Post date: Aug 11, 2011 4:1:41 PM
Standard Bank posted an 11 percent rise in half-year profit on Thursday on the back of cost controls and refocusing on its home market and said it was building up cash for possible Africa acquisitions.
JOHANNESBURG, SOUTH AFRICA . ON LINE BROADCASTING - Standard Bank reported a surprise 11 percent rise in half-year profit on Thursday (August 11), as Africa's biggest bank by assets benefits from a drive to keep costs flat and refocus on its home market.
Standard Bank has been looking to rein in expenses after an expansion drive in emerging markets beyond Africa. The bank this year retooled its strategy to concentrate on the continent and last week sold down its stake in its Argentine unit.
While lenders in Africa's top economy have been hit by weak demand, Standard Bank, which is 20 percent owned by Industrial and Commercial Bank of China (ICBC) is once again building its loan book.
Banking assets increased for the first time in two years, with the loan portfolio increasing 4 percent in the six months to end-June.
"Standard bank took action a while ago to deal with a volatile and uncertain world characterised by low earnings growth so in the aftermath of the first global financial crisis, we took some really stern action. We went through some pain last year retrenching people and that has made us lean and mean and I think we are in a good position to deal with low revenue growth which is what we dealt with in the first six months," said Chief executive Jacko Maree.
Standard Bank, which cut more than 2,000 jobs in London to curb ballooning expenses, said its cost-to-income ratio was little changed from a year ago.
Maree said Africa in some ways had been spared by the effects of the global financial markets turmoil due to its isolation and in fact higher prices of commodities were benefiting producers.
"At one level you can argue because we are further away from the epicentre of the turmoil and because Africa is less developed and less interconnected that there is some benefit in a crisis to a degree of isolation and disconnectedness and I think the one thing that will have a direct impact on Africa is if you saw a big drop in commodity prices because clearly a number of the countries in which we operate benefit from high oil prices, high copper prices and so on," he said.
Last week Standard Bank agreed to sell most of its stake in its Argentine unit to ICBC for 600 million US dollars. In March it sold its 36 percent stake in Russia's Troika Dialog to Sberbank for 372 million US dollars.
Analysts had been waiting to see whether the bank would use the surplus capital to boost its dividend, but it kept its first-half payout flat at 141 cents.
Maree said returns from that sale could be felt as early as the end of this year or early next year -- funds that will build up a "war chest " for potential acquisitions in Africa.
"We are in a fortunate position that we have sold two assets at good prices in both Argentina and in Russia, we have no intention of using that money anywhere else other than on the Africa continent.
On taking control of the Argentina operations of the bank, ICBC will become the first Chinese lender to enter Latin America's third-largest economy.
ICBC, the world's biggest bank by market value, will take 80 percent of commercial lender Standard Bank Argentina and its two affiliates, asset manager Standard Investments and Inversora Diagnol, a commercial service provider.
Shares of Standard Bank are down 16 percent this year, making it the worst performer on Johannesburg's index of bank stocks.