Nicola Mawson
STANDARD BANK, Africa’s biggest bank by assets, both benefited and lost out because of the rand’s strength, especially in the four months to October, it said in a voluntary trading update covering the 10 months to October it issued yesterday.
The bank, which expects to publish full-year results in March 2025, yesterday said that currency “devaluations in various countries in which the group operates on the African continent, together with, more recently, the stronger rand, continued to dilute the group’s performance in rand”.
Previously, Standard Bank’s view was this this trend would moderate in the second half of the year. So far, with two months left to include in its reporting for the year, this has not been the case.
It reiterated its previous guidance for the full year to December, stating that it was committed to delivering banking revenue growth in low single digits in rand and low double digits in constant currency.
It also expects to report banking revenue growth at or above operating expenses growth, resulting in a flat to lower cost-to-income ratio year-on-year.
Yet, larger-than-expected currency movements in Standard Bank’s African operations meant that balance sheet growth was slower than expected. Standard Bank has operations in the rest of Africa spanning in Botswana, Ghana, Kenya, Malawi, Nigeria, South Sudan, Tanzania, Uganda, Zambia and Zimbabwe, with some of these units trading under the Stanbic Bank brand.
However, the bank noted that the strength of the local currency was not all bad, given that, although a “headwind to reported revenue growth trends,” it also favourably affects reported operating expenses and credit impairment charges.
Cost growth was well contained, reflecting continued cost management discipline, and dampened by currency translation impacts. Revenue growth remained slightly ahead of cost growth.
The rand gained 3.4% against the US dollar between the end of December 2023 and October 2024, the period under review.
Despite the currency strength affecting revenue, Standard Bank said its “underlying operational and financial trends were robust and reflective of the continued momentum in the underlying franchise”.
"The group has proved resilient and continued to deliver strong organic growth. This is reflective of the value in the diversity of the franchise across the four businesses and three regions and is testament to the strength of the client franchise and resilience of our people,” it said.
Standard Bank also has operations in New York, China, and the Isle of Man.
Its statement yesterday reaffirmed what it said at the half-year results, when it stated that earnings of R22 billion were underpinned by strong underlying organic growth”.
That growth was “driven by increasingly digital clients and growing client” franchises.
Year-on-year for the 10-month period, group headline earnings grew by low-to-mid single digits in rands and by mid-teens on a constant currency basis, it said. It added that banking headline earnings also grew by low-to-mid single digits in rand and by mid-teens on a constant currency basis period-on-period.
At the same time, net interest income growth slowed to low-to-mid single digits period-on-period. Non-interest revenue declined by low-to-mid single digits period-on-period as continued growth in fees and commissions was more than offset by a decline in trading revenue off a high base in the comparable period.
In an indication that consumers were moving into more positive financial territory, Standard Bank said that credit impairments were lower period-on-period due to a slowdown in early arrears and lower inflows into non-performing loans in Personal and Private Banking as reported previously.
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