Standard Bank shares fall on poor earnings guidance
DURBAN - STANDARD BANK fell more than 4 percent yesterday after the lender flagged that its profits were likely to fall by more than 20 percent as Covid19 outbreak continues to spook global markets.
The bank said in a trading update that its headline earnings per share (Heps) and earnings per share (Eps) would be lower than the reported Heps of 1 766.7 cents a share and Eps of 1 593.5c compared to last year.
Standard Bank said that it would release a further trading statement with specific guidance relating to the ranges once it has a reasonable certainty regarding the extent of the decline relative to the prior year has been achieved.
“The current surge in infections and ensuing lockdowns in the Northern Hemisphere are a concern.
“While the broader impact thereof on the global economy, disruptions to trade and the potential knock-on impact on Africa is unclear, it is expected to be milder than that that has been seen in the second quarter of 2020,” the group said.
It added that across most of the countries in which the group operates in sub-Saharan Africa, infection rates and lockdowns have moderated, and economic activity has recovered.
Last week, the South African lender, FirstRand, also warned its shareholders that its half-year earnings for the six months to end December are likely to fall by between 20 and 25 percent as the impact of the Covid19 crisis continues to hurt operations, although the first four months of its financial year had been better than expected.
Africa’s largest bank by assets said that its personal and business banking (PBB) client relief portfolio in South Africa continued to be under pressure.
The PBB South Africa client relief portfolio declined further to R47 billion, compared to R107bn at the end of June. “We have identified pockets of pressure in the PBB South Africa portfolio, particularly within personal unsecured lending.
“In addition, a continued increase in retrenchments has triggered additional stage 3 provisions,” the bank said. However, it said collection rate trends continue to improve, leading to positive transfers from stage 2 to stage 1. It said approximately 80 percent of the remaining client relief portfolio is secured, like mortgages and vehicle and finance loans, while the lapsed client relief portfolio continues to reflect strong payment behaviour and has performed in line with their previous expectations.
Total coverage for the PBB South Africa portfolio has increased from 5.3 percent at the end of June to 5.5 percent at the end of October.
In corporate and investment banking, the group said that requests for relief from clients have tapered off, with relief granted to clients amounting to R24bn at the end of October, compared to R21bn at the end of June.
Standard Bank expects to release its full-year results in March 2021.
Standard Bank fell 4.83 percent to close at R121.14 yesterday.