Standard Bank Group, the parent company of Stanbic Bank Ghana, has recorded headline earnings of 11% in the first six months ending June 30, according to a press statement.
The Group which has representation in 17 African Countries including Ghana and Nigeria earned 6.6 billion Rands (about GHC 1.4 billion Ghana Cedis) up 11% on the corresponding period last year.
Headline earnings per share of 418,4 cents were also up 10% with the Group’s Return of Equity (ROE) trending upwards, recording 14.5% for the six months compared to 12.5% for the 2010 year. The Bank has declared a dividend per ordinary share of 141 cents for the period under review.
The Personal and Business Banking unit, which represents the retail session of the Bank had commendable results. Headline earnings were up 30% to R2 483 million for the period, supported by an improved credit experience. The division earned an ROE of 17.8%, up on the 14.7% recorded in the prior period.
Despite a difficult operating environment, the Corporate & Investment Banking unit recorded stronger revenues across its regions as the year progressed. For the six months ended June 30, 2011, total income and headline earnings ended up 1%. A credit impairment charge for the period, compared to a net reversal in the prior period, was offset by good cost containment, with costs down by 3%. An ROE of 15.4% was recorded for the period, still dampened by a low ROE in operations outside Africa.
Jacko Maree, Standard Bank Group CEO says “It is encouraging to see that the action we took on costs in 2010 is starting to bear fruit. Cost efficiency has become an increasingly important management tool for banks world-wide as the outlook for revenues remains uncertain. Recognising this in 2010, we embarked on a range of long-term and short-term cost saving initiatives across the group, many of which are well under way and expected to have lasting impacts.”
Towards the end of 2010, Standard Bank articulated a refined strategy in response to a changed banking landscape post crisis and intense pressures on revenues following the global recession. Standard Bank is some way down the road in implementing this refined strategy.
In terms of Standard Bank’s ambition to have first class, on the ground operations in chosen countries in Africa, the bank has continued to invest tactically in these businesses. In some markets Standard Bank has proved that it can grow sustainable universal banking platforms, with strong Personal & Business Banking and Corporate & Investment Banking franchises and the bank is earning good returns.
Standard Bank’s intention is, over time, to halve the amount of capital utilised in operations outside of Africa from $3 billion to approximately $1.5 billion. The bank has therefore initiated a number of cost saving strategies in its international operations which are targeted to save $75 million on an annualised basis.
“We announced in March that we sold our 36% stake in Troika Dialog Group Limited to Sberbank, the largest bank in Russia. And post the balance sheet date, we announced that we have signed an agreement with Industrial and Commercial Bank of China (ICBC) for the sale of a majority stake in Standard Bank Argentina (SBA). We have agreed to sell 55% of our current 75% shareholding and retain a 20% shareholding in SBA. Subject to conditions and approvals, proceeds from the sales of our interests in Russia and Argentina of approximately $750 million will flow to the group and earnings will reduce by approximately $50 million per annum. Our challenge will be to redeploy this capital effectively,” said Maree.
Maree says “The divestitures in Russia and Argentina will further strengthen the group’s capital position. We will have greater clarity on uses of potential surplus capital when we announce FY11 results in March 2012, by which time the proceeds of these transactions may have been received.”
Current global economic uncertainty shows little sign of abating and, indeed, the events of the last few weeks point to further volatility and softer prospects for global economic growth. Pipelines across the bank’s core sectors remain strong and are growing.
Maree says “Our strong capital position and our sharpened focus on cost discipline will enable us to build further on the progress we have made in the first half of the year. We anticipate that the banking group’s total operating expenses for 2011 will be at the same level as 2010. We will continue our efforts to grow our client franchises and improve returns to shareholders.”
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