Standard Bank year earnings up 23%

JOHANNESBURG – South Africa’s Standard Bank lifted 2005 headline earnings per share by 23 per cent, helped by strong consumer and corporate lending, and said it expected to maintain earnings growth in the current year.

Standard Bank said last week that annual headline EPS – the key profit measure for South African firms which excludes non-trading, capital and certain extraordinary items – under IFRS accounting rules increased 23 per cent to 702,3 cents, in line with the bank’s own forecast. Shares in Standard Bank, Africa’s biggest banking group by assets, rose 1,42 per cent to 78,40 rand in line with the JSE Securities Exchange banking sector.Africa’s largest economy is enjoying its longest expansion on record with low interest rates helping to drive a consumer-led boom partly fuelled by a growing black middle class.But the benefits are yet to filter to the poor majority – many of whom remain unemployed.A Johannesburg-based analyst said the annual results showed a softer operational performance than expected while provisions for bad debts increased more than expected.”It looks as if the impairment ratio was a lot higher than I expected.These guys (Standard Bank) are badly out of line when you compare it to Absa, Nedbank and FirstRand,” the analyst, who declined to be named, said.He said Standard Bank may be preparing for an increase in future bad debts by making bigger provisions than its rivals.The group’s credit impairment ratio of 0,41 per cent of total advances was down slightly from the previous financial year but still above that of rivals like FirstRand’s ratio of around 0,3.Normalised headline EPS, which takes the effect of preference shares issued for the group’s black economic empowerment transaction into account, rose 19 per cent to 666 cents.Net interest income increased 13 per cent to 12,98 billion rand.”Net job creation, the positive effect of rising equity and house prices, increased household disposable income and the growing middle class resulted in improved consumer confidence and provided a strong platform for consumer and business banking in South Africa,” Standard Bank Chief Executive Officer Jacko Maree said in a statement.Standard Bank said its RoE ratio under IFRS rose to 27,8 per cent, making it the second-best RoE ratio of South African banks behind FirstRand’s 28 per cent.The bank, with a forecast 2006 price-earnings ratio of 11,7 times, is cheaper than rival Nedbank at 12,25 but slightly expensive compared with South Africa’s biggest retail lender Absa at 10,7 times, according to Reuters data.- Nampa-Reutersxt yearShares in Standard Bank, Africa’s biggest banking group by assets, rose 1,42 per cent to 78,40 rand in line with the JSE Securities Exchange banking sector.Africa’s largest economy is enjoying its longest expansion on record with low interest rates helping to drive a consumer-led boom partly fuelled by a growing black middle class.But the benefits are yet to filter to the poor majority – many of whom remain unemployed.A Johannesburg-based analyst said the annual results showed a softer operational performance than expected while provisions for bad debts increased more than expected.”It looks as if the impairment ratio was a lot higher than I expected.These guys (Standard Bank) are badly out of line when you compare it to Absa, Nedbank and FirstRand,” the analyst, who declined to be named, said.He said Standard Bank may be preparing for an increase in future bad debts by making bigger provisions than its rivals. The group’s credit impairment ratio of 0,41 per cent of total advances was down slightly from the previous financial year but still above that of rivals like FirstRand’s ratio of around 0,3.Normalised headline EPS, which takes the effect of preference shares issued for the group’s black economic empowerment transaction into account, rose 19 per cent to 666 cents.Net interest income increased 13 per cent to 12,98 billion rand.”Net job creation, the positive effect of rising equity and house prices, increased household disposable income and the growing middle class resulted in improved consumer confidence and provided a strong platform for consumer and business banking in South Africa,” Standard Bank Chief Executive Officer Jacko Maree said in a statement.Standard Bank said its RoE ratio under IFRS rose to 27,8 per cent, making it the second-best RoE ratio of South African banks behind FirstRand’s 28 per cent.The bank, with a forecast 2006 price-earnings ratio of 11,7 times, is cheaper than rival Nedbank at 12,25 but slightly expensive compared with South Africa’s biggest retail lender Absa at 10,7 times, according to Reuters data.- Nampa-Reutersxt year