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