Independent Online

Thursday, July 7, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Standard Bank forging ahead despite worsening economic environment

STANDARD Bank says a growing client franchise and higher client activity, driven by fewer Covid-19 restrictions, drove higher transactional turnover and supported mid-single digit growth in banking fees. Photo, Karen Sandison, ANA.

STANDARD Bank says a growing client franchise and higher client activity, driven by fewer Covid-19 restrictions, drove higher transactional turnover and supported mid-single digit growth in banking fees. Photo, Karen Sandison, ANA.

Published Jun 15, 2022

Share

Standard Bank Group said yesterday that revenue increased by low double digits in the five months to May 31 in spite of worsening local and global economic conditions.

The biggest lender in Africa by assets said in a trading statement yesterday a larger average balance sheet and higher interest rates drove low-teen net interest income growth.

Story continues below Advertisement

The share price increased 3.03 percent to R160.21 yesterday afternoon in a market where the JSE All Share Index was down more than 1 percent. The price represented a 17.9 percent increase over 12 months.

A growing client franchise and higher client activity, driven by fewer Covid-19 restrictions, drove higher transactional turnover and supported mid-single digit growth in banking fees.

Higher insurance premiums and lower pandemic-related claims were partially offset by higher short-term insurance claims.

Floods in KwaZulu-Natal drove up insurance claims. Trading revenue grew by the mid-teens off a high base in the five months to May 31, 2021 and ahead of expectations.

The group said in sub-Saharan Africa, higher food, fertiliser, and fuel prices had started to drive inflation upwards. Higher inflation had prompted monetary tightening.

The global outlook had also deteriorated due to rising inflation, slower growth, uncertainty from the conflict in Ukraine, strict lockdowns in China and persistent global supply chain disruptions.

Story continues below Advertisement

The bank has revised upward its forecast for interest rates to rise by 175 basis points in South Africa for the full year, compared with its March forecast of a 100 basis point increase.

The bank’s costs increased by high single digits in the five months driven by higher staff costs, normalisation of post-pandemic spend and inflation.

Average inflation across the countries where the group operates was close to 10 percent. Credit impairment charges were marginally lower than in the same period in 2021.

Story continues below Advertisement

Liberty Holdings’ operational earnings improved due mainly to lower funeral and death claims in SA Retail and Liberty Corporate, and improved persistency in SA Retail.

Sales at both SA Retail and Liberty Corporate increased relative to the prior period. Risk claims remained elevated. The pandemic reserve was used to absorb adverse experience variances as intended, and would be re-assessed for the first half reporting process.

Stanlib and the shareholder investment portfolio were negatively impacted by market movements. The Liberty integration plan was on track, the group said.

Story continues below Advertisement

Nonkululeko Nyembezi took over as chairman-designate of Standard Bank Group and the Standard Bank of South Africa from June 1, 2022.

BUSINESS REPORT

Share