Standard Bank pumps R83 billion into green finance

Standard Bank has mobilised R83 billion in sustainable finance solutions – over R1 billion in financing for small and large businesses and over R450 million for households. 

This was revealed in the bank’s interim results presentation for the six months to the end of June 2023. 

The bank recorded headline earnings of R21.2 billion, up 35% relative to the six months to 30 June 2022 and delivered a return on equity of 18.9%.

Standard Bank said its banking businesses benefitted from continued client franchise growth, larger balance sheets, increased transaction volumes, and market and interest rate tailwinds. 

Revenue growth was well ahead of cost growth which supported strong positive operating leverage and a decline in the cost-to-income ratio to 50.5%. 

In its results presentation, Standard Bank said it is paying particular attention to sustainable finance. 

To this end, the bank has mobilised R83 billion in sustainable finance solutions, and its asset management company, Stanlib, raised R13 billion for a sustainable infrastructure fund. 

Africa’s largest bank disbursed R1.1 billion to businesses for installing alternative energy sources and to solar solutions providers directly. 

Through its LookSee platform, the bank lent over R450 million to individual households to install solar solutions or purchase homes with sustainable features. 

This puts the bank on track to reach its target of financing over R250 billion by the end of 2026. Standard Bank’s Corporate and Investment Banking (CIB) will conduct the vast majority of this lending. 

CEO of Standard Bank’s CIB division Kenny Fihla said that the bank is seeing increased demand for funding from renewable projects across the continent. 

Fihla said the company is seeing increased demand from its clients for funding for renewable projects ranging from government-run Independent Power Producer projects to off-grid private sector projects. 

Standard Bank’s financing of renewable projects has risen with demand to over four times greater than the bank’s funding of non-renewable energy projects. 

The bank set an initial target of financing R55 billion worth of renewable energy projects in Africa within two years from 2021. This target was reached in less than one year. 

Standard Bank aims to finance R50 billion in renewable projects in the current financial year. 

Fihla said most projects are in South Africa, with the bank starting to see demand pick up in Namibia, Kenya, and Nigeria. 

In South Africa, the mining sector is the major player in building large renewable projects to mitigate the effects of load-shedding and diversify their energy streams away from fossil fuels. 

However, despite the increased demand, there are significant constraints to the rollout of renewable energy in Standard Bank’s home market. 

“There are transmission network constraints, particularly in the Northern Cape, which is ideal for solar projects. Because of this limited capacity, those projects cannot connect to the grid,” Fihla said. 

It is not enough to expand the financing of renewable projects. Standard Bank will also have to find ways to support Eskom to expand and upgrade its grid. This will result in load-shedding continuing for longer.  

“It will be 18 to 24 months before we can see adequate connections to the grid from projects under construction. That will make a significant impact on energy supply.”