CFO Arno Daehnke says 2025 targets are achievable – despite uncertain macro environment
Standard Bank has revised its interest rate outlook to 175 basis points for 2022, Arno Daehnke reveals.
Changes in the global macro-economic environment, driven by the ongoing conflict in Ukraine, the strict lockdowns in China, and persistent global supply chain disruptions, among other factors, have resulted in a slowdown in global growth, an upward trend in inflation and increased uncertainty.
This is according to Arno Daehnke, Standard Bank Group financial director, who was hosting an investor call following a voluntary trading update and trading statement on 14 June 2022.
“In sub-Saharan Africa, higher food, fertiliser, and fuel prices have started to filter through, also driving inflation upwards. Higher inflation has in turn prompted monetary tightening and this is faster than previously expected,” he said.
Inflation reached 5.9 percent in April 2022. By 31 May 2022, the Monetary Policy Committee had raised the repo rate three times and by a combined 100 basis points, with the SARB indicating that further increases are likely in the second half of the year.
Within this context, Standard Bank has now revised its interest rate outlook to 175 basis points for the full year.
In terms of the bank’s performance for the five months to the end of May 2022, Arno noted that the group had recorded low double-digit revenue growth.
“A larger average balance sheet and higher interest rates drove low-teen net interest income growth. A growing client franchise and higher client activity drove higher transactional turnover and supported mid-single digit growth in banking fees,” he said.
Arno added, “Higher insurance premiums, particularly from our flexi funeral policy base, and lower pandemic-related claims were partially offset by higher short-term insurance claims. The latter was driven by inclement weather and floods in Kwa-Zulu Natal, South Africa.”
In terms of the outlook for the bank for the 12 months to 31 December 2022, the bank continues to see opportunities to grow its business.
“Our guidance remains largely unchanged,” Arno said, “We also remain convinced that the strategy we laid out in August 2021 remains valid and that the 2025 targets we set at the time are achievable.”
Standard Bank will report its first half results for 2022 on 19 August.