Standard Bank saved by its African operations


For the six months ended 30 June 2014, the financial services provider [DATA SBK:Standard Bank Group Limited]posted a two per cent increase in group headline earnings to 8.3 billion rand while headline earnings per share (HEPS) rose slightly by one per cent to 513 cents per share.

Headline earnings from continuing operations increased by 12 per cent to 9.3 billion rand while an interim dividend of 259 cents per share has been declared, an 11 per cent increase from the 2013 period.

(READ MOREStandard Bank reports strong FY results)


The group’s South African division reported a 1.8 per cent decrease in private consumption expenditure, its slowest growth rate since 2009, due to the impact of the prolonged strike action in the mining sector as well as the South African Reserve Bank unexpected hiking of the repo rate to 5.75 per cent.

The bank added that strong growth was reported in its sub-Saharan African operations as foreign direct investment continues to flow into the region’s resources sector, public investment in infrastructure is increasing and agricultural production is improving.  

(READ MOREStandard Bank improving economic presence in Africa)

“Growth of approximately 5 per cent is expected by the International Monetary Fund for 2014, similar to the growth rate attained for 2013, accompanied by a positive inflation outlook,” said the company in a statement.

Total income for the period grew by 12 per cent with net interest income (NII) hiking up by 14 per cent due to higher interest rates in South Africa and growth in deposits and advances in the rest of Africa.

This also resulted in non-interest revenue (NIR) growing by 10 per cent with fees and commission 12 per cent higher.

Total credit impairment declined by one per cent to 4.9 billion rand with the credit loss ratio falling from 1.24 per cent to 1.13 per cent. Gross loans and advances to customers increased by six per cent.

The group also announced that an investigation and legal proceedings are underway against several parties involved in fraudulent activities relating to rights that the bank held in physical aluminium stored in a bonded warehouse in China.

(READ MOREStandard Bank has $170 million exposure to China metal fraud)

“There is emerging evidence that the financing arrangements were impacted by fraudulent activities in respect of the physical aluminium,” the group explained.

The group expects that sluggishness in the South African economy is likely to persist for the remainder of 2014 however the bank’s exposure in sub-Saharan Africa remains robust.

“We remain firmly committed to delivering improved returns on equity to shareholders over the medium term while investing in our people and systems to meet the demands of a rapidly evolving environment,” concluded the bank. 

(WATCH VIDEO: Standard Bank’s gains in Africa)