Standard Bank expects massive earnings jump

Standard Bank expects its earnings to rise by up to 30% for the 2023 financial year.

In a trading update released today, Standard Bank informed shareholders that it expects a significant jump in earnings for FY23.

South Africa’s banks have benefitted from the country’s high interest rates over the past few years.

The South African Reserve Bank has been in a hiking cycle since November 2021 and has hiked the repo rate by a cumulative 475 basis points.

However, this is a double-edged sword in the banking sector, as some consumers have struggled to repay their debt.

Standard Bank South Africa CEO Lungisa Fuzile previously said that banks are coming under increasing pressure in South Africa due to the higher cost of living and the resultant pressure on consumers.

Besides volatility in the global economy and financial system, South African banks have to contend with a stagnant domestic economy.

As a result, banks have had to increase their provisions for bad debt as households and companies struggle to repay loans.

Despite these pressures, Standard Bank expects positive results for the 2023 financial year.

The bank expects the following changes to its earnings for 2023 compared to 2022.

2022 (cps)Range2023 range (cps)
Headline earnings per share2,050.423% to 28%
2,522.0 to 2,624.5
Earnings per share2,074.125% to 30% 
2,592.6 to 2696.3

Standard Bank will release its results for FY23 on 14 March 2024.

The bank also informed shareholders that, during the finalisation of the group’s results, Standard Bank also amended the methodology for recognising interest on Stage 3 loans. 

This change resulted in an increase in net interest income and an equal and opposite increase in credit impairment charges. There is no impact on HEPS or EPS. 

Furthermore, this change has no impact on gross loans and advances, balance sheet provisions or coverage. 

Standard Bank explained that this amendment will result in a change in the related figures and ratios in 2023.

Therefore, the bank’s FY23 net interest margin and credit loss ratio will be higher than previously expected.

The change has been applied retrospectively to the 2022 financial year, and the ratios have been restated as below.

2022As reportedAdjustmentRestated
Net interest margin
(basis points)
Credit loss ratio
(basis points)
Cost-to-income ratio