Standard Bank results for the six months ended 30 June 2008 reflect the resilience of its businesses amidst continued global financial market turmoil. The banks strong capital position and healthy liquidity profile has positioned it to take advantage of business opportunities in the groups chosen growth markets.
Normalised headline earnings grew by 15% to R7.1 billion and normalised headline earnings per share by 7% to 482 cents per share. Net asset value per share increased by 40% and a return on equity of 19.8% was achieved.
Standard Bank has declared an interim dividend of 193 cents per share, an increase of 7% on the 2007 interim distribution of 181 cents per share.
In South Africa, consumers continued to come under pressure from rising inflation, falling asset values and tighter borrowing conditions. The South African Reserve Bank has raised interest rates on ten occasions since June 2006, taking the prime lending rate 500 basis points higher to 15.5% at June 2008. Household spending lost momentum and activity in the residential property and passenger car markets slowed significantly. However, strong investment spending continued to buoy growth in the corporate sector.
“Our strategy to grow businesses in other emerging markets continued to deliver value in the period. Including Liberty Life, headline earnings from South Africa grew 1%,” says Jacko Maree, Standard Bank chief executive. “Our businesses outside South Africa grew 30%, allowing the group to achieve growth in headline earnings of 15% in very difficult trading conditions.”
Net interest income grew 40% on the back of strong balance growth assisted by higher net interest margins. Non-interest revenue was up 25%, with net fee and commission revenue up 21%, trading revenue up 42% offset somewhat by other non-interest revenue down 7%. All revenue items have benefited from acquisitions.
Credit impairment charges more than doubled and the credit loss ratio increased from 0,78% to 1,27%. Within Personal & Business Banking, impaired loans increased 122% from June 2007 and 75% since December 2007, increasing the charge for impaired loans by 137% and resulting in a total credit loss ratio for Personal & Business Banking of 2,18% (June 2007: 1,31%). The credit loss ratio for mortgages rose from 0,61% to 1,30%, while instalment sales and finance leases experienced a credit loss ratio of 2,00% (June 2007: 1,38%) . The credit loss ratio in card debtors increased from 6,34% to 9,44%.