The Standard Bank Group has announced robust financial results for the first half of 2023 (1H23), marked by a 35% increase in headline earnings to R21.2 billion. The company’s return on equity (ROE) also improved to 18.9%. These positive outcomes are attributed to the group’s differentiated franchise and its strategic focus on Africa.
- South African Banking Franchise: The headline earnings of the South African banking franchise grew by 17% to R8.4 billion, and the ROE improved to 15.2%. The franchise benefited from client franchise growth, larger balance sheets, and increased transaction volumes.
- Africa Regions Franchise: The headline earnings for the Africa Regions franchise recorded remarkable growth of 65%, accompanied by an improved ROE of 28.4%. Notably, Ghana, Kenya, Mozambique, Nigeria, Uganda, and Zimbabwe were the top contributors to this positive performance.
- Contribution to Group Earnings: The Africa Regions franchise played a significant role, contributing 44% to the group’s headline earnings.
- Financial Strength and Dividend: The group demonstrated financial strength with a 10% growth in net asset value and a common equity tier 1 ratio of 13.4%. An interim dividend of 690 cents per share was declared, reflecting a payout ratio of 54%.
- Banking Operations: The banking operations segment achieved headline earnings growth of 42% to R18.7 billion, with an improved ROE of 19.0%. Positive revenue growth outpaced cost growth, resulting in strong positive operating leverage and a decreased cost-to-income ratio.
- Insurance and Asset Management: The insurance and asset management business unit, including Liberty, showed operational improvement with headline earnings of R1.4 billion. Life insurance operations recorded increased indexed new premiums, and the short-term insurance business reported higher gross written premiums. Group assets under management increased by 6% to R1.4 trillion.
- Sustainable Finance and Assistance Initiatives: The group actively supported over 20,000 South African clients through various assistance initiatives. Additionally, innovative market firsts were structured, contributing to the mobilization of R28 billion in sustainable finance for clients.
Economic Landscape and Challenges
Standard Bank’s assessment of the economic landscape pointed out challenges in several areas:
- Inflation Rates: Elevated inflation rates were observed, with specific pressures on sovereigns with high debt levels in sub-Saharan Africa.
- Interest Rates and Reforms: Interest rates increased, impacting consumers and businesses. Slow reforms, service delivery issues, and disruptions in electricity and logistics also affected South Africa.
- Confidence and Demand: Consumer and business confidence remained low, leading to decreased demand in various sectors.
CEO Sim Tshabalala highlighted the positive actions taken in certain markets to reduce sovereign credit risks and addressed the challenges and changes affecting the economic environment.
I am a tech aficionado dedicated to unravelling the dynamic world of startups, sharing insightful analyses and fostering innovation through my candid perspective.