Banking

Standard Bank has bad news for South Africa

Luke Fraser

 ·14 Aug 2025

Standard Bank has cut South Africa’s GDP growth prospects to under 1% in 2025—but still expects to deliver solid results and earnings.

In its interim financial results for the first half of 2025, Standard Bank said that US tariff announcements initially drove volatility and market fears, which abated near the end of the period. 

In South Africa, global uncertainty and local political developments dented confidence and negatively impacted the growth outlook.

South African real GDP growth is expected to be 0.9% in 2025 and improve to 1.3% in 2026. This is lower than the 1.7% and 2.0% for 2025 and 2026, which Standard Bank expected in March 2025. 

“However, this outlook remains sensitive to developments on tariffs, including both the rate thereof and the exemptions applied,” said the group. 

Standard Bank is not the only financial institution to lower its growth forecast for South Africa below 1%, with Investec and Efficient Wealth doing the same. Nedbank is slightly more optimistic at 1% on the dot.

International groups like the IMF are also more optimistic, with the most recent World Economic Outlook pencilling in 1% growth for the year.

Market analysts aniticapate a GDP hit from the United States’ 30% tariff, but are not yet certain of the extent. Opinions are floating around a 0.2-0.3 percentage point hit, which would put growth around 0.7%.

Despite the GDP downgrade, Standard Bank noted that inflation trended downwards over the first half of the year and sat well below the Reserve Bank’s target range of 3% to 6%.

This led to interest rate cuts of a cumulative 50 basis points to 7.25% by June, and a further 25 basis point cut in July. 

Despite trade disputes and high levels of uncertainty, which are expected to hurt global economic activity, Standard Bank said that it does not expect it to disrupt the medium- and long-term opportunities seen across Africa.

In South Africa, inflation is expected to remain at the bottom half of the current target range of 3% to 6% for the rest of the year and into 2026. 

Interest rates are expected to remain flat for the rest of the year, with the Reserve Bank’s comments that it prefers inflation to be closer to 3%, clouding the outlook beyond 2025.

The repo rate is expected to remain flat for the rest of the year, followed by one further 25 basis point cut in early 2026. 

Financial performance

Regarding its financials, Standard Bank recorded an 8% increase in headline earnings to R24 billion and delivered a ROE of 19.1%. 

“This strong performance was underpinned by continued balance sheet growth, robust fee and trading revenue growth, and diligently controlled costs,” the group said. 

“Growth in credit charges was muted as expected. Insurance and Asset Management recorded a continued upward trajectory in earnings and returns.”

The group’s credit impairment charge increased by 2% period on period, while the credit loss ratio was broadly flat at  93 basis points (1H24: 92 basis points).

The group’s board thus upped its interim dividend by 10% period, indicating an interim dividend payout ratio of 56%. 

The group’s South African franchises delivered earnings of R11.6 billion, its Africa Regions’ franchise R9.7 billion, and its Offshore businesses R1.6 billion 

 The key contributors to Africa Regions’ headline earnings remained Angola, Ghana, Kenya, Mauritius, Mozambique, Nigeria, Uganda and Zambia. 

The group reaffirmed its three core metrics for the 2025 financial year: 

• Banking revenue growth of mid-to-high single digits in ZAR; 
• Banking cost-to-income ratio to be flat to marginally down year on year; 
• Group ROE will remain well anchored in the group’s 2025 target range of 17% to 20%. 

The group feels that it is confident in hitting these targets, with headline earnings per share growth of 8% to 12% expected.