Standard Bank said this week that Africa regions continued to perform very well and delivered strong earnings growth period on period in both reported and constant currency, the bank said in a report to the ten months to 31 October.
Africa regions’ contribution to group headline earnings for the period was 44 percent. The bank said while higher average interest rates continued to support net interest margin, net interest margin expansion has slowed in recent months given that the interest rate increases seen in the second half of 2022 are now embedded in the base.
Lower demand, reduced affordability, and competitive pricing pressure (particularly in mortgages in South Africa), resulted in lower disbursements to retail and business clients and a slowdown in growth in the related loan portfolios.
Cost growth remained elevated but was slower than that reported in the first half of 2023. The group continued to record strong positive jaws. Credit impairment charges growth also slowed but remained elevated due to a combination of balance sheet growth, client strain linked to the rapid interest rate increases, sovereign risk migrations in Africa Regions, and provisions linked to specific corporates in South Africa.
In terms of the group’s guidance for the twelve-month period to 31 December 2023, the bank said banking revenue growth year on year is expected to be robust, underpinned by strong momentum across the franchise, banking cost growth is expected to remain elevated, but the group expects to deliver. The return on equity is expected to remain well anchored in the group’s 2025 target range of 17 percent to 20 percent.
“While higher average interest rates continued to support net interest margin, net interest margin expansion has slowed in recent months given that the interest rate increases seen in the second half of 2022 are now embedded in the base. Lower demand, reduced affordability, and competitive pricing pressure (particularly in mortgages in South Africa), resulted in lower disbursements to retail and business clients and a slowdown in growth in the related loan portfolios.”
