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Standard Bank, the largest lender in South Africa, has announced a significant increase in profits by up to 35 percent for the first half of its 2023 financial year.
A trading update released on Friday shows that the group’s headline earnings per share (Heps) are expected to surge between 30 percent and 35 percent for the six months ending June 2023. Heps is a key profit measure for corporates in South Africa.
The update saw the group’s share price shoot up over 5 percent, at around R192.77 a piece, by midday.
The bank attributed some of its success to favourable tailwinds from higher interest rates.
Standard Bank is scheduled to report its half-year results on 17 August.
In a previous update issued over a month ago, Standard Bank said it had benefitted from the impacts of higher-than-expected interest rates in the markets it operates, which had helped boost profits and income earned from interest.
On Friday, the bank said the group continues to benefit from the higher interest rates, which generally help banks as servicing debt becomes more expensive for consumers.
The South African Reserve Bank’s hiking cycle, which began in November 2021 in response to rocketing inflation, has seen the repo rate increase by a combined 475 basis points.
While this bodes well for interest income and top-line earnings, it has hurt impairment charges, which Standard Bank said grew nearly 50 percent during the first five months of the year. The lender added that it continues to benefit from a growing client franchise. – Moneyweb
Online Reporter