Standard Bank says interim headline earnings will be at least 40% higher
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STANDARD Bank Group’s headline earnings were expected to be at least 40 percent higher for the six months to June 30, 2021, compared with the same period a year before, and an interim dividend was anticipated, the biggest bank in Africa by assets said in a trading statement yesterday.
Headline earnings of 473.8 cents were reported in the six months to June 30, 2020, which included Covid19 lockdowns in South Africa and when banks did not declare dividends.
The dividend payout ratio was expected to be higher than in the 2020 financial year, but below historic levels of 45 to 55 percent.
Standard Bank’s share price rose 0.27 percent yesterday morning to R133.50, up 27.7 percent over a year, although the price has a volatile trading pattern. The share closed the day at R135.68 on the JSE.
“Boom! Very strong trading update from Standard Bank. As I previously said, the banks are significantly undervalued (and with abnormally depressed rates). The interest rate cuts took away from the banks and gave to the retailers, but this situation is going to reverse,” @Hazelwood_dave said on Twitter yesterday.
“Again SA Inc results continue to be positive. Standard Bank expects headline earnings to be at least 40 percent higher,” @WayneMcCurrie also commented on Twitter.
In a pre-close trading update, Standard said the global environment had improved. The International Monetary Fund had revised upward its global gross domestic product growth forecast to 6 percent this year.
The interest rate hiking cycle had been delayed, there was strong demand and pricing for commodities, which was favourable for South Africa, and strong export prices had driven a trade surplus, with the fiscal outlook improving.
There were signs that an economic recovery was under way, and sentiment had improved. Interest rates were expected to remain low, while the rand had appreciated against other major currencies.
The slow roll-out of the Covid-19 vaccine in sub-Saharan Africa remained a key hurdle, and infection waves were expected to continue at different paces and severities.
In the four months to April 30, the stronger rand had reduced both revenue and costs by 5 percent, period-on-period.
Mortgage and vehicle and asset finance disbursements in South Africa were well above the same four months in 2020, and business disbursements grew by double digits.
In Africa Regions, personal loan volumes were higher, driven by strong digital channel origination.
Despite relatively strong investment banking origination in April, corporate client balances declined as clients took the opportunity to repay loans. Foreign currency balances declined because of the translation impact related to the stronger rand.
Net interest income declined by mid-single digits, but was flat in constant currency terms. Significantly lower margins were partially offset by higher average interest-earning assets.
Non-interest revenue declined by high-single digits as trading revenues were lower period on period, relative to the high base in the same four months in 2020. Net fee and commission revenue were down low-single digits.
Card issuing turnover in South Africa was up double digits.