Standard Bank reaping the benefits of Covid-loans

Standard Bank reported impressive results for 2022, which boasted a robust balance sheet strengthened by the payback of Covid-19 loans.

Speaking with eNCA, Standard Bank CEO Sim Tshabalala said both consumers and businesses are paying back the loans they took with the bank during the Covid-19 pandemic.

This, in combination with the numerous interest rate increases over the last year, resulted in the bank’s revenue growing by 18%.

The increased interest rate and the growth of the bank’s asset base led to a 24% increase in net interest income on average, with increases across almost all Standard Bank client segments in 2022. 

With its consumer and high-net-worth (CHNW) clients, the bank saw net interest income grow by 15% to R32.6 billion.

Credit impairment charges in this segment declined by 3% to R7.7 billion. The credit loss ratio declined from 134 to 122 basis points.

With its corporate and investment banking (CIB) clients, the bank saw similar results, although its credit impairment charges were influenced by higher corporate and sovereign-related charges.

The bank’s net interest margin also saw a 45 basis point increase.

Tshabalala said the bank lent out a large proportion of its balance sheet during Covid-19.

In 2020, the bank’s loans and advances increased from R1.18 trillion to R1.27 trillion. There was an even higher increase in 2021 when the bank’s loans and advances shot up to R1.42 trillion.

The loans and advances are still going up, though less, reaching R1.50 trillion in 2022.

Tshabalala told News24 that benefiting from loans was not based on luck, but rather intentional strategic tweaks.

“We positioned our bank such that when interest rates go up, we benefit. But when interest rates go down, we also take the pain,” he said.

Alternative energy opportunities

Tshabalala said that, since December, many clients have approached the bank and its competitors for loans to invest in alternative energy solutions.

These opportunities for retail and corporate clients are “burgeoning”.

“The fastest growing part of our corporate and investment bank is that which faces off to sustainable finance,” he said.

South Africa’s recently announced tax incentives for consumers and corporations to install solar panels as an alternative energy source may also have an effect on the bank’s balance sheet.

Tshabalala said Standard Bank has had to invest in its own alternative energy solutions as well.

The bank spent more than R70 million on diesel in 2022 – a more than R50 million increase from the previous year.