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South Africa's Standard Bank warns of up to 50% profit slump

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07/29/2020 | 01:27am EDT
The logo of South Africa's Standard Bank is seen above the company's headquarters in Cape Town

South Africa's Standard Bank said on Wednesday that its half-year profit could drop by as much as 50% as the coronavirus crisis hits its business.

Africa's biggest bank by assets, along with all of South Africa's major lenders, had already warned that profits would likely be at least 20% lower, with the pandemic prompting a spike in bad loans and also hitting new business and fee income from transactions.

Its headline earnings per share - the main profit measure in South Africa - for the six months to June 30 would likely fall by between 30% and 50%, compared to the 837.4 cents it reported in the same period last year, it said in a trading update.

"The group remained well capitalised and liquid," it continued.

South African lenders, which managed to shield themselves from the more devastating impact of the 2008-2009 financial crisis, are now facing one of their biggest ever hits to profits as a result of the pandemic.

South Africa's economy, already in recession, is forecast to decline by over 7% this year, according to the central bank, and the Banking Association of South Africa has warned problem loans could rise to their highest ever level of 10%.

Standard Bank did however say it is set to benefit from a bigger than expected gain on the sale of its 20% stake in ICBC Argentina to the Industrial and Commercial Bank of China, thanks to the slump in South Africa's rand.

The group will now get 1.4 billion rand ($85.06 million) as a result, rather than 600 million rand.

($1 = 16.4591 rand)

(Reporting by Emma Rumney; Editing by Olivia Kumwenda-Mtambo, Kenneth Maxwell and Louise Heavens)

Stocks mentioned in the article
ChangeLast1st jan.
BANK OF CHINA LIMITED -2.03% 2.41 End-of-day quote.-27.63%
DOW JONES AFRICA TITANS 50 INDEX -0.71% 462.55 Delayed Quote.-13.41%
EURO / ARGENTINE PESO (EUR/ARS) -0.70% 87.844 Delayed Quote.31.26%
US DOLLAR / ARGENTINE PESO (USD/ARS) -0.36% 75.499 Delayed Quote.26.22%
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