Standard Bank banks on digital future as it posts interim profit up 12% to R12.1bn
Interim up by 12% to R12.1billion
Profits surge for Standard Bank STANDARD Bank, South Africa’s biggest bank by assets, said yesterday that it was banking on its digital transformation strategy for future growth after its interim profits surged 12 percent to R12.1 billion.
Standard Bank shares closed 0.81 percent lower on the JSE yesterday at R162.55.
The banking giant, which released its six months to end June results, said its core banking replacement journey in South Africa and Africa remained on track to close by the end of the year.
“Although it has been a long and costly exercise, we remain of the opinion that it provides us with the resilient platform required to compete in a digital world. Our innovation initiatives extend across analytics, robotics, cyber security and blockchain.”
“We recognise that we are not where we want to be in terms of customer satisfaction and are making changes to ensure that we improve this going forward,” the bank said.
It said the surge in profits in the period under review was supported by global growth prospects having firmed, supported by post-election optimism in the US and better-than-expected growth in Europe and China.
The bank said another factor that put gloss to its bottom line was the performance of emerging markets (EM), including South Africa, which benefited from the EM risk-on trade, providing broad support to funding costs and currencies.
The group’s headline earnings growth was supported by Africa regions, which grew by 46 percent in the period, offsetting the dilution impact from the rand strength. The top five contributors to Africa regions’ headline earnings were Angola, Ghana, Mozambique, Nigeria and Uganda, which together represent 60 percent of the region’s headline earnings.
However, the group’s total revenue for the period declined 1 percent to R49.3bn, driven primarily by weaker non-interest revenue, which decreased 7 percent in the period.
The company’s CIB profit grew 10 percent to R5.3bn, while the unit’s return on investment (ROE) improved from 17.8 percent to 21.4 percent.
The group’s personal and business banking grew its headline earnings 11 percent to R6.1bn and its return on equity increased from 16.5 percent to 17.7 percent.
The group said it expected an even better performance in the second half of the year due to stronger global growth and firmer commodity prices forecast in the period ahead.
The company has recently parted ways with its head of the CIB business, David Munro, who it seconded to steady the ship at its battered subsidiary Liberty.
The company said to meet its digital transformation targets it would continue to seek opportunities to successfully collaborate with financial technology (Fintech) and support relevant Information Technology skills development initiatives. The company has in recent times been making moves in acquiring Fintech companies just like its rivals have been doing.
Last year, the group said it had bought a majority stake in Firepay, the company that develops popular mobile payments platform SnapScan for an undisclosed amount. Firepay launched SnapScan in partnership with Standard Bank in 2014. The SnapScan app allows users to pay for goods and services using only their mobile phone. Today, the company has 32 000 physical and online merchants.
Early this year the group partnered with OfferZen to create Root; a programmable credit card and bank account system aimed at fintech innovators.
Standard Bank provides the underlying banking services and securely stores users’ funds.
The group said it also remained committed to its medium-term targets of delivering through-the-cycle headline earnings per share growth and ROE within its target range of between 15 percent to 18 percent.
“We are focused on the levers available to deliver on our targets, including positive jaws, efficient capital management and improving returns from PBB Africa Regions.”
‘We recognise that we are not where we want to be in terms of customer satisfaction.’