Standard Bank warns of ‘competitive pressures’ as interim profit climbs 5%
Standard Bank published its financial results for interim period ended June 2018 with headline earnings of R12.7 billion, up 5% on the prior period, and return on equity up to 16.8% from 16.1% before.
Total income for the interim period rose to R65.5 billion, while profit for the period attributable to ordinary shareholders jumped to R12.7 billion (R12.3 billion).
Headline earnings per share was up 5% to 794 cents and an interim dividend of 430 cents per share was declared, an increase of 8% on the prior period, the bank said.
Banking activities headline earnings grew 6% to R11.7 billion driven by strong growth in non-interest revenue (NIR) and lower credit impairment charges, in Africa Regions in particular. Banking activities ROE improved to 17.5% from 16.8% in 1H17, the lender said.
The stronger rand, on average, adversely impacted the group’s reported results. On a constant currency basis, group headline earnings increased by 8% boosted by Africa Regions which grew earnings by 32%. Africa Regions’ contribution to banking headline earnings increased to 32% from 29% in 1H17.
The top five contributors to Africa Regions’ headline earnings were Angola, Ghana, Mozambique, Nigeria and Uganda, Standard Bank said.
In South Africa (SA), on average, the rand was stronger, rates lower and inflation surprised on the downside.
Consumer and business confidence improved but have not necessarily translated into higher spending or fixed investment. The VAT increase, tax bracket creep and higher fuel prices have all negatively impacted discretionary spending capacity.
Looking ahead in South Africa, chief executive Sim Tshabalala said that 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% to 6% target range, supporting a flat interest rate outlook for the rest of the year, he said.
“The group has appetite to grow lending judiciously in South Africa. There is no doubt competitive pressures will continue to increase, however, we will fiercely protect our existing customer franchise and grow by partnering with third parties to build new, innovative offerings and revenue streams,” Tshabalala said.
South Africa is expected to see at least six new banks and banking services launch in the coming months, including the likes of Discovery Bank and Bank Zero – a mutual bank co-founded by former FNB CEO Michael Jordaan.
“More broadly, we will continue to balance growth, resilience and returns to deliver on our medium-term objectives of sustainable growth in earnings and delivering an ROE in our 18% to 20% target range,” Tshabalala said.
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