Standard joins queue of hard-hit SA banks
STANDARD Bank, the biggest banking group in Africa, yesterday joined the list of South African banks expecting their profits to take a dramatic hit this year because of the financial impact of the Covid-19 lockdown on consumers and businesses.
Standard Bank said yesterday that it expected headline earnings per share to fall between 30 percent and 50 percent for the six months to the end of June on Covid-19 uncertainties.
The bank said disbursements and transaction activity levels were negatively impacted by the lockdown, particularly in April.
“Activity levels did improve in May and June as lockdowns were eased, but, in most instances, remained below pre-lockdown levels,” Standard said in an operational guidance to investors.
Absa and Nedbank recently warned that their interim profits would fall at least 20 percent. FirstRand Group said earnings would decline 20 percent in its year to the end of June, and Capitec said earnings in the six months to August could tumble more than 70 percent. All the banks reported rising credit impairment charges.
Standard said its headline earnings were expected to be between 330.8 cents and 165.4c per share, compared with 837.4c in the same period in 2019.
“The pandemic appears to be gaining momentum in certain of the markets in which the group operates on the continent, particularly in South Africa. Elsewhere, countries are battling with a second wave of infections. The path remains uncertain and this continues to weigh on sentiment and demand,” the bank said.
The personal and business banking division provided R92 billion in relief to individual clients and businesses by May 28, while R11bn and R30bn had been extended to commercial clients as well as corporate and investment banking clients, respectively.
The group continued to receive additional client relief requests in June. However, the rate slowed month on month. All requests remained subject to its internal credit assessment processes. In addition, the bank continued to receive applications for funding under the Covid-19 SME loan guarantee scheme.
Standard Bank said it completed the sale of a 20 percent stake in ICBC Argentina (ICBCA) to the Industrial and Commercial Bank of China last month. It said the transaction was fixed in dollars, with the carrying value of the investment held in the Argentinian peso.
The bank was expected to release its interim results next month.
Standard Bank’s shares rose 5.09 percent on the JSE yesterday to close at R118.55, outpacing the Banks Index, which was up 3.26 percent.