Standard Bank SA business outperforms

South Africa's Standard Bank has recorded strong financial performance for the year ended December 31, with CEO Sim Tshabalala attributing the success to resilience in customer activity and improved balance sheets. The group saw a significant increase in headline earnings per ordinary share by almost 60%, accompanied by a more than doubling of dividends. During an interview with CNBC Africa, Tshabalala outlined the key drivers behind the impressive results. The consumer segment in South Africa played a pivotal role, with individuals across different income brackets benefiting from various economic factors. At the top end, people retained jobs and had investment income, while the middle class enjoyed reduced interest rates. Those at the bottom end received social grants, leading to increased borrowing for home loans, vehicle financing, and unsecured loans. This resulted in a 9% growth in loans and robust net interest income in the retail banking sector. In addition, the corporate and investment banking division experienced growth due to improved consumer activity and right backs of bad debts, leading to increased fees and commissions. Good cost management and a reduction in bad debt charges contributed to the overall growth in headline earnings. While corporate and consumer confidence in South Africa saw an uptick, Tshabalala noted that the investment activity by corporates was particularly noteworthy, as businesses began retooling and preparing for potential investment opportunities stemming from expected structural reforms in the country. The CEO highlighted the importance of infrastructure development, trade opportunities with African countries, and the increasing digital connectivity as key drivers of future growth in sub-Saharan Africa. Despite the economic challenges posed by global geopolitical events, including the crisis in Ukraine, Standard Bank remains cautiously optimistic about the region's growth prospects. Tshabalala emphasized the minimal exposure of the bank to Russia and Ukraine, with a focus on monitoring multinational clients with operations in those regions. Structural reforms and the reduction of red tape in South Africa have been instrumental in driving economic activity across various sectors, with a focus on 4G and 5G rollouts, renewable energy projects, and ESG opportunities. While forecasting a 2% economic growth rate for South Africa, Tshabalala acknowledged external risks such as the ongoing geopolitical tensions and the slow vaccine rollout could potentially hinder growth and lead to a sub-2% outcome. Overall, Standard Bank's strong performance in 2021 reflects the resilience of the South African economy and the bank's strategic focus on customer-centric growth strategies.