Standard Bank, Africa’s largest lender by assets, reported a 44.1% year-on-year increase in interim profit, reaching R22.1 billion. This growth comes despite tough economic conditions and a surge in bad loans.
- Businesses and consumers faced challenges due to high inflation and interest rates, along with subdued global markets. This economic backdrop impacted disposable incomes and debt repayment.
- Credit impairment charges increased by 42% to R8.4 billion, reflecting the strain on borrowers’ ability to repay loans.
- The credit loss ratio, which measures loan losses relative to total loans, reached 97 basis points (bps), nearing the upper end of the bank’s target range of 70bps-100bps.
- Gross loans and advances to customers grew by 8.8% to R1.4 trillion, indicating continued lending activity despite the challenging economic conditions.
- The increase in charges was attributed to a combination of macroeconomic pressures, higher interest rates, and negative sovereign credit risk migration in certain African markets where the bank operates.
- Headline earnings per share (HEPS), a key profit measure, increased over a third year-on-year to 1,281c. The bank declared a dividend that is 34% higher, at 690c per share.
- Standard Bank anticipates that interest rates will remain elevated for a longer duration, despite indications of declining inflation. In South Africa, it expects interest rates to stay at 8.25% for the rest of the year, with real GDP growth projected at 0.8%, significantly lower than the IMF’s forecast for Sub-Saharan Africa.