Nigeria results take toll on Standard Bank SA share price

THE share price of Standard Bank Group of South Africa fell by up to 1.23% in intraday trading (in Johannesburg, SA) on Friday as the market digested the poor results of its Nigerian subsidiary, Stanbic IBTC, for the half-year to end-June, unveiled on Thursday.

The stock ended the day 0.58% down after Stanbic IBTC’s net profit for the period fell 29%.

This translated into a 46% drop in basic earnings per share, despite Stanbic IBTC increasing customer deposits in the period.

Fee and commission income were static, while trading and other revenue fell 14% and 7%, respectively. It was an unexplained turn in fortunes for a bank that grew profits 56% in the previous corresponding period. It lodged only its financial statements with the Nigerian Stock Exchange, without a management report or analysis.

Standard Bank spokesman Erik Larsen said economic contractions caused by lower oil prices had affected companies operating in Nigeria. “Stanbic IBTC is no exception, and its executive team will be engaging with the market next week regarding these results,” he said.

Since last July, crude oil prices have nearly halved and the Nigerian stock market has slumped more than 25%.

Mr Larsen would not divulge the effect of Stanbic IBTC’s performance on the Standard Bank Group, which is due to release interim results next month.

Arqaam Capital analyst Jaap Meijer said he expected it to shave 2.5% off the group’s earnings. Neville Chester, portfolio manager at Coronation Fund Managers, one of Standard Bank’s largest shareholders, said it was staying focused on Standard’s long-term prospects as it expanded in sub-Saharan Africa.

“We expect different markets will be at different points of their respective credit cycles and this will impact on short-term results,” he said.

“Over the longer term, the low levels of credit penetration mean that these are attractive long-term growth markets.”