Standard Bank recently announced record headline earnings and higher dividends for shareholders for the year ended 31 December 2022.
However, higher corporate and sovereign-related charges increased the company’s credit impairment charges by more than 20%.
The company saw a 37% increase in headline earnings, which now stand at R34.24 billion. Headline earnings per share increased by more than 30% to 2,087 cents.
Standard Bank approved a final dividend of 691 cents per share, which equates to a final dividend payout ratio of 60%.
“We delivered strong earnings growth, which drove higher returns. The group is ahead of its 2025 plan and confident we will deliver our targets,” said Standard Bank CEO Sim Tshabalala.
The company’s revenue growth was well ahead of its cost growth, resulting in substantial positive operating leverage and a cost-to-income ratio decline to 54.9%.
Standard Bank’s return on equity also improved to 16.4%, up from the previous 13.5%. Net asset value grew by 10%, and Standard Bank ended the year with a common equity tier-one ratio of 13.5%
A larger client base, recovery in transactional and foreign exchange activity, and increased digital volumes drove growth in the company’s net fee and commission revenue while increased client activity supported trading revenue.
Ghanaian sovereign exposures, in particular, contributed to the company’s credit impairment charges increasing.
Ghana is currently experiencing a sovereign debt crisis and announced in December 2022 that it was suspending its repayments on Eurobonds, commercial loans, and bilateral loans to restructure its debt.
Despite the impairment, Standard Bank’s credit loss ratio remained broadly flat at 75 basis points.
The company also reported that the integration of Liberty has been successful thus far, with Liberty reverting from a net loss in FY21 to a profit of R2.1 billion in F122.
“The Liberty minority buyout was completed, and the process of integrating Liberty into the group is well underway,” said Tshabalala.
“While further work is needed, we remain confident that the full integration of Liberty into the group will create sustainable value for shareholders”.
Liberty saw the most success with its Africa Regions franchise, which saw headline earnings grow by 36%.
The company’s South African franchise saw a slightly smaller, but still positive, change in headline earnings, which grew by 26%.