The Star Early Edition

Flat earn­ings af­ter $248m joint ven­ture losses for Stan­dard Bank

- SANDILE MCHUNU Business · Finance · Stocks & Markets · Investing · Financial Markets · Standard Bank Group · London · Bank of China · Beijing · South Africa · Africa · Eskom · South Africa News · Americas Stock Markets · R3 · ICBC · Industrial and Commercial Bank of China

STAN­DARD Bank yes­ter­day re­ported flat earn­ings for the year to end De­cem­ber, dragged down by losses of $248 mil­lion (R3.8 bil­lion) at its strug­gling Lon­don-based joint ven­ture with In­dus­trial and Com­mer­cial Bank of China (ICBC) and a slug­gish econ­omy in the coun­try.

Stan­dard Bank said ICBC Stan­dard (ICBCS) re­ported a $248m loss dur­ing the pe­riod, with a sin­gle client cost­ing its $198m while re­struc­tur­ing costs ris­ing $30m and op­er­a­tions $20m.

The group’s 40 per­cent share of the losses equated to R1.4bn. In Septem­ber, Stan­dard Bank recorded a $163m im­pair­ment of its stake in ICBCS, re­duc­ing the car­ry­ing value from $383m to $220m.

The group said this equated to a R2.4bn im­pair­ment re­ported out­side of head­line earn­ings.

As a re­sult, the group re­ported a 1per­cent in­crease in head­line earn­ings to R28.21bn while head­line earn­ings per share rose 1 per­cent to 1 767 cents a share.

The group de­clared a 2 per­cent in­crease in div­i­dend a share to 994c.

Chief ex­ec­u­tive Sim Tshabalala said the bank’s per­for­mance dur­ing the pe­riod un­der re­view was none­the­less un­der­pinned by the growth and re­silience of its core op­er­a­tions.

“The con­strained macroe­co­nomic en­vi­ron­ment, par­tic­u­larly in South Africa, and ICBCS losses im­pacted the group’s re­sults,” Tshabalala said, adding that growth in the sub-Sa­ha­ran Africa had been re­vised down­wards.

“Growth in South and Cen­tral Africa con­tin­ued to be neg­a­tively im­pacted by the poor South African en­vi­ron­ment. In South Africa, load-shed­ding un­der­mined growth prospects, the pace of pol­icy progress and re­form was slow and Eskom’s fis­cal con­cerns re­mained un­re­solved. Busi­ness and con­sumer con­fi­dence lev­els re­mained low, con­strain­ing spend­ing and de­mand for credit. The econ­omy shrank 1.4 per­cent in the fourth quar­ter of 2019 which re­sulted in a sec­ond re­ces­sion in less than two years. Real GDP growth for the year was 0.2 per­cent.”

Stan­dard Bank said credit im­pair­ment charges in­creased 23 per­cent to R7.96bn off a low base and pushed South Africa’s sec­ond largest bank by mar­ket cap­i­tal­i­sa­tion credit loss ra­tio to 68 ba­sis points from 56 points last year.

The group said the ra­tio was ex­pected to re­main “at the lower end” of Stan­dard Bank’s 70 to 100 ba­sis points range.

Re­turn on eq­uity de­clined to 16.8 per­cent from 18 per­cent a year ear­lier, and the bank said it would move closer to the lower end of its 18 to 20 per­cent goal in 2020.

Per­sonal and Busi­ness Bank­ing in­creased its head­line earn­ings by 6 per­cent to R16.5bn while Cor­po­rate and In­vest­ment Bank­ing grew head­line earn­ings by 5 per­cent to R11.8bn.

Last year the bank re­duced its head­count by 5.5 per­cent as it bat­tled cost growth below in­fla­tion and revenue growth.

Chief ex­ec­u­tive of Cus­tomer Ex­pe­ri­ence Spe­cial­ists Nathalie School­ing said the bank would fo­cus on in­creas­ing com­pet­i­tive­ness and client ex­pe­ri­ence in 2020.

“Any fi­nan­cial in­sti­tu­tion that wants to stay in busi­ness in this tough econ­omy needs to in­vest in the right tech­nol­ogy and make ef­fi­cient use of re­sources, all with the cus­tomer in mind,” School­ing said.

Stan­dard Bank rose 0.12 per­cent on the JSE yes­ter­day to close at R152.64.

 ?? African News Agency (ANA) ?? STAN­DARD Bank head­quar­ters on Sim­monds Street, Jo­han­nes­burg. | KAREN SANDISON
African News Agency (ANA) STAN­DARD Bank head­quar­ters on Sim­monds Street, Jo­han­nes­burg. | KAREN SANDISON

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