JOHANNESBURG - Standard Bank Group, South Africa's largest bank by assets, has confirmed its financial outlook for 2023, projecting robust revenue growth that outpaces rising costs. The bank has experienced a notable increase in revenues during the January to October period.
The bank's management remains confident about maintaining a strong positive jaws effect, a banking term that indicates revenue is growing faster than expenses, despite encountering higher operational costs. This optimism comes even as competitive pressures in the mortgage market and other factors have led to a moderation of cost growth from an earlier rate of 16%.
In the broader landscape, Standard Bank Group has faced challenges such as decreased demand and affordability issues, which have tempered loan disbursements and slowed portfolio growth among its retail and business clients. However, the bank anticipates that credit impairment charges will decrease in the second half of the year. The credit loss ratio is expected to be above the mid-point but still within the targeted range of 70-100 basis points.
A key highlight for Standard Bank Group has been the substantial contribution of its operations across Africa, which have significantly boosted earnings. These regions account for an impressive 44% of the group's headline earnings. The bank also remains on course to achieve its return on equity target of 17%-20% by 2025.
InvestingPro Insights
Standard Bank Group's commitment to robust revenue growth is not only a projection but is reflected in real-time data, with revenue growth accelerating as one of the noteworthy InvestingPro Tips. This aligns with the bank's report of increased revenues and the positive jaws effect mentioned in their financial outlook. Moreover, the bank's strategy seems to be yielding results, with a high return on invested capital and consistently increasing earnings per share, further emphasizing the bank's efficiency and profitability.
InvestingPro Data also highlights that Standard Bank Group is a prominent player in the Banks industry, with a significant dividend to shareholders, having maintained dividend payments for an impressive 32 consecutive years. This dedication to shareholder returns, coupled with the bank's optimistic revenue growth, presents a compelling case for investors.
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