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May 24 2012 17:31
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May 24 2012 15:29
The Reserve Bank will maintain current interest rates, says governor Gill Marcus.
May 24 2012 12:00
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Johannesburg - The soon-to-be-released financial results of Standard Bank will be in step with those of its rival Absa, which posted a quarter drop in earnings earlier this week.
On Thursday, Standard warned it expects headline earnings per share to be down about 20% when it reports full-year results on March 4. This would be in line with Absa, which reported a 23.5% drop on Tuesday.
Sanlam Investment Management analyst Patrice Rassou told Fin24.com the guidance from Standard Bank is in line with his expectations, and described the performance as "solid".
Analysts have been scaling back their earnings expectations for South African banks in general. Apart from mounting bad debt and impairment charges, consumer spending as well as business lending remain low.
When Standard reported interim results to end-June last year, credit impairments had risen 58% to R7.1bn.
Absa deputy CEO Louis von Zeuner warned on Tuesday he is concerned about commercial lending, particularly in the transport and property sectors. He also cautioned that unemployment levels may be a concern if the economic recovery does not take hold.
All eyes on expansion
Deutsche Securities recently advised clients it only expects earnings growth from banks to come through during the second half of 2010.
Credit Suisse Standard Securities agreed on the growth prospects for South African banks, saying that lending activities would continue to be slow: "In our view, South African banks offer investors relatively low real and nominal loan growth prospects."
The firm rates Standard Bank a "neutral" share, but retains a 12-month price target of R120 per share.
All eyes will also be on continued expansion plans for the bank into other developed markets. Standard has been actively growing its presence in Africa, as well as in countries like Russia and Argentina.
Standard Bank's trading update also follows hot on the heels of subisidiary Liberty Holdings' statement that the group's basic and headline earnings for the year are expected to be between R38m (14.8c per ordinary share) and R46m. Standard owns 53% of Liberty. In 2008, the insurer generated R709m in profits.
In midday trade on Thursday, Standard Bank shares were down 0.4% (45c) to 10 855c, while stocks in Liberty Holdings were up 2c to 6 877c/share.
- Fin24.com
*The writer holds shares in Standard Bank.