Standard Bank Reports R26bn Increase in Earnings
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JIMMY MOYAHA: The Standard Bank Group has published its interim results for the six months ending June 30, 2026. Headline earnings have shown a double-digit growth, with the return on equity aligned well within the target range for 2028.
The organization is exhibiting strong results across all primary metrics both locally and throughout the African continent. We will further explore these results with the group’s CEO, Sim Tshabalala, who is here to discuss the performance with us.
Malume Sim, it’s always great to have you here. Thanks for joining us. The group seems to be on a roll with consistent victories.
SIM TSHABALALA: Absolutely, with 52,000 employees making around 10 decisions daily, this generates substantial momentum…
This led to a headline earnings figure of R26 billion, reflecting a 10% increase.
Moreover, the return on equity has climbed to 19.8%.
This demonstrates the consistent effort of countless individuals striving for excellence each day.
JIMMY MOYAHA: Malume Sim, let’s talk about the operational performance of the business, particularly in Africa. While the global landscape is uncertain with various geopolitical challenges, the group has managed to derive 40% of its earnings from Africa, operating in nearly half of the continent’s countries. The Standard Bank Group functions in 21 out of 54 African nations.
In spite of external macroeconomic factors that might affect you, the business continues to perform commendably. What do you attribute this success to?
SIM TSHABALALA: Jimmy, it hinges on portfolio theory – some segments like CIB [Corporate and Investment Banking] might flourish while others like BCB [Business and Commercial Banking] and BPB [Personal and Private Banking] may face challenges.
When the economic cycle changes, it’s often the retail sector that outperforms the wholesale sector.
This pattern has been consistent for the past three decades since I entered the banking industry.
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We have an impressive portfolio spread across 21 countries, contributing to 80% of Africa’s GDP, which is quite significant. You’ve mentioned the growth rate at 10.4%, which equates to a 7% increase.
Interestingly, in relation to your macro observations, numerous interest rates have decreased across the continent while several currencies have depreciated against the South African rand.
That 10.4% growth converts to effectively 11% in local currency.
The 10.4% growth translates to 11% in constant currency, equating to a 7% growth when converted to rand.
We observe stagnant performance in East Africa, with South and Central Africa up by 6%, while West Africa stands out with a remarkable 13% growth.
JIMMY MOYAHA: Malume Sim, let’s shift our focus to your investment strategy, particularly the recent announcement of an $80 million investment to expand operations in Tanzania. We are witnessing substantial revenue growth, which is crucial to note – we are only halfway through the financial year.
SIM TSHABALALA: Certainly. Our investments are aimed specifically at enhancing our top line and boosting revenues.
The investment mentioned by the CFO earlier today is dedicated to our operations in Tanzania.
We’re also planning to increase our stake in our Angolan bank to 75%.
This will be executed through an IPO, with the investment amount contingent on the IPO’s pricing.
We are committed to supporting our clients in their investments and trading activities, whether they are importers or exporters, across the continent, thereby facilitating organic growth and leveraging prevailing trends such as infrastructure development and demographic shifts in African trade.
The group is well-positioned to take advantage of these opportunities.
JIMMY MOYAHA: Considering these relationships and emerging trade routes, what is the bank’s strategy for the remainder of this year and beyond?
With the 2028 target for return on equity set between 18% and 22%, and currently nearing 20%, it seems plausible to surpass these expectations by year-end.
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While 2028 is a few years away, the bank’s momentum indicates you might achieve that target sooner. How will you adjust your growth strategy in Africa, especially given your presence spans nearly half of the continent?
Furthermore, with operations extending to London and Hong Kong, how will the bank implement its strategy towards 2028?
SIM TSHABALALA: Drawing an analogy from rugby, the Currie Cup isn’t won in June; we are only in August. We have assured the investment community that our banking revenues will experience mid to high single-digit growth.
We aim for a cost-to-income ratio below 50%. Additionally, we are targeting improvements in group ROE beyond 2025, and we are confident in achieving this.
As you highlighted, we aim for a CAGR (compound annual growth rate) of 8% to 12% in our headline earnings per share through 2028.
Our actions are carefully orchestrated to reach these objectives.
Your understanding of the Gordon Growth Model suggests that we need not only a healthy return on equity, but also to sustain revenue and earnings growth – which we are diligently managing.
These strategies involve expanding our lending portfolio while ensuring strong risk management. We need to allocate capital judiciously while keeping our costs efficient.
We have recorded ten consecutive reporting periods of positive draws; that’s quite an achievement, Jimmy.
While many external factors like interest rates are beyond our control, we can influence our hiring practices and productivity levels.
We see immense potential on the continent.
As the continent grows more interconnected, it will become increasingly appealing for those seeking resources, investing in infrastructure, or harnessing human capital.
All these elements will contribute to rising revenues. We remain focused on prudent expense management and smart capital allocation to enhance headline earnings and return on equity.
JIMMY MOYAHA: Malume Sim, before we wrap up, what concerns, if any, do you and your management team hold? Given the current positive momentum, it seems there’s little to worry about.
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However, in light of the previously mentioned external factors, I assume certain elements must keep you focused on your goals. What concerns you and your team?
SIM TSHABALALA: We are attentive to the competitive landscape.
The competition in South Africa and the continent is intense, requiring us to keep a close eye on the actions of our rivals.
Why is Absa’s home loan sector showing improvement compared to ours? What can be learned from their strategies?
What actions is FirstRand undertaking? How can we adapt our strategies based on their moves?
What’s happening with Standard Chartered, and how should we respond?
Thus, we remain focused on the competition.
We also closely monitor the actions of fintechs that we might not be currently pursuing.
Additionally, crime in general, particularly cybercrime, poses a significant concern; the sophistication level is alarming.
Lastly, the ongoing conflicts in the Middle East, Ukraine, and various wars across the African continent are troubling sources of concern.
JIMMY MOYAHA: Aiming to sustain momentum while avoiding distractions from external uncertainties.
The Standard Bank Group has reported impressive headline earnings for the first half of their financial year, with an anticipated improvement in return on equity, while the company remains devoted to nurturing positive trends in these metrics.
We will conclude this discussion on that note. Group CEO Sim Tshabalala has joined us to reflect on the first two quarters of their financial year and shed light on what the future may hold.