South Africa is back on track

South Africa’s push to revive key drivers of its economy such as power availability and logistics has created a tailwind for the largest unit of the continent’s biggest lender by assets.  

Standard Bank’s South Africa business grew profit 16% last year, eclipsing the 9% gain from its other regions, as efforts to undo the effects of years of economic mismanagement and corruption started bearing fruit, it said Thursday.

The upswing lifted the unit’s contribution to overall headline earnings to 51% from as low as 34% in 2023. 

“South Africa is back,” Chief Executive Officer Sim Tshabalala said in an interview. 

The continent’s biggest economy expanded 1.3% in 2025 — the fastest pace in three years — but lagged an International Monetary Fund estimate for 4.4% expansion in the sub-Saharan region for last year. South Africa’s expansion has averaged less than 1% annually for more than a decade. 

“It might be growing slower than the rest of the continent, but it’s growing off a large base,” Tshabalala said. 

South Africa has entered its strongest phase in 10 years and could see expansion accelerate if efforts to clear its infrastructure backlog gain traction, Standard Bank said.

A credit upgrade by S&P Global Ratings, removal from the Financial Action Task Force’s dirty-money list and slower inflation are further evidence of a better trajectory. 

Momentum is expected to pick up as the government and private sector work to revive dilapidated water infrastructure and the state tries to intervene to help deeply dysfunctional municipalities that are unable to provide basic services. 

The lender now expects gross domestic product could expand 1.5% in 2026, compared with a 1.4% forecast by the central bank. While it’s an improvement, it’s below the global average of 3.3% seen by the IMF for this year. 

Standard Bank says it’s too soon to comment with any confidence on the consequences of the war in the Middle East, which has stoked energy prices. 

“We know that there will be damage,” Tshabalala said.

While prolonged war could place additional stress on many African economies through oil prices and interest-rate channels, push up fertilizer prices and reduce food security, higher export prices for energy and metals could counter that, the lender said. 

Earlier, the Johannesburg-based lender said headline earnings for the year climbed 11% to a record R49.2 billion, exceeding the R48.2 billion median estimate in a Bloomberg survey. 

It declared a final dividend of R8.78 per share, bringing the total payout for the year to a record R16.95. 

Standard Bank, backed by Industrial & Commercial Bank of China, added 3.3% more clients in the year to 19.6 million, and benefited from trade-related volatility, which affected African currencies and debt and lifted trading revenue.

The one-year historical volatility of the rand was at 10% at the end of last year, the highest among major currencies on the continent. 

Standard Bank’s shares rose as much as 2.8% before paring gains to trade little changed at 4 p.m. in Johannesburg. The city’s benchmark stocks gauge declined 0.3%.