JOHANNESBURG –– Standard Bank Group last week announced impressive results in the first six months of this year despite operating in a tough environment.
In a statement to the media, Standard Bank said headline earnings, at R5 407 million, were down 24 percent on the comparable six-month period while normalised headline earnings from banking activities were 11 percent lower.
On an IFRS basis, the group reported a 12.4 percent return on equity while headline earnings of R5 079 million were 30 percent lower while headline earnings per share were down 33 percent at 352.5 cents per share.
On a normalised basis, the group’s return on equity was 12.6 percent (June 2008: 19.8 percent), headline earnings of R5 407 million were down 24 percent and headline earnings per share fell 27 percent to 351.3 cents per share (June 2008: 481.8 cents per share).
The dilution in the per share results was largely due to the inclusion of the shares issued to the Industrial and Commercial Bank of China in March last, for the full reporting period, said the statement.
An interim dividend of 141 cents per share has been declared, 27 percent lower than in June last year.
This is in line with the group’s policy for both interim and final dividends to be covered 2.5 times by normalised headline earnings per share, said the statement.
“The group’s operating environment during the first six months of 2009 was challenging, following the turbulence in financial markets experienced in the second half of 2008.
“The aftershocks of the credit and liquidity crisis continued to be felt in financial systems around the world.
“The impact of sharply lower demand for goods and services in the real economy dragged the global economy further into downturn,” said Jacko Maree, Standard Bank group chief executive.
“The South African banking sector has remained stable throughout the global financial crisis. Robust risk management practices, a relatively low concentration of exotic products in local banking models and a proactive regulatory framework have all contributed to the resilience of the banking system.”
Maree said although South Africa has avoided the worst effects of the financial crisis, the economy is feeling the lagged effects of the cyclically higher inflation and interest rates experienced in 2008, compounded by output levels in the first quarter of 2009 contracting by an annualised 6.4 percent.
The contraction was particularly evident in mining and manufacturing with unemployment rising in these sectors. Consumers’ ability to repay debt remained under strain, resulting in further growth in defaults, albeit at a slowing rate.
In the context of not compromising its risk practices, the group said it had done everything possible to proactively assist its customers.
The statement said in the past six months, personal customers have been encouraged to contact the group in advance of financial distress.
Maree said the financial position of corporate clients has been closely monitored through rigorous industry specific analysis and review.
Proactive steps have included participating in recapitalisation, funding, renegotiated lending facilities and providing bridging finance.
Standard Bank’s results were impacted by a host of factors including a slowdown in economic activity, an increase in non-performing loans, falling interest rates, and changes in the rand exchange rate
The group said it has continued to invest in technology and infrastructure mainly in its African operations.
This is in line with the group’s strategy to increase its footprint in key African countries such as Nigeria, Kenya, Ghana, Zambia and Uganda.
This investment has contributed to substantial cost growth in the rest of Africa in the period whereas the benefits will only be realised over time, said the statement