1,695 cents per share, which was a 12% increase year-on-year. It was at the upper end of the group’s target range of 45% to 60%.

The group’s active client base grew to 19.6 million over the period, driven by growth in South Africa and Africa Regions.

In South Africa, targeted initiatives to grow retail transactional clients resulted in a 9% increase in digital clients, a 5% increase in digital transactional volumes, and a 67% increase in clients who transact digitally.

The South African franchises delivered earnings of R24.9 billion, the Africa Regions’ franchise R19.7 billion, the Offshore businesses R3.1 billion, and its 40% stake in ICBC Standard Bank Plc R1.5 billion.

In South Africa, average inflation decreased to 3.2% in 2025, marking the lowest level in 21 years and providing the scope for the introduction of a new inflation target of 3%.

On top of 100 basis points in interest rate cuts, South Africa was also removed from the FATF grey list, saw its sovereign credit rating upgraded by S&P and saw growth improve to 1.1%.

“These positive shifts are helping to rebuild momentum in the South African economy, with encouraging signs in confidence, investment activity and medium-term growth,” said the bank.

For 2026, the group expects the following:

• Banking revenue growth to be mid-to-high single digits, supported by ongoing business momentum;
• Cost-to-income ratio to decline slightly on the back of continued disciplined cost management alongside ongoing franchise investment;
• Credit loss ratio to increase but remain in the bottom half of the through-the-cycle target range of 70 – 100 basis points; and
• ROE to increase relative to FY25 (FY25: 19.3%).

“Our 2028 strategy is anchored in a clear ambition: to compete and win in our chosen markets and segments,” said the group.

“Our strategy is clear and credible, built on a rigorous understanding of our markets and the opportunities ahead. The targets we have set are ambitious yet achievable, supported by disciplined execution and a strong performance culture.”