Standard Bank sees resilient 5-month earnings, keeps 2025 guidance despite macro volatility
Standard Bank Group on Thursday said its earnings for the five months to May 31, 2025 rose 10% year-on-year in rand terms, supported by a resilient performance across its African operations despite a challenging global and domestic macroeconomic environment.
Image: Armand Hough / Independent Newspapers
Standard Bank Group on Thursday said its earnings for the five months to May 31, 2025 rose 10% year-on-year in rand terms, supported by a resilient performance across its African operations despite a challenging global and domestic macroeconomic environment.
"Standard Bank group's operational and financial trends were strong, reflective of the continued momentum in the underlying transactional franchise across both South Africa and Africa Regions. Despite the considerable uncertainty and market volatility, the group's established and well diversified franchise continued to deliver a resilient performance," it said in a voluntary trading update.
Africa’s largest lender by assets said group headline earnings rose at a similar pace as in the first quarter. On a constant currency basis, headline earnings increased in the mid-teens compared with the same period last year. Return on equity (ROE) remained within the group’s 2025 target range of 17% to 20%.
Macroeconomic headwinds persist
Global uncertainty, driven by geopolitical tensions and US trade policy, weighed on macroeconomic and monetary policy, the group said. Across the group's countries of operations, inflation moderated and interest rates began to ease, although more slowly than anticipated. Sub-Saharan Africa’s GDP is expected to grow 3.8% in 2025, according to International Monetary Fund forecasts.
In South Africa, while the global uncertainty and the local budget-related wrangles weighed on confidence and demand, higher commodity prices and market volatility have presented opportunities, Standard Bank said.
Margins under pressure, but fees and trading revenues strong
Balance sheet growth has been slower than expected as elevated uncertainty and a delay in interest rate cuts negatively impacted demand for credit, particularly in South Africa.
Group net interest margin declined year-on-year, reflecting lower average rates and competitive mortgage pricing in South Africa. Net interest income was flat period-on-period.
Standard Bank said the group's growing and increasingly entrenched client base drove continued strong growth in net fee and commission revenue, which was testament to the group's strategy of providing a full suite of relevant and appropriately priced solutions to our clients when and where they want them.
"Market volatility drove client activity which supported robust trading revenue growth period on period." it said. Non-interest revenue grew by mid-teens period on period.
Operating expenses rose slightly ahead of revenue growth, in line with expectations. Staff costs were pushed higher by incentive payments and increased hiring of specialist skills, while other costs were kept in check as higher growth in activity-related costs were moderated by slower growth in other areas, such as amortisation and premises-related costs.
Credit impairment charges declined due to a slowdown in early arrears and fewer non-performing loan inflows in personal and private banking. The credit loss ratio for the period was slightly above the group’s 70–100 basis point range, but lower than in the prior year.
The group reaffirmed its guidance for the 2025 financial year, including mid-to-high single-digit banking revenue growth (in ZAR); a flat to declining cost-to-income ratio; and return on equity within the 17% to 20% target range.
However, it warned that headline earnings growth for the six months to June 30 would likely be slower than in the first five months due to a strong base in June 2024.
Standard Bank said, "Uncertainty around the macroeconomic dynamics, monetary policy, trade policies and geopolitical developments remains elevated. The group continues to model and plan for a variety of scenarios and outcomes. The group's large and diversified set of clients, businesses and regions underpins its resilience. Against the modelled scenarios, the group remains appropriately liquid and adequately capitalised."
The group is scheduled to report interim results for the six months ending June 30 on August 14, 2025.
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