Standard Bank Group shows strong growth in the first half of 2015
Results for the six months to 30 June 2015 at a glance:
Headline earnings: R10 529 million, up 27%
Deadline earnings per share (HEPS): 651 cents, up 27%
Total dividend per ordinary share: 303 cents per share, up 17% from 1H14
Tier 1 capital adequacy ratio: 13.7% (1H14: 12.7%)
Net asset value (NAV) per share: Increased by 6%
NReturn on equity (ROE): increased to 15.1% from 12.7%
Cost to income ratio: 56.7% from 55.3%
Credit loss ratio: declined to 0.99% from 1.13%
Group headline earnings increased by 27% to R10 529 million and headline earnings per share (HEPS) increased by 27% to 651 cents. Net asset value per share increased by 6% and group return on equity (ROE) increased to 15.1% from 12.7% in 1H14. An interim dividend of 303 cents per share has been declared, 17% increase on 1H14.
During this interim period, the group completed the disposal of its controlling interest in Standard Bank Plc (renamed ICBC Standard Bank Plc), which was designated as a discontinued operation within the group's income statement. As a result of this transaction completion, earnings attributable to ordinary shareholders includes R2,8 billion of net disposal gains, which have been excluded from headline earnings.
Headline earnings to 30 June 2015 reported within the group's discontinued operation include the effects of a partial recovery in respect of insurance claims relating to the external fraud in the Qingdao port in China; a write-down of the residual aluminium exposure in China; and cash flow hedge releases relating to the disposal. The net contribution to headline earnings from the discontinued operation amounts to R171 million.
Global growth of 2.2% in the first quarter of 2015 underperformed the International Monetary Fund expectations set at the beginning of the year. The economic recovery in the Eurozone seems broadly on track, while in South Africa, the lower oil price has temporarily lowered inflation but electricity shortages, accompanied by subdued consumer and business confidence, restricted economic growth to 2.1% in the first quarter of 2015.
The decline in commodity prices has impacted sub-Saharan Africa in a highly differentiated manner. Oil exporters have been most affected, while for much of the rest of the region, the impact has been reasonably favourable, with many countries benefiting from lower oil prices although, for a number of them, this positive effect is partly offset by the decline in the prices of other exported commodities.
Ben Kruger, Standard Bank Group Chief Executive, says: "Overall, although economic growth has subsided slightly from the 5% achieved in 2014, sub-Saharan Africa remains one of the world's fastest growing regions."
Personal & Business Banking (PBB) PBB's headline earnings of R4 811 million were 16% higher than the prior period. Net interest income growth of 12% and growth of 8% in non-interest revenue enabled total income growth of 10%. Credit impairment charges were 2% lower than in 1H14, while operating expenses increased by 12%. PBB's ROE increased slightly to 16.0% from 15.8% in 1H14. PBB South Africa earnings rose by 14%, while PBB rest of Africa earnings improved to R56 million from R49 million. PBB outside Africa earnings of R205 million were 92% higher than in the prior period.
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