Standard Bank’s First-Half Profit Rises 14% as Impairments Drop

JOHANNESBURG (Capital Markets in Africa) – Standard Bank Group Ltd., Africa’s largest lender by assets, said first-half profit rose 14 percent after impairments dropped and costs were contained.

Net income climbed to 12.3 billion rand ($937 million) from 10.8 billion rand a year earlier, the Johannesburg-based lender said in a statement on Thursday. Earnings per share excluding one-time items, known locally as headline earnings, advanced 11 percent to 7.56 rand beating the 7.44 rand median estimate of three analysts surveyed by Bloomberg.

With operations in 20 African countries, Standard Bank has been able to offset the impact of South Africa’s recession and find pockets of growth. Still, lending is slowing in its home market, while peers like Nedbank Group Ltd. have predicted that loan impairments will start climbing. Unemployment in South Africa is at a 14-year high and the country faces more credit-rating downgrades, which will increase banks’ cost of funding, while making their holdings in government debt more risky.

“We remain committed to our medium-term targets of delivering through-the-cycle headline earnings per share growth and return on equity within our target range of 15 percent to 18 percent,” the bank said in the statement. “Stronger global growth and firmer commodity prices should provide some support in the second half of 2017. The threat of further rating agency downgrades remains. Declining interest rates, in South Africa and in some
of the countries in our Africa regions, will be a headwind.”

The interim dividend rose 18 percent to 4 rand a share, while the company’s return on equity, a measure of profit, increased to 16.1 percent in the first half from 14.4 percent.