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Standard Bank Group's [JSE:SBK] adjusted full-year profit rose 1.1%, missing estimates, as a moribund South African economy weighed on the continent’s largest lender.
The increase was aided by a strong performance from Liberty.
Adjusted earnings per share before one-time items increased to R17.67 rand in the 12 months through December, Standard Bank said in a statement on Thursday. That compares with the R17.90 rand average estimate of 11 analysts.
Credit impairment charges increased 23%, albeit off a low base, pushing the Johannesburg-based lender’s credit loss ratio to 68 basis points from 56 basis points the previous year. The ratio is expected to remain "at the lower end" of Standard Bank’s 70-100 basis points range.
Return on equity declined to 16.8% from 18% a year earlier, and will move closer to the lower end of its 18%-20% goal in 2020, Standard Bank said.
Standard Bank also said on Thursday that ICBC Standard Bank Plc had recorded a loss of $248 million, attributable to a single client loss of $198 million, $30 million in restructuring costs and $20 million in operating losses relating to business operations. The groups own 40% share of the losses came to R1.4 billion.
"The latter was driven by lower revenues on fixed income and currency trading due to subdued market sentiment," Standard Bank said. It added that it has met with ICBC Standard Bank Plc management to address the issue.
"These discussions resulted in a number of management actions in ICBCS, including significant headcount reductions and a reduction by ICBCS of business lines and locations in FY19. Closer integration into and cooperation with the ICBC group is an important element of the plan to achieve sustainable profit," Standard Bank said.
SA's economy expanded at the slowest pace in a decade in 2019, meaning Standard Bank and its peers are likely to continue to struggle to boost revenue as consumers and companies battle to repay their debt. Standard Bank has focused on lowering costs by reducing its headcount and encouraging customers to use digital channels rather than going to its decreasing branch network. It is also targeting income from trade in Africa and between the continent and China for other sources of revenue.
The firm continues to invest in its African footprint to shield earnings from its floundering home market. Spanning 20 nations on the continent, the bank expects growth in its businesses can outpace that of some of the region’s fast-expanding economies such as Kenya, Uganda and Ivory Coast.
Standard Bank shares are down 9.4% this year, the best performer after Capitec in the the six-member FTSE/JSE Africa Banks Index, which is down 11%.
