UPDATE: Standard Bank 1st Half Profit Falls; Expects Lower 2009
August 13 2009 - 4:03AM
Dow Jones News
Standard Bank Group Ltd. (SBK.JO), Africa's largest lender by
assets, Thursday said it expects a decline in earnings this year
after posting a slump in first-half profit as impairments rose amid
the global economic recession.
The Johannesburg-based company said it wouldn't provide specific
guidance for the year, but that current trends suggest so-called
normalized earnings will be lower than in 2008.
South Africa's banks have proved relatively resilient to the
global economic crisis. Still, the economy is feeling the lagging
effect of last year's high inflation and interest rates that has
been compounded by the country's first post-apartheid recession
after output contracted during the first quarter of this year.
Standard Bank said first-half earnings fell 24% to 5.41 billion
rand ($674.3 million), excluding one-time items and adjusting for
shares used to fund ownership by black South Africans and stock
held for policyholders of its insurance unit Liberty.
Net profit was down 31% at ZAR5.11 billion, or 354.7 cents a
share, from ZAR7.4 billion, or 540.5 cents, a year earlier.
Standard Bank in late July forecast a 30%-35% decline in earnings
per share, fleshing out a warning in May that it was unlikely to
match the previous year's performance.
Credit impairments for the half-year were 58% higher at ZAR7.12
billion, which resulted in a credit loss ratio of 1.84% against
1.31% a year earlier.
"High consumer indebtedness and the lagged effect of previously
high interest rates, together with high food and fuel prices in
South Africa, continued to impact on customers' ability to service
debt," the company said.
Still, net interest income was 15% higher on the year at
ZAR16.52 billion and non-interest revenue was up 6% at ZAR15.28
billion. And Standard Bank said it would pay an interim dividend of
141 cents a share, albeit representing a 27% decline on last
year.
At 0720 GMT, Standard Bank's shares were trading 1% higher at
ZAR96.65 in a broadly positive market. Its stock has risen about
15% since the start of the year, matching a rise in Johannesburg's
blue chip Top 40 index.
South Africa's economy contracted an annualized 6.4% in the
first three months of the year - the most since 1984 - after
shrinking 1.8% in the final quarter of 2008. The country's largest
banks, however, are profitable and have said they remain well
capitalized.
Absa Group Ltd. (ASA.JO), South Africa's biggest retail lender,
earlier this month said it expects to remain under pressure for the
rest of the year due to rising arrears and non-performing loans.
The bank, majority owned by the U.K.'s Barclays PLC (BCS), posted a
39% drop in its first-half net profit after impairments rose and
business volumes fell.
Company Web site: www.standardbank.com
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848;
robb.stewart@dowjones.com