Standard Bank adds 670,000 customers in South Africa – with households under strain

 ·14 Mar 2024

Standard Bank has seen a profit jump despite the continued economic strain on its customer base, which has increased to 11.4 million in South Africa.

Reporting its full-year results for 2023, the group reported earnings growth of 27% and a return on equity of 18.8%.

Group net income grew to R177 billion (from R140.1 billion before), with headline earnings growing 27% to R42.9 billion.

“This strong performance is underpinned by our robust and growing franchise and is reflective of the positive momentum in all our businesses,” said Sim Tshabalala, Group Chief Executive Officer.

The group’s Africa Regions franchise contributed 42% to group headline earnings (49% year-on-year growth to R18.2 billion), with the top contributors being Ghana, Kenya, Mauritius, Mozambique, Nigeria, Uganda, Zambia and Zimbabwe.

Headline earnings in South Africa grew by 3% to R16.8 billion.

Group active customers grew by 6% to 18.8 million, with growth recorded in both South Africa and African regions.

South African customers grew to 11.4 million from 10.7 million before, adding just under 670,000 new customers over the 12-month period.

Core customers – active customers with at least one banking product – rose to 8.92 million, up 7% from 8.38 million before (+540,000 core customers).

In addition, the Insurance and Asset Management franchise recorded improved insurance performance and growth in its assets under management year on year.

“Since the announcement of the Liberty minority buyout, the group has received over R5.7 billion in distributions related primarily to capital optimisation. In FY23, the group successfully bought out the minorities of Liberty2Degrees (L2D). L2D holds an attractive portfolio of commercial properties.”

The group also ended the year with a common equity tier 1 ratio of 13.7% (FY2022: 13.4%).

The board declared a final dividend of 733 cents per share, with a total dividend of 1,423 cents per share, equating to a dividend payout ratio of 55%.

FinancialsFY22 RestatedFY23
Total net income (Rm)148 117177 616
Headline earnings (Rm)33 85342 948
Earnings Per Share (cents) 2 074.12 666.6
Headline Earnings Per Share (cents) 2 050.42 590.4
Total Dividend (cents) 1 2061 423
Return on equity 16.3%18.8%
Banking cost-to-income ratio53.9%51.4%

Looking ahead

While global risks persist, the International Monetary Fund predicts a soft landing in 2024.

Real GDP growth in sub-Saharan Africa is expected to grow from 3.3% to 3.8%, as higher levels of growth in East Africa offset lower growth in South Africa and Nigeria.

“Overall, the outlook is positive, but the region remains at risk of global shocks and climate events,” said the group.

“In addition, 13 countries in sub-Saharan Africa will hold elections in 2024, including six where the group operates, namely Botswana, Ghana, Mauritius, Mozambique, Namibia, and South Africa.”

In South Africa, inflation is set to decline to an average of 5.0% in 2024 due to demand-driven inflation, a lack of wage pressure and favourable base effects,

The repo rate is also expected to drop by 75 basis points to 7.50% by the year-end.

The electricity shortfall is also expected to ease compared to 2023, driven by an increase in Eskom supply and the ongoing expansion of private sector generation capacity. Actions to ease the logistics constraints are also expected to quicken.

These efforts should see real GDP growth improve to 1.2% in 2024, the bank said.

“The South African election outcome is not expected to drive a change in policy direction. Accordingly, the continued gradual policy reform should be growth-supportive over time. Any acceleration in resolving the electricity, road, rail, and port constraints would aid this further.”

That said, the group’s clients are likely to remain constrained until interest rates decline.

Credit impairment charges, which grew from R13.3 billion in FY22 to R16.2 billion in FY23, are expected to peak in the first six months of 2024, primarily driven by the ongoing strain in the Personal and Private Banking sectors.

The credit loss ratio is expected to remain near the top of the group’s through-the-cycle credit loss ratio range of 70 to 100 basis points in 2024.

“For FY24, we expect average interest rates to be marginally down and pricing to remain competitive. Balance sheet growth to remain slow in 1H24, but improve in 2H24.”

“Accordingly, net interest income is expected to be up low-to-mid single digits year on year. Fee and commissions are expected to grow at mid-single digits supported by a larger client base, increased client activity and higher client spend.”

“Trading revenue is likely to decline off a high base in FY23 but will be subject to market developments and client flow … Banking revenue growth is expected to be similar to banking cost growth and Jaws flat to positive.”

Read: Absa flags big trouble for consumers in South Africa

Show comments
Subscribe to our daily newsletter