Standard Bank profit climbs 14%
Standard Bank Group on Thursday (8 March 2018) pointed to a strong financial performance for the year ended December 2017, delivering 14% growth in headline earnings to R26.3 billion, while return on equity (ROE) improved to 17.1% from 15.3% in 2016.
Headline earnings per share improved to R16.40, from R14.40 before, while a final dividend of 510 cents per share has been declared, resulting in a total dividend of 910 cents per share, an increase of 17% on the prior year, the lender said.
Banking revenue growth remained subdued, credit impairment charges were broadly flat and costs were well managed to deliver positive jaws of 1.0%. Banking activity headline earnings grew 10% to R24.3 billion and ROE improved to 18.0% from 16.8% in 2016.
Group headline earnings growth was boosted by an improved contribution from ICBC Standard Bank (ICBCS) and Liberty, the bank said.
“Although less marked than in the first half of the year, currency movements continued to adversely impact the group’s reported results, reducing group and banking headline earnings growth by four percentage points year on year. On a constant currency basis, group headline earnings grew by 18%.
“Despite the dilution impact from a strengthening rand, Africa regions still increased its contribution to banking headline earnings to 28% from 26% in 2016, and contributed positively to group headline earnings per share growth and ROE,” Standard Bank said.
Personal & Business Banking
PBB’s headline earnings of R14.0 billion were 10% higher than the prior year, driven by growth in pre-provision operating profit and lower credit impairment charges as a result of improved collections strategies. An ROE of 20.0% was achieved, an improvement on the 18.8% recorded in the prior year.
PBB in South Africa delivered a strong performance with headline earnings of R13.2 billion up 11%, Standard Bank said.
“PBB SA now has almost 2.2 million unique customers actively using digital channels as their preference, with more of these choosing to use our mobile banking offering than internet banking.”
Mobile banking transactions processed were 32% higher than in 2016. By contrast, teller and enquiry volumes in branches declined by 14% and 13% respectively, the bank said.
Looking ahead, the bank said that the global growth outlook remains positive, with recent momentum in advanced economies expected to continue.
From a 22-year low in 2016, growth in sub-Saharan Africa is expected to accelerate to 3.3% in 2018, supported by a world-wide economic upswing, and slightly rising commodity prices.
“In general, economic prospects across our network of countries are expected to improve, providing a favourable backdrop for our business,” it said.
The bank said it is also optimistic about the prospects in its home market of South Africa.
“We believe that the positive steps taken already by the ruling party subsequent to its leadership conference will improve business and consumer confidence. This positive sentiment, as well as pent-up demand, should begin to reflect in key economic indicators.”
Standard Bank said that in the face of fast-growing competition from established banks and new competitors, “we have a relentless focus on three immediate priorities – to transform into a client-centred, digitally enabled, and integrated universal financial services organisation”.
“We are in the final stages of our core banking journey and, by the end of the first quarter of 2018, 93% of our transactional accounts in South Africa will have been migrated onto our core banking platform. With this modernised platform in place, we will increasingly focus on front-end solutions and innovations, the benefit of which will be experienced directly by our customers,” it said.
The bank said it has lifted its medium-term ROE target range from 15% – 18% to 18% – 20%.
Read: Standard Bank boosts profits despite South Africa’s economic woes
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