Standard Bank: debt stress easing

Johannesburg - Earnings at JSE-listed banking firm Standard Bank Group [JSE:SBK] rose 11% to R5.9bn for the six months to the end of June 2010 on the back of improved market confidence and better returns from wealth management business Liberty Holdings [JSE:LBH].
 
"In a period characterised by continued low interest rates and increasing uncertainty about the global outlook, banking revenues were constrained.  This was balanced by a steady improvement in customers' debt profiles, allowing impairment charges to almost halve," said group CEO Jacko Maree.
 
Loans to customers declined 3% year-on-year while mortgages rose 4%, instalment sale and finance leases declined 13%, overdrafts and other loans dropped 7% and term lending to corporates was off 7%.
 
The bank maintained its interim divided at 141c per share and the credit loss ratio declined from 1.84% to 1.04%. Impairments on non-performing loans dropped from R7bn in the first half of 2009 to R4bn in the first half of 2010.
 
Wealth management and insurance subsidiary Liberty Holdings had a torrid 2009 where it lost nearly R1bn in mark-to-market related losses as markets were volatile. The group reported a return to profitability last week, delivering just over R1bn in earnings for the six months to the end of June.
 
In commentary to shareholders, Maree spoke of a "two-track recovery profile" where emerging markets - most notably those in Brazil, Russia, India and China (collectively known as the Bric countries) -  were continuing to outpace growth in more developed regions. 
 
"Nearly half of the world's GDP growth in 2010 will come from the Bric economies. An axis of developing nations, including Latin America and Africa, are supporting the ongoing structural shift to the south and east," Maree said.

"Africa is reaping the rewards of reform, better macroeconomic management,  investments in infrastructure and more constructive trade partnerships."
 
Asked about the outlook for the remainder of the year Maree concluded: "Although a second global recession seems unlikely at this point, a loss of  momentum in the recovery is evident. While the South African economy has grown relatively robustly in the first half of 2010, it is possible that the second half of the year will see a modest pull-back in economic activity, given the uncertain global environment and the debt overhang of households. In the near term we therefore expect revenue growth to remain challenging."
 
- Fin24.com 

*The author holds ordinary and preference shares in Standard Bank.