Standard Bank used 72 percent of its capital in Africa as the continent proffered opportunities to form links with emerging markets such as Brazil, India and China, Standard Bank SA chief executive Sim Tshabalala said on Friday.
This means Africa is at the heart of the company's emerging markets strategy, which would enable the bank to provide services to countries with ties to the continent.
Tshabalala said the group expected to generate higher levels of growth outside of South Africa in the medium term, adding this was the reason some of its capital had been channelled there.
Standard Bank, in its latest annual report, said that as Angola was one of the continent's fastest growing economies, it was an important market for it. Angola offered growth potential in the oil and gas, mining and agriculture sectors.
The bank established a representative office there in 2006 and was granted a banking licence in November last year.
This will allow the bank to commence operations as a full-service bank in mid-2010, with an emphasis on corporate and investment banking.
Tshabalala said of the 72 percent capital employed in Africa, 58 percent was deployed in South Africa. The country contributed 77 percent of the group's headline earnings in the past financial year.
"We also pay the majority of the group's costs, taxes and dividends out of the South Africa operation," Tshabalala said.
"Our return on equity (ROE) in South Africa had for many years generated a return in excess of the cost of capital, generating positive shareholder value." ROE measures how well the company used reinvested earnings to generate additional earnings.
Standard Bank released a financial statement last week as required by the shareholding agreement with the Industrial and Commercial Bank of China (ICBC), the world's biggest bank by market capitalisation. ICBC holds 20 percent shareholding in Standard Bank.
It said first quarter earnings amounted to R3.03 billion.
Steve Meintjes, a senior analyst at Imara SP Reid, said when annualised (multiplied by four), earnings for the year would be R12.1bn.
"Though this indicates that the combined earnings for the remaining three quarters now need to increase by 38 percent compared to last year, it is better to carefully monitor the situation at half year rather than react too adversely based purely on these first quarter results," Meintjes said.
"Business in the first quarter of the year is traditionally slower... and the widely predicted recovery for the year is far from being in full swing."
On Friday, Standard Bank's shares on the JSE closed 1.5 percent lower at R111.25.