Standard Bank’s trading juggernaut eclipses FirstRand, Nedbank and Absa combined 

Standard Bank remains the dominant financial institution in Africa, with its trading revenue on the continent eclipsing that of its three biggest competitors – FirstRand, Nedbank, and Absa – combined. 

This was revealed by Research Analyst at Private Clients by Old Mutual Wealth, Tasneem Samodien, who outlined the reasons behind the bank’s strong performance in 2023 and its dominant position in Africa. 

Standard Bank’s 2023 financial results showcased robust growth, with headline earnings surging by 27%. 

This performance was fueled by the sustained momentum within the group’s African operations. 

Notably, Standard Bank’s Africa Regions, representing only 27% of Standard Bank’s net asset value, delivered a significant 42% contribution to group headline earnings. 

This achievement underscores remarkable growth from a decade prior, when Africa’s contribution to profits stood at a modest 12%.

One of the key drivers of Standard Bank’s success in Africa has been the development of its Global Markets division, which bridges the gap between African businesses and international markets. 

Through this division, the bank assists clients in trading foreign currencies, commodities, fixed-income securities and equities. 

This division generates trading income, which is included in the group’s non-interest revenue and is unaffected by interest rate changes or the pressures on traditional banking fees and commissions. 

In this way, it provides a valuable source of income diversification. 

While trading income is inherently volatile due to its dependence on client trading activity, it has exhibited significant growth, with a compound annual average of 14% over the past five years, surpassing the traditional fee and commission income growth of 2% over the same period. 

Consequently, Standard Bank’s trading revenue for 2023 eclipsed the combined trading revenue generated by peers FirstRand, Absa and Nedbank, as shown in the graph below. 

Samodien said Standard Bank has navigated the complexities of operating in diverse African markets, ensuring their ventures translate to shareholder value. 

Notably, their 2023 return on equity in Africa surpassed that of South Africa, effectively offsetting the typically higher cost of capital in new markets.