DURBAN - Africa's biggest lender by assets, Standard Bank, has cut the value of its stake by 42.56 percent in ICBC Standard Bank (ICBCS), negatively impacted by deteriorating market conditions and lower than anticipated client flows.
Standard Bank said yesterday that it had impaired the value of its 40percent associate investment in ICBCS from $383million (R5.65billion) to $220m as at the end of September.
“The impairment of R2.4bn has been recognised in earnings attributable to ordinary shareholders. As at September 30, ICBCS had sufficient capital to meet its regulatory requirements,” the group said.
Standard Bank added that the major business lines of ICBCS continued to be negatively impacted by deteriorating market conditions and lower than anticipated client flows.
“These factors have impacted the business’ ability to deliver appropriate returns on a standalone basis,” the group said. Standard Bank is engaging with ICBC and ICBCS to determine the best way forward for the business. However, Standard Bank said, excluding the ICBCS impairment, earnings attributable to ordinary shareholders in the nine months to end September were 2percent higher compared to last year.
During the period, it added that net interest income grew faster than non-interest revenue, and was supported by higher average loan and deposit balances compared to the same period last year.
“Income growth remained above operating expense growth resulting in positive flows. Credit impairment charges increased period-on-period on the back of loan book growth and charges in East Africa and South Africa.” Its banking activities headline earnings growth continue to outpace the group’s headline earnings growth, the group said.