South Africa’s biggest bank sees big shift
Standard Bank has highlighted an improving economic environment, with the group set for a rise in revenue.
Despite geopolitical and trade policy uncertainty, global economic activity has been relatively resilient in the first 10 months of the year.
Inflation and interest rates have declined. Across the portfolio of countries it operates in, inflation has eased, and interest rates have declined.
In South Africa, inflation and interest rates have also declined year-to-date. Real GDP growth has been subdued, but confidence is improving.
Finance Minister Enoch Godongwana announced a new inflation target of 3%, with the South African Reserve Bank also cutting rates by a cumulative 100 basis points this year.
For Standard Bank, banking revenue grew by mid-to-high single digits in the first 10 months of the year.
Net interest income growth was driven by book growth, supported by continued strong origination in Investment Banking.
This was partly offset by the negative impact on endowments from lower average interest rates.
Standard Bank stated that non-interest revenue growth remained robust, driven by a larger and more engaged client base.
This was combined with increased client activity, which led to substantial net fee and commission revenue growth.
Continued uncertainty and market volatility supported strong trading revenue momentum, it said.
Although the group experienced an increase in activity-related costs, cost growth remained well-contained. Banking Revenue growth was slightly ahead of cost growth.
The group’s credit loss ratio for the first 10 months of 2025 was around the middle of the group’s through-the-cycle range of 70 to 100 basis points.
Corporate & Investment Banking credit impairment charges were higher on a period-over-period basis, off a low base in the prior period.
Personal and Private Banking credit impairment chargers were lower on a period-on-period basis due to a slowdown in early arrears formation and lower inflows from non-performing loans.
Business & Commercial Banking credit impairment charges were also lower on a period-on-period basis, driven by improvements in impairment charges.
The Insurance and Asset Management franchise continued to deliver a robust performance.
An improved performance in the South African retail life insurance business drove higher earnings, primarily due to persistency and favourable risk experience.
There was also an improvement in the claims ratio in the South African short-term insurance business.
The former was driven by improved persistency and risk experience, assisted by the absence of catastrophic weather-related events.
Outlook
In line with its previous guidance for the 12 months to 31 December 2025, the group remains committed to delivering the following:
- Banking revenue growth of mid-to-high single digits;
- Banking revenue growth at or above operating expenses growth, resulting in a flat to lower cost-to-income ratio year on year; and
- Group ROE well anchored in the group’s target range of 17% to 20%.
The group will guide on 2026 when it reports its financial results for FY25 on 12 March 2026.
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