Standard Bank misses earnings estimate as credit impairments rise sharply

Standard Bank. Picture: FINANCIAL MAIL
Standard Bank. Picture: FINANCIAL MAIL

Standard Bank, SA’s second-largest bank by market capitalisation, missed earnings expectations in its full-year to end-December, when credit impairment charges rose almost a quarter due to the deteriorating economic performance of SA and parts of Africa.

The group reported diluted earnings per share of R15.847, less than the R17.499 expected by the market. Diluted earnings per share refers to earnings per share if all options that could affect the number of shares in issue were exercised.

Credit impairment charges rose 23% to R7.96bn, with the group saying it expected sustained economic weakness in SA in the absence of tangible progress by the government in pursuing its reform programmes.

Insufficient electricity supply and low confidence was weighing on SA, while the group also expects trading conditions to remain challenging due to technological changes in the industry and increasing competition.

The number of active clients in SA dropped 1% to 7.99-million, though active clients in the group’s rest-of-Africa operations grew 8% to 5.37-million.

Headline earnings grew 1% to R28.2bn, with the group raising its dividend per share 2% to 994c.

Headline earnings is a widely used profit measure in SA, stripping out one-off items, such as writedowns.

In morning trade on Thursday Standard Bank’s share price was up 1.25% to R154.37, having fallen 18.08% over the past 12 months.