Standard Bank Group (SBK) H2 2023 earnings summary

Executive summary

• Diversified franchise across 4 businesses and 26 countries; FY23 headline earnings rose 27% to R42.9bn and ROE reached 18.8%.

• All regions delivered growth; Africa Regions contributed 42% of earnings, while the 10-year earnings CAGR was 10%.

• Performance remained resilient amid geopolitical and macroeconomic pressure; FY23 targets were tracking ahead of plan, with short-term headwinds persisting.

Financial highlights

• Headline earnings increased 27% to R42.9bn from R33.9bn; banking headline earnings rose 31% to R38.8bn.

• Total income reached R178bn, up 20%; banking total income was R155.2bn, up 21% reported and 26% in constant currency.

• Operating expenses rose 15% to R79.7bn; revenue growth more than offset costs, delivering 5.7% positive jaws in banking.

• Credit impairment charges increased 22% to R16.3bn, driven by home services and business lending; the credit loss ratio rose to 98bps from 83bps.

Outlook and guidance

• FY24 banking NII guidance is low-to-mid single digits; non-interest revenue growth is low single digits, with flat-to-positive jaws expected.

• FY24 credit loss ratio expected at the top of the through-the-cycle 70–100bps range; charges expected to peak in 1H24, mainly from ongoing PPB strain.

• FY24 overall ROE expected inside the 17%–20% target range; dividend payout guidance is 45%–60%.

• FY24 growth outlook includes IMF forecasts of 3.1% globally and 3.8% in sub-Saharan Africa; South African GDP growth expected at 1.2%, subject to easing power and logistics constraints.

• Weighted average forecast currency dilution was 5.8% in 2024; balance-sheet growth expected to be slow in 1H24, improving in 2H24.