Standard Bank Group continued to benefit from strong momentum across all its businesses and geographies and is on track to deliver against targets committed to in August 2021, by 2025, the bank said in a voluntary trading update for the 10 months to October 31.
These targets were compound annual revenue growth of 7% to 9%, a cost-to- income ratio approaching 50%, and return on equity in a target range of 17% to 20%.
Standard Bank Group will report results for the 12 months to December 31, 2022, on March 9.
For the 2022 financial year, total income growth and cost growth were expected to be higher than guided in August, principally due to faster than expected increases in interest rates and higher inflation.
“However, we do expect continued positive jaws (income growth versus growth in expenses). We will provide guidance for FY23 (financial year 2023) when we report in March 2023,” the bank said.
In the 10 months to October 31, average balance sheet growth had been robust, which, combined with positive endowment tailwinds from higher average interest rates, resulted in strong double-digit net interest income growth period on period, the bank said.
Non-interest revenue growth remained robust, supported by growth in transactional activity, trading revenue and insurance earnings.
Insurance earnings growth was underpinned by higher fees, mainly due to annual fee increases, continued good funeral policy performance, and lower credit life claims compared to the prior period.
Cost growth was higher than expected, driven by both higher inflation and higher levels of activity, particularly in Africa Regions.
Despite upward pressure, cost growth was however contained to below the group's weighted average rate of inflation (14%).
Group credit impairment charges increased, influenced by the low base in the second half of 2021.
The Consumer and High Net Worth portfolio continued to benefit from better collections and the normalisation of previous payment holiday portfolios.
There were increased impairment charges from new business strain as well as pockets of consumer strain.
The Business and Commercial Client credit impairment charges were largely flat – a decline in impairment charges in South Africa were offset by increased charges in Africa Regions.
Corporate and Investment Banking charges continued to normalise; with additional provisions raised due to portfolio growth, internal rating downgrades and client-specific provisions. The group remained well provided and can weather an uptick in delinquencies.
Group earnings growth was boosted further by an ongoing recovery in Liberty earnings, as the pandemic impact waned, as well as an insurance settlement received by ICBC Standard Bank plc (ICBCS) in January 2022. ICBCS also continued to report a positive operational performance for 10M22.
Standard bank’s share price increased 0.44% to R187.69 on the JSE Monday afternoon, a price that had appreciated more than 45% over 12 months.
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