Standard Bank, SA’s largest lender by assets, said on Thursday that profits rose more than a third in its half-year to end-June after it got a boost from higher interest rates and its African operations.
Headline earnings rose 35% to R21.2 billion in the period, the group said, with this profit measure in its rest-of-Africa personal banking operations more than doubling to R605 million, helped by margin expansion due to higher interest rates and a double-digit increase in the active client base.
However, the South African personal and private banking franchise reported headline earnings growth of only 1% to R2.9 billion, amid strain on consumers.
Consumers were under pressure in the secured lending portfolio, in particular, in the home services portfolio, with instalments increasing by approximately 40% since 2021 due to interest rate hikes in South Africa.
The group said that credit impairment charges in this part of the business increased by 26% to R5.36 billion due to rapid interest rate hikes and a deteriorating macroeconomic environment.
Its credit loss ratio for personal and private banking climbed to 162 basis points from 139, which is above the through-the-cycle range of 100 to 150, mainly driven by the South African franchise.
The group, however, is slightly more optimistic than its peers for SA’s growth in 2023, expecting a 0.8% rise in GDP. Absa said recently it forecasts 0.7%, while Nedbank is expecting 0.3%. The Reserve Bank said at its July meeting it expects 0.4% growth.
The group on Thursday upped its interim dividend 34% to R6.90, but its shares were up less than 1% in early trade, having gained over 13% in the past year.
“Standard Bank Group’s strong first half performance can be attributed to our differentiated franchise and Africa-focused strategy,” CEO Sim Tshabalala said in the results.
“We have continued to support our clients and our teams have managed the business well through an uncertain geopolitical environment and volatile market conditions.”