Stan­dard Bank buoyed by African growth

Lesotho Times - - Business -

JO­HAN­NES­BURG — Stan­dard Bank Group Ltd, Africa’s big­gest lender by as­sets, recorded a 12 per­cent rise in net profit in 2014 as it con­tin­ued to dis­pose of busi­ness out­side the con­ti­nent.

The Jo­han­nes­burg-based bank said net profit rose to R15.93 bil­lion South African rand from 14.26 bil­lion rand in 2013, on a one per­cent rise in group head­line earn­ings to 17.32 bil­lion rand in the year ended 31 De­cem­ber. Non­in­ter­est rev­enue climbed 14 per­cent from 2013 to 39 bil­lion rand.

Last month, the lender com­pleted the sale of 60 per­cent of its Lon­don-based busi­ness to the Industrial and Com­mer­cial Bank of China Ltd, a key bloc of its strat­egy to ex­pand in Africa. In its state­ment, it said it would also sell its Brazil­ian op­er­a­tion in 2015.

Banks in Africa are po­si­tion­ing to take ad- van­tage of growth in the con­ti­nent’s mid­dle classes, which are amass­ing sav­ings and re­quir­ing more so­phis­ti­cated fi­nan­cial ser­vices. Stan­dard Bank recorded a 22 per­cent in­crease in com­mer­cial de­posits across Africa in 2014 alone. The lender’s de­ci­sion to sharpen its fo­cus on Africa in­di­cates the po­ten­tial it sees there.stan­dard Bank said it would dis­trib­ute a div­i­dend of 598 rand cents to share­hold­ers, a 12 per­cent in­crease on 2013 and at the higher end of mar­ket ex­pec­ta­tions.

But Sim Tsha­bal­ala, the bank’s co-chief ex­ec­u­tive, said South Africa’s slug­gish eco­nomic growth rep­re­sents a risk in 2015 and be­yond, stress­ing that this was a key rea­son to di­ver­sify to the rest of the con­ti­nent.

“Struc­tural and cycli­cal head­winds in 2015” will be wors­ened by elec­tric­ity short­ages plagu­ing South African busi­nesses, the bank said. The coun­try’s econ­omy grew 1.5 per­cent last year, well be­low the con­ti­nent’s av­er­age rate.

Rev­enue from the rest of Africa, ex­clud­ing South Africa, was 28 per­cent of to­tal rev­enue in 2014, Mr Tsha­bal­ala said, not­ing that this was the fastest-ex­pand­ing part of the op­er­a­tion, record­ing 41 per­cent growth last year.

“The rea­son this is ex­cit­ing is the rest of the con­ti­nent will grow at about 5 per­cent in the next few years…as the con­ti­nent grows wealth­ier and more peo­ple en­ter the mid­dle class, they need bank­ing ser­vices, and we are ide­ally placed to pur­sue that,” Mr Tsha­bal­ala said in an in­ter­view.

He said he was op­ti­mistic on oil-de­pen­dent African economies that are cur­rently suf­fer­ing be­cause of low oil prices, es­pe­cially Nige­ria, An­gola and Ghana.

“Oil-pro­duc­ing coun­tries are go­ing to be chal­lenged but I think that will nor­mal­ize in the next 18 months,” Mr Tsha­bal­ala said.

— WSJ

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