Standard Bank Posts Record Profit Amid US-Iran War Fallout

Article content

(Bloomberg) — Standard Bank Group Ltd. said first-half profit rose to a record as Africa’s biggest bank by assets navigated the inflationary and monetary-policy effects of the war in the Middle East that’s stoked inflation and weighed on its clients’ confidence.

Article content

Headline earnings grew 10% to 26.1 billion rand ($1.62 billion) in the six months through June 30, buoyed by fee growth and higher trading revenue, the Johannesburg-based lender said in a statement on Thursday. It declared an interim dividend of 9.02 rand per share, its biggest to date.

Article content

Article content

Article content

The bank’s shares climbed as much as 3.2% — the biggest jump in more than a month — before paring gains to trade 2.4% higher by 10:35 a.m. in Johannesburg.

Article content

Article content

US-Iran tensions over the period disrupted seaborne traffic through the Strait of Hormuz, lifting the costs of energy and fertilizers and stoking price growth. The increase in import costs saw inflation in South Africa, Standard Bank’s biggest market, accelerate at the fastest pace in two years in June to 5%, with the protracted conflict making it less likely that it will return to the central bank’s 3% target as quickly as policymakers had suggested before the escalation.

Article content

Headline earnings from Standard’s South African operation surged 15% to 13.4 billion rand, with the unit now contributing 51% of the lender’s total headline earnings. 

Article content

“We are particularly encouraged by the resilient outlook for South Africa,” Chief Executive Officer Sim Tshabalala said in an emailed note. “Sustaining that momentum will require the country to deepen its economic integration with the rest of the continent and fully participate in Africa’s growth opportunity.”

Article content

Article content

Standard Bank’s net interest income advanced 4%, while non-interest revenue climbed 8% for the period as client activity increased and the lender gained more customers. The bank now has 19.5 million clients across 21 African countries, as well as operations in key international financial centers and major offshore hubs in London, Beijing and New York, among others. 

Article content

Profit attributable to ordinary shareholders increased 10% to 26.2 billion rand and its return on equity rose to 19.8%. 

Article content

Headline earnings from the bank’s rest-of-Africa operations advanced 7%, and the unit now comprises 40% of the lender’s total earnings, with Angola, Ghana and Kenya among its top contributors. 

Article content

To further tap the “significant opportunities” across Africa, Standard Bank invested $80 million of additional capital in its Tanzanian operations in July and plans to increase its shareholding in its Angolan business during the second half as it seeks to strengthen the group’s presence in two of the continent’s most attractive growth markets, it said.

Article content

Impairments declined 12% to 7.13 billion rand in the period following improved collections performance and proactive portfolio management. This resulted in 20 basis-point drop in the credit-loss ratio to 0.73% for the period.

Article content

Standard Bank plans to announce its new chief executive and financial officers in 2027, with the incumbents set to retire at the end of that year. The bank’s board is currently considering candidates and will look internally for the position of CEO, Chairperson Nonkululeko Nyembezi said in June.

Article content

Sign up here for the daily Next Africa newsletter and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen.

Article content

(Updates with comment from CEO in fifth paragraph.)

Article content