Solid result shows Standard Bank on front foot

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BR_br standard bank0 Independent Newspapers Standard Bank said growth in higher-margin unsecured lending and a repricing of mortgages in South Africa helped lift interest income. Photo: David Ritchie

Bloomberg

Standard Bank’s full-year profit was little changed as higher costs countered an increase in interest income, Africa’s largest lender said yesterday.

Net income rose to R16.2 billion in the year to December last year from R16bn a year earlier, the bank said.

Headline earnings a share leapt 13.9 percent to R10.65, beating the R10.32 median estimate of 13 analysts surveyed.

Growth in higher-margin unsecured lending and a repricing of mortgages in South Africa helped boost interest income, the bank said.

Return on equity was little changed at 14.1 percent compared with 14 percent a year earlier, Standard Bank said.

The sale of 60 percent of its London-based markets business to Industrial & Commercial Bank of China for about $765 million (R8bn) would boost Standard Bank’s return on equity, Neville Chester, a senior portfolio manager at Coronation Fund Managers, said.

“Return on equity will pick up sharply in 2015,” Chester said in response to questions.

“It was a solid result and the business is on the front foot.”

Standard Bank jumped 1.86 percent to close at R126.87 in Johannesburg trading, paring this year’s decline to 2 percent. After Capitec Bank, the stock is the worst performer on the six-company FTSE/JSE Africa banks index, which rose 1.44 percent.

The bank planned to pay a total dividend of R5.33 a share, 17 percent higher than in 2012.

Standard Bank, which operates in 18 countries on the continent, said higher interest rates and subdued consumer demand would keep economic growth in South Africa at 2.2 percent this year, below the government’s forecast of 2.7 percent.

“Competition is high in all the markets we serve and business operating environments remain challenging,” Standard Bank said.

“The group’s capital and liquidity strength, together with our firm commitment to our strategy, which includes the building of world-class information systems, provides substantial opportunity to elevate our return on equity” over the medium term, it said.


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