Standard Bank surges as it unveils new targets

Standard Bank’s share price surged on Thursday after Africa’s biggest bank by assets predicted that earnings growth would accelerate. 

The Johannesburg-based lender said that it’s targeting headline earnings per share growth of as much as 12% between 2026 and 2028. That compares with a compound annual growth rate of 10% in the 10 years to 2024, according to a presentation by Standard Bank.

The company’s shares jumped as much as 5% at 16:30 p.m. in Johannesburg, the biggest gain since August 15.

A modest economic revival in South Africa — the lender’s biggest market — helped by the improved performance of the state-run power utility and the government’s focus on infrastructure projects is brightening the outlook for banks.

“The consumers in South Africa, in particular, are starting to find themselves in better health with their ability to meet their obligations,” Standard Bank’s Chief Executive Officer Sim Tshabalala said in an interview with Bloomberg TV.

That’s “supporting the lending business,” he said.

The company predicts a return on equity of between 18% and 22% by 2028 compared with 16% in the decade to 2024.

Standard Bank earlier reported that headline earnings climbed 4% to R44.5 billion for the year ending December 31, 2024. That was in line with the median Bloomberg estimate of R44.8 billion.

The lender declared a final dividend of R7.63 per share, bringing the total payout for the year to R15.07.

Currency devaluations in various markets dilute performance in rand terms and affect profit. Earnings in local-currency terms surged 22% in the lenders’ Africa Regions segment, but the depreciations saw the unit’s contribution to headline earnings drop to 41% from 42% a year earlier.

“Weak African currencies, particularly the Nigerian naira and the Angolan kwanza, reduced rand earnings by 9%,” Tshabalala said in an investor presentation. 

Customers increased by 4% to 20 million, driving deposits up 6% to R2.2 trillion. Gross loans and advances also grew by 2%. 

Growth in net interest income slowed to 3%, while non-interest revenue was flat for the period as gains in fees and commissions weren’t sufficient to counter losses on financial instruments. 

Standard Bank said it has cumulatively mobilized more than R177 billion in sustainable finance since 2022, with R74 billion added in 2024 alone.

This puts the lender on track to meet its target of lending more than R250 billion for green projects by the end of 2026.