- Standard Bank’s prudent approach and high-interest rates acted as countermeasures against escalating bad loans, resulting in a notable profit boost.
- Lender’s net profit for the first half 2023 hit $1.14 billion.
- The bank will pay an interim dividend of 690 South African Rand cents per share, a testament to its commitment to creating value for shareholders.
Standard Bank, Africa’s largest lender by assets, reported a remarkable surge in interim profit, demonstrating resilience in the face of adversity. The bank’s prudent approach and high-interest rates acted as countermeasures against escalating bad loans, resulting in a notable boost in profitability.
For the six months ending on June 30, the bank’s headline earnings per share stood at 12.8 rand (US$0.67), a substantial increase from the previous year’s 9.55 rand (US$0.5). This growth was supported by various factors, including net interest income bolstering its overall revenue.
Navigating Challenges
While South African banks are celebrated for their well-capitalized balance sheets and conservative lending practices, recent challenges such as local power blackouts and a significant surge in interest rates have posed difficulties. These issues, including a 350 basis point rise in interest rates over the past year, have particularly impacted retail and small business customers, leading to a spike in bad loans.
Standard Bank acknowledged the challenging environment and revealed its credit loss ratio, a gauge of bad loans relative to total loans, at 97 basis points. This figure hovered near the upper boundary of its target of 100 basis points or 1.0 per cent, highlighting the bank’s proactive approach to managing its credit portfolio.
Impressive Financial Metrics
The bank’s net profit for the first half of 2023 hit US$1.14 billion (21.92 billion South African rand), showcasing an uptick of US$840.31 million during the same period the previous year. Furthermore, headline earnings surged by 35 per cent to US$1.11 billion, with each headline earnings per share reaching 1,281 cents.
Growth across the bank’s three core banking divisions and improved earnings and returns in its insurance and asset management segments contributed to robust financial performance.
Total income for the period amounted to US$4.55 billion, encompassing net interest income of US$2.4 billion, a notable increase from the previous US$3.53 billion. Additionally, the bank’s return on equity demonstrated a positive trend, rising from 15.7 per cent to 18.9 per cent year-on-year. Despite a slight decrease in the standard equity Tier 1 ratio, from 13.7 per cent to 13.4 per cent, Standard Bank’s balance-sheet strength remains robust.
The bank declared an interim dividend of 690 South African Rand cents per share, a testament to its commitment to creating value for shareholders.
Standard Bank’s strong interim performance in a challenging environment is a testament to its strategic approach, solid financial management, and dedication to delivering value to its stakeholders.
