Financial results

Standard Bank reports strong results for the year ended 31 December 2018

Results at a glance

  • Headline earnings: R27 865 billion, up 6%
  • Headline earnings per share (HEPS): 1 748 cents, up 7%
  • Dividend per share: 970 cents, up 7%
  • Common equity tier (CET) 1 ratio: 13.5% (FY17: 13.5%)
  • Net asset value (NAV) per share: 10 380 cents up 6%
  • Return on equity (ROE): Improved from 17.1% to 18%
  • Cost-to-income ratio: Increased from 55.5% to 57%
  • Credit loss ratio: 56bps (FY17: 87bps) 

Group results overview

For the year ended 31 December 2018, Standard Bank Group delivered sustainable earnings growth and improved returns. The group’s performance was underpinned by the strength and breadth of our client franchise. Group headline earnings grew 6% to R27.9 billion and ROE improved to 18.0% from 17.1% for the year ended 31 December 2017. The group’s capital position remained robust, with a common equity tier 1 (CET1) ratio of 13.5%. Accordingly, a final dividend of 540 cents per share has been declared, resulting in a total dividend of 970 cents per share, an increase of 7% on the prior year.

Banking activities headline earnings grew 7% to R25.8 billion and ROE improved to 18.8% from 18% in 2017. Non-interest revenue (NIR) continued to record strong growth, driven by retail banking. Net interest income (NII) growth was dampened, and credit impairment charges were lower, as a result of the adoption of a new accounting standard.

The 2018 group results were less impacted by currency movements than in prior years. On a constant currency basis, group headline earnings grew 8%. Africa Regions’ contribution to banking headline earnings grew to 31% from 28% in 2017. The top five contributors to Africa Regions’ headline earnings were Angola, Ghana, Mozambique, Nigeria and Uganda.

"We will reduce cost growth and increase efficiency to permanently reshape the group's cost structure. We will continue to accelerate digitisation to meet clients' needs and enhance competitiveness and efficiency." says Sim Tshabalala, Group CE

 

Operating environment

Global macroeconomic conditions were positive during 2017, supporting increased trade volumes and underpinning global growth of 3.7% for the year. Economic growth in sub-Saharan Africa rebounded from 1.4% in 2016 to 2.7% in 2017, underpinned by improving commodity prices and trade. Across many of Standard Bank’s key countries inflation began to ease, stemming interest rate hikes and, in certain countries, providing scope for rate cuts in the second half of the year. Although exchange rates largely stabilised in the second half, many were weaker year on year against the strengthening Rand.

The recovery in the West Africa region was supported by higher oil prices and production volumes, together with higher business and consumer confidence levels. East Africa started to emerge from the drought. The South & Central Africa region was supported by improved commodity prices, but countries immediately surrounding South Africa continued to feel the effects of low South African demand.

Business unit results for Corporate & Investment Banking

CIB’s headline earnings of R11.5 billion were up 11% on the prior year, and 17% on a constant currency basis. Continued cost discipline and improvements in productivity and efficiency metrics resulted in positive jaws of 4.6%. Higher headline earnings, together with disciplined capital utilisation, delivered an ROE of 22.2%, an improvement from 19.5% in 2016.

Transactional Products and Services (TPS) was the outstanding performer, with headline earnings up 32%. TPS plays a core role across the wider CIB franchise, being critical to the wholesale client franchise across the African continent. Revenues grew by 18%, with NII well ahead of the prior year.

Global Markets delivered a resilient performance, growing headline earnings by 13% to R4.6 billion.

Investment Banking revenues were up 6%, reflecting fees earned on a number of landmark transactions and client activity in both debt and equity capital markets.

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