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Johannesburg - Standard Bank [JSE:SBK] was pinning its hopes on a strong rebound in emerging markets in an effort to reclaim 2008 earnings - a self-imposed target - and added that developed markets would only show "hesitant" recovery in 2010.
In comments to the group's full-year results, in which it posted a one fifth earnings decline, Jacko Maree, Standard Bank CEO, also laid into the National Credit Act criticising how it had been implemented.
Share earnings came in at R11.2bn, as expected by the market. In 2008, Standard Bank, which is South Africa's largest banking group, produced R14bn in earnings.
For the period under review, the earnings contribution from personal and business banking slid 19% to R3.8bn, while wealth management - comprising a stake in Liberty Holdings - contributed 89% less to the bottom line at R72m. The dividend was unchanged at 386c per share.
"The recovery in 2010 is likely to be hesitant and employment and credit conditions are expected to remain under pressure," said Maree.
"It is also likely that most of the growth in the global economy will originate from emerging markets, especially Asia."
Another key market in Africa was likely to benefit from trade ties to other developing economies, he added.
The credit impairment charge rose 7% to R12bn, with non-performing loans up to 6.2% of the lending book. However Maree indicated that the credit environment on the consumer side had begun to show signs of improvement in late 2009 but criticised the implementation of some of the systems around the National Credit Act (NCA) has having an adverse impact on the sector.
Maree said: "The way in which this process has been implemented - with many interpretations of the act yet to be clarified - has created bottlenecks in the system, resulting in lengthy delays. During the debt counselling process, banks are unable to engage with customers to reschedule payment terms or, where deemed necessary, foreclose on assets to redeem unpaid debts."
Many in the South African asset management industry have highlighted Standard Banks forays into emerging markets including Africa, China, Argentina and Russia as a competitive advantage for the group.
Maree said: "The resilience and swift return to positive growth in key emerging nations, such as China, Brazil, and India seemingly confirms that a structural shift in economic influence remains intact."
* Writer holds ordinary and preference shares in Standard Bank
- Fin24.com
