STANBIC Bank has transcended the macroeconomic challenges bedeviling the country to post an inflation adjusted profit after tax of $1.2 billion for the half year to June 2021.
The Standard Bank Group subsidiary has sustained its impressive performance which has defied the prevailing economic conditions having rebounded from a loss position in the half year in 2019 to a profit position in 2020 in the comparable period.
One year down the line, the top-ranking financial services provider has consolidated that steady performance although the $1.2 billion was slightly below the $1.3 billion inflation adjusted profit achieved in the prior comparable period last year.
In a statement accompanying the results, Stanbic’s chairman, Mr Gregory Sebborn, attributed the slight drop in profit to depressed performance of the trading revenue line owing to subdued trading activity during the interim period.
Mr Sebborn said the foreign currency shortages in the market combined with periods of lockdown also contributed to the marginal reduction in profit for the Standard Bank Group subsidiary.
“In addition, operating expenses increased in comparison to the prior year driven by expenditure of $430 million in the staff optimisation exercise,” said Mr Sebborn.
Stanbic Bank ended the six months period to June 2021 with a qualifying core capital of $5.7 billion, outpacing the local currency equivalent of the required US$30 million regulatory minimum core capital to be achieved by Tier 1 banks by December 31, 2021.
Stanbic’s stellar performance comes at a time when the economy is still stifled by a number of challenges, chief among them being the Covid-19 pandemic, high inflation, foreign currency shortages, low disposable incomes and unstable energy supply.
“The policy environment and fiscal space are likely to remain constrained to contain these challenges in the short to medium term outlook,” said Mr Sebborn.
Giving a business performance overview for the six months to June 2021, Stanbic Chief Executive (CE), Mr Solomon Nyanhongo, said the institution recorded a 218 percent growth in its net interest income, closing the period at $2.6 billion and surpassing the income of $803 million for the prior period..
“The uplift in interest income was largely buttressed by the strong growth in interest earning assets during the period as new lending assets were written. Fee and commission income for the period had grown by 167 percent from $1 billion in 2020 to $2.7 billion, largely spurred by the improved volumes of transactions which were being processed on our service channels after the two month lockdown period (January and February 2021) as most businesses were operational again,” said Mr Nyanhongo.
The Bank’s credit impairments ended in a net release of $105 million, improving from a prior period charge of $797 million, largely reinforced by better recoveries on foreign currency denominated financial assets.
Mr Nyanhongo said Stanbic embarked on a staff optimization exercise during the first half of the year which led to the increase in its total operating expenses from $2.7 billion in the comparative period to $3.2 billion.
“This was on the back of progress in the Bank’s digitization strategy which saw an expansion in the digital solutions available for our transacting customers,” said Mr Nyanhongo.
He said the demand for local currency funding continued on an upward trend during the period as working capital requirements swelled. This saw the bank’s net lending book increasing in real terms from $10.7 billion as at the end of December 2020 to $12.2 billion as at the end of June 2021.