Standard Bank earnings up 18%

JOHANNESBURG – Africa’s biggest banking group, Standard Bank, increased first-half normalised headline earnings per share by 18 per cent on strong loan demand but said yesterday second-half earnings growth might be slower.

“The South African economy remained buoyant in the first half of 2006, and brisk growth in credit extension continued. Consumer spending remained strong, although there are now signs of slower growth, albeit off a high base,” Standard Bank Chief Executive Jacko Maree said in a statement.South African banks have benefited from record low interest rates in recent years, which led to increased credit demand but two interest rate hikes since June are likely to put the brakes on consumer spending.Headline EPS increased to 359 cents per share in the six months to end-June – in the middle of a 15 to 20 per cent growth range given by the group on Aug. 1.Net interest income increased 24 per cent to 7,464 billion rand and 23 per cent on a normalised basis, while credit impairment charges rose 104 per cent from a low base.The banking group said loans and advances at its Corporate and Investment Banking business jumped by 56 per cent after several years of subdued growth while lending assets at Personal and Business Banking increased by 28 per cent.Corporate and Investment Banking contributed 45 per cent of normalised headline earnings and Personal and Business Banking 43 per cent.Earnings growth may be slower in the second-half of the year, but Standard Bank said its financial targets of a normalised return on equity of 24 per cent and normalised headline EPS growth of inflation plus 10 percentage points remain reachable.Normalised headline EPS excludes non-trading, capital and certain extraordinary items and excludes the effects of treasury shares – preference shares issued by the company to fund selling a stake in the group to black investors and shares held for policyholders in insurer Liberty Group.The group, which operates in 17 African countries and 21 other countries across the world, said it would increase its interim dividend by 18 per cent to 144 cents per share.Nampa-ReutersConsumer spending remained strong, although there are now signs of slower growth, albeit off a high base,” Standard Bank Chief Executive Jacko Maree said in a statement.South African banks have benefited from record low interest rates in recent years, which led to increased credit demand but two interest rate hikes since June are likely to put the brakes on consumer spending.Headline EPS increased to 359 cents per share in the six months to end-June – in the middle of a 15 to 20 per cent growth range given by the group on Aug. 1.Net interest income increased 24 per cent to 7,464 billion rand and 23 per cent on a normalised basis, while credit impairment charges rose 104 per cent from a low base.The banking group said loans and advances at its Corporate and Investment Banking business jumped by 56 per cent after several years of subdued growth while lending assets at Personal and Business Banking increased by 28 per cent.Corporate and Investment Banking contributed 45 per cent of normalised headline earnings and Personal and Business Banking 43 per cent.Earnings growth may be slower in the second-half of the year, but Standard Bank said its financial targets of a normalised return on equity of 24 per cent and normalised headline EPS growth of inflation plus 10 percentage points remain reachable.Normalised headline EPS excludes non-trading, capital and certain extraordinary items and excludes the effects of treasury shares – preference shares issued by the company to fund selling a stake in the group to black investors and shares held for policyholders in insurer Liberty Group.The group, which operates in 17 African countries and 21 other countries across the world, said it would increase its interim dividend by 18 per cent to 144 cents per share.Nampa-Reuters