Group FD Arno Daehnke pleased with Standard Bank’s growth

Standard Bank Group has seen positive recovery in its financial results for the first half of 2021.

The Standard Bank Group says that it is starting to see some early signs of recovery in its financial results for the first half of 2021, despite it being “another exceptionally difficult period” for many of its clients, staff and stakeholders.

According to a statement by the company, the underlying business has shown strong momentum and, relative to this time last year, has seen a recovery in client activity, an improved outlook and lower impairment changes.

The group’s South African business also recorded a strong recovery, particularly in the consumer and high net worth client segment, and the wholesale client segment reported strong earnings growth on the back of net credit recoveries and tight cost control.

“We are pleased with the growth we are seeing in the number of active clients in our consumer and high net worth, as well as our business and commercial client franchises, in both the South Africa and Africa regions,” says Standard Bank group FD Arno Daehnke. “It is positive affirmation for our solution enhancements and for the changes we have made to improve client experience.”

Arno explains that the revenues for the half year were down by two percent compared to the previous period, but up five percent in constant currency. Non-rand revenues were also dampened in the period by the strong rand.

“There are many drivers of underlying revenue growth in the period, which include targeted lending book growth in our retail portfolios, transactional activity levels recovering meaningfully from lows in the pandemic period last year and a growing customer base,” he adds.

This, Arno says, is illustrated by the number of active clients increasing by five percent in the consumer and high net worth segment and six percent in the business and commercial segment.

Arno adds that Standard Bank’s cost-to-income ratio remains “stubbornly high” and that the group has “lots of work ahead to drive revenues and contain costs to bring the ratio down towards 50 percent”.

Despite tight cost management, the group said that the decline in revenues drove negative jaws. Credit impairment changes halved but remained above 1H19 levels. Consequently, Standard Bank Activities’ reported headline earnings of R10.9 billion, up 41 percent on 1H20, and a return on equity of 13.3 percent. Liberty returned to profitability and ICBCS continued to perform well too.

Group headline earnings were R11.5 billion, an increase of 52 percent on 1H20, and return on equity was 12.9 percent.

Standard Bank has declared an interim dividend of 360 cents per share. “The recovery of the group’s returns and robust capital labels enabled a faster than expected recovery of the dividend payout ratio to 50 percent,” Arno says. “Over the last 40 years we have an unbroken record of dividend payments, which we are proud of.”

Arno says that the bank also sees many growth opportunities across its diverse business. “Demographic trends in sub-Saharan Africa support strong growth in our banking business. We expect to grow insurance and investment products across SSA and our proposed buyout of Liberty minorities will accelerate this growth.”

He adds that, as part of the bank’s platform strategy, the group also plans to invest in new business models beyond traditional banking. “We plan to allocate incremental capital and invest in new capabilities and partnerships that will allow us to capitalise on the network effect that ecosystems and platforms reveal.”