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

Headline earnings: R27 865 million, 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% (2017: 13.5%)

Net asset value (NAV) per share: 10 380 cents up 6%

Return on equity (ROE): Improved to 18.0% from 17.1%

Cost-to-income ratio: 57.0% (2017: 55.5%)

Credit loss ratio: 56bps (2017: 87bps)

Sim Tshabalala, Standard Bank Group CEO says: “Standard Bank Group delivered sustainable earnings growth and improved returns, underpinned by the strength and breadth of our client franchise.”

For the year ended 31 December 2018 (2018), the group’s headline earnings grew 6% to R27.9 billion and ROE improved to 18.0% from 17.1% in the prior year. 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 18.0% 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.

Operating environment

Global economic growth plateaued at 3.7% as geopolitical tensions rose and risk sentiment deteriorated. Growth trajectories de-coupled as fiscal stimulus in the US supported continued growth, whilst other advanced economies, in particular the Euro area, started to slow. Emerging market capital inflows reversed, which negatively impacted exchange rates and borrowing costs.

Economic growth in sub-Saharan Africa was 2.9%. In 1H18 inflation continued to ease, providing scope for interest rate cuts. By 2H18, heightened global risks resulted in a pause in monetary policy easing. Across our basket of currencies, exchange rates were relatively stable, other than in Angola where the Angolan Kwanza (AOA) devalued approximately 50% relative to the South African Rand (ZAR).

Growth in the SA economy was weaker than expected at 0.7%. The poor macro environment, slow policy progress and higher taxes weighed on consumer and business confidence and, in turn, demand for credit. A 25 basis point (bps) interest rate cut in March, on the back of broadly favourable conditions, was later reversed in November as the US fiscal tightening, oil price and exchange rate outlook were considered a threat to the South African Reserve Bank’s inflation targeting. The ZAR was relatively strong against the major currencies in 1H18, but this reversed in 2H18.

IFRS 9-related accounting impact

In 2018, the IFRS 9-related accounting impact resulted in lower reported net interest income and credit impairment charges - equating to R1.7 billion. This diluted reported year-on-year movements in NII and credit impairment charges as well as some of the group’s key ratios, namely net interest margin, credit loss ratio, cost-to-income ratio and jaws. There was no impact on 2018 headline earnings.

Business Units

Personal & Business Banking

PBB’s headline earnings grew 10% to R15.5 billion, underpinned by customer and balance sheet growth, higher transaction volumes and lower credit impairment charges. PBB loans to customers grew 7%; in SA, loans grew 3% whilst in Africa Regions, they grew 22%. PBB’s impairment charges declined 30% on the prior year and the credit loss ratio declined to 81 bps (2017: 120 bps). ROE improved to 21.9% from 20.0% in 2017.

PBB SA delivered headline earnings of R13.7 billion, up 3%, against a difficult macro backdrop and increasingly competitive environment. Underlying revenue benefited from higher disbursements and better cross-sell following the embedding of all banking products into the frontline. The franchise continued to invest in embedding the new operating model, improving the customer experience, staff re-skilling and upskilling and digitisation initiatives. The benefits of these investments are reflected in improving customer and employee net promoter scores, a decline in the number of complaints and an acceleration in disbursements over the year. PBB SA customers continued to migrate to our digital platforms apace, in particular, the SBG mobile app. Digital transaction volumes increased 26%, whilst face-to-face volumes declined 13%.

PBB Africa Regions headline earnings grew more than threefold from R183 million in 2017 to R817 million in 2018. The businesses in Angola, Ghana, Kenya, Uganda and Zambia grew market shares in both assets and deposits. Loans to customers increased 22% and deposits from customers grew 21%. The group’s market leading digital solutions assisted in driving customer growth. The number of active customers grew 11%. Digital transaction volumes which increased 34%, whilst branch transactions declined 12%.

Wealth International grew headline earnings 60%, supported by growth in client deposit balances to GBP5.1 billion, increased client activity and endowment benefit.

Corporate & Investment Banking

CIB’s headline earnings of R11.2 billion were down 2% on the prior year and ROE declined to 19.3% (2017: 22.0%). Revenue from strong operational client activity in Africa Regions was offset by lower trading and capital markets related revenue linked to subdued market conditions. CIB’s gross loans and advances to customers grew 13%. CIB’s credit loss ratio to customers declined to 20 bps due to a combination of improved performance and recoveries. CIB remains cautious on the outlook for the construction sector in SA and the consumer sectors in East Africa and SA.

CIB continued to grow and diversify its client base driving year-on-year client revenue growth of 8%. Client segments underpinning growth were multinationals and large domestic corporates and key sectors included Financial Institutions, Industrials and Power & Infrastructure. Africa Regions’ performance was underpinned by strong revenue growth in Angola, Kenya, Zambia and Zimbabwe.

Investment banking’s performance was underpinned by strong balance sheet growth - average loans increased 9%. Energy and Infrastructure transactions supported NIR. Credit impairment charges were lower year on year due to better portfolio performance and a recovery from a previously impaired exposure in Nigeria.

Transactional products and services continued to grow its Africa Regions client base and deposit base. Global markets' revenue was adversely impacted by negative emerging market sentiment and lower flows. CIB’s on-the-ground presence and deep local knowledge enables it to identify opportunities and trade even in dislocated markets.

Other banking interests

Other banking interests recorded headline earnings of R418 million. ICBCS recorded growth in its underlying franchise revenue and a recovery of US$38 million relating to the aluminium previously written off. This was unfortunately offset by the trading business performance which was negatively impacted by declining global emerging market risk appetite and reduced flows, resulting in ICBCS recording a loss of US$14.9 million for the year. The group’s 40% share thereof equated to R74 million. ICBC Argentina delivered a strong performance despite the dislocation experienced in the domestic market. The headline earnings contribution from the group’s 20% stake in ICBC Argentina increased 19% to R492 million.


Liberty’s operating earnings were up 42% on the prior year, driven by strong performances in Individual Arrangements and STANLIB. Liberty’s headline earnings attributable to the Standard Bank Group, adjusted for the impact of deemed treasury shares, were R1.6 billion, 11% higher than in the prior year.


Global growth is expected to weaken slightly in 2019 to 3.5% as the slowdown in momentum seen in 2H18 continues into 2019. With risks to the downside, economic conditions will remain challenging and volatile in 2019. Subdued demand will impact global trade, industrial production and could drive commodity and oil prices lower.

Sim Tshabalala says: “Whilst not immune from global risks, prospects for sub-Saharan Africa overall are good with growth expected to accelerate from 2.9% in 2018 to 3.5% in 2019. Over a third of the countries in the region are expected to grow above 5%. In South Africa, we expect an uptick in growth to 1.3% for the year, driven by a stronger 2H19.

There is no doubt that in the years ahead the financial services industry, the competitive and regulatory environment and our customers’ and employees’ expectations will continue to change. Across the group, we are making the changes necessary to best position the franchise to deliver to all our stakeholders. We are focused on transforming our customer and employee experience and improving our productivity to deliver a “future-ready” group. In 2019, we will build on the franchise momentum from 2018, continue to simplify, rationalise and digitise and seek ways to accelerate our delivery. “

“We remain committed to our medium-term targets of delivering sustainable earnings growth and an ROE in our 18%-20% target range. In delivering on our purpose of driving Africa’s growth, we will continue to support faster, more inclusive and more sustainable growth and human development in South Africa and across the continent we are proud to call home.” says Mr Tshabalala.

More recent news

  • News 30 November 2018

    Standard Bank announces the appointment of new Chief Executive for Wealth South Africa Division

Careers @ Standard Bank

Join our international team and you could move your career forward from the start.

© 2015 Standard Bank is a licensed financial services provider.

Disclaimer || Privacy and Security || USA Patriot Act Certification || How to report unethical behaviour || Wolfsberg Questionnaire || FATCA || Sitemap