Johannesburg – Standard Bank Group gained the most in almost three months as Africa’s largest lender by assets posted full-year profit that beat analyst estimates, boosted by increased revenue from interest charges and impairments that were little changed.
Earnings per share excluding one-time items, which the company uses as its main measure of profit, increased 4 percent to R14.40, the Johannesburg-based bank said in a statement on Thursday. That compares with the 13.82 rand median estimate of three analysts surveyed by Bloomberg. Standard Bank declared a final dividend of R4.40 a share for a total payout of R7.80, up 16 percent from a year earlier.
“The dividend was much better than I expected,” said Harry Botha, an analyst at Avior Capital Markets Pty in Cape Town. The stock jumped 3.9 percent to R152.01 as of 9:12 a.m. in Johannesburg, the most since December 8 and the biggest increase on the six-member FTSE/JSE Africa Banks Index.
Standard Bank benefited from two interest-rate increases in South Africa last year that increased income from loans. Lower bad-loan charges in its home loans, vehicle and asset finance divisions and a “non-recurrence” of large corporate impairments in its home market also helped reduce credit losses, compensating for a deterioration in other African markets such as Nigeria and Mozambique, the lender said.
Profit targets
Net income dropped 6.7 percent to R22.2 billion after one-time gains a year earlier weren’t repeated.
In 2015, the bank completed the sale of a 60 percent stake in its UK operations to Industrial and Commercial Bank of China, helping boost profit in the period and lessen the impact of losses from its London business.
Return on equity declined to 15.3 percent in 2016 from 15.6 percent a year earlier.
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The lender remains committed to delivering “through-the-cycle” growth in earnings per share excluding one-time items and return on equity within its target range of 15 percent to 18 percent, Standard Bank said.
Standard Bank is also under scrutiny from South Africa’s antitrust authorities, which have alleged that 31 people from more than a dozen local and international lenders, including three currency traders linked to the Standard Bank, colluded to manipulate the rand.
“We consider these allegations in an extremely serious light and remain committed to maintaining the highest levels of control and compliance with all relevant regulations,” Standard Bank said on Thursday. The allegations are confined to dollar-rand trading activities within the South African business “and do not relate to the conduct of the group more broadly.”
No suspensions
Standard Bank’s head of institutional foreign exchange sales Bryan Brownrigg answered his work phone when contacted by Bloomberg last week and declined to comment on the case. The lender’s head of foreign exchange Richard de Roos was in the office and in meetings, according to his personal assistant, who wouldn’t comment on the matter.
“We can confirm that both Richard de Roos and Bryan Brownrigg are still in the employ of Standard Bank South Africa and have not been suspended,” the bank said in an e-mailed response to questions on February 24. Standard Bank’s units “are engaging with the Competition Commission to better understand the basis for the complaints and the appropriate response.”