Africa’s Biggest Bank Looks Beyond Pandemic With Upbeat Guidance

(Bloomberg) --

Standard Bank Group Ltd. expects its income to grow faster than costs, with earnings for the year set to soar by at least 20% as damage caused by the onset of the pandemic eases.

The Johannesburg-based firm saw profit after taxes and other adjustments grow threefold to 11.4 billion rand ($759 million) in the six months ending in June as earnings in its home market rebounded off a low base in the same period last year.

Africa’s biggest lender said Thursday credit impairment charges declined 49% to 5.8 billion rand and that it’s declaring an interim dividend of 360 cents per share, which represents a 50% payout ratio.

“The Standard Bank Group’s results reflect a recovery in client activity” Chief Executive Officer Sim Tshabalala said. “The wholesale client pipeline is strong, but conversion remains subject to reform execution and improved confidence. Lockdown restrictions are not expected to return to previous levels, which should aid transactional activity.”

Standard Bank’s shares have risen 9% this year, making it the worst-performing lender in the six-member FTSE/JSE Banks Index, which is up 22%.

Standard Bank and its peers are paying dividends and reporting better profits as the amount of money set aside to cover souring loans falls after bad debts resulting from the pandemic were less severe than expected. Rivals including Absa Group Ltd. and Nedbank Group Ltd. are seeking opportunities to drive growth but have warned that further surges in coronavirus infections and disruptions in power supply remain constraints for firms in South Africa.

Standard Bank’s South African business enjoyed better client demand and activity while credit disbursed and fees earned recovered. Its performance in Africa was significantly affected by a stronger rand and other currency movements.

The bank made 35% of its money on the continent, driven by earnings from Angola, Ghana, Kenya, Mozambique, Nigeria and Uganda.

Standard Bank has a presence in 20 countries on the continent and remains committed to its strategy to grow its share of income earned regionally.

It’s also sticking with its plan to boost its digital capabilities and is acquiring all the shares it didn’t yet own in insurer Liberty Holdings Ltd. to provide customers with an expansive offering across banking, insurance and asset management.

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