Standard Bank Group Ltd (SBGOF) (Q4 2024) Earnings Call Highlights: Navigating Growth Amid ...
Headline Earnings: ZAR45 billion, up 4% year-on-year; 14% growth in constant currency terms.
Dividends: ZAR15.7 per share, a 6% increase.
Return on Equity (ROE): 18.5% for the year.
Cost to Income Ratio: Improved to 50.5%.
Credit Loss Ratio: 83 basis points.
Common Equity Tier 1 Ratio: 13.5%.
Revenue Growth: Compound annual growth rate of 12% since 2020.
Loan Growth: 3% increase in 2024.
Deposit Growth: 6% increase.
Net Interest Income: Grew by 3% to ZAR201 billion.
Non-Interest Revenue: Net fee and commission revenue increased by 4% to ZAR32 billion.
Insurance and Asset Management Earnings: Grew by 17% to ZAR3.3 billion.
Assets Under Management: ZAR1.5 trillion.
Dividend Payout Ratio: 56%.
Headline Earnings Growth Target (2026-2028): 8% to 12% CAGR.
Return on Equity Target (2026-2028): 18% to 22%.
Warning! GuruFocus has detected 6 Warning Sign with SBGOF.
Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Standard Bank Group Ltd (SBGOF) achieved a headline earnings growth of 4% in 2024, with a 14% increase in constant currency terms.
The company declared dividends of ZAR15.7 per share, marking a 6% increase from the previous year.
The return on equity for the year was 18.5%, well within the target range of 17% to 20%.
The cost to income ratio improved to 50.5%, indicating effective cost management.
Insurance and asset management business units showed strong growth, with earnings increasing by 17% to ZAR3.3 billion.
Weaker African currencies, particularly the Nigerian naira and the Angolan kwanza, reduced rand earnings by 9%.
Headline earnings growth was moderate at 4%, compared to 35% in 2022 and 27% in 2023.
The net interest income growth was relatively subdued at 3%, impacted by lower margins and pricing pressures.
Credit impairments on financial investments increased due to sovereign credit risk deterioration in Malawi and Mozambique.
The devaluation of subsidiary currencies against the rand had a meaningful impact on the income statement, particularly in West Africa.
Q: How should we think about growth in trading income for 2025 and beyond, and what factors might affect this momentum? A: Luvuyo Masinda, CEO of Corporate and Investment Banking, explained that the trading revenue is largely driven by client activity, which gives confidence in its sustainability. The supportive macroeconomic conditions in Africa are expected to continue driving growth in trading revenues. Additionally, the development of financing businesses within global markets is anticipated to contribute to future growth.
Q: Can you expand on the scope for further cost containment in the medium term? A: Arno Daehnke, Chief Finance and Value Management Officer, noted that cost efficiency is an ongoing focus. The reduction of physical distribution costs through digital solutions and the decrease in amortization costs as more technology is processed in the cloud are expected to provide natural tailwinds for cost containment.
Q: What are your expectations for advances growth in BCB and PPB segments in 2025? A: Bill Blackie, CEO of Business and Commercial Clients, indicated that asset demand in South Africa is expected to continue growing, with strong asset growth in Africa regions. Funeka Montjane, CEO of Consumer & High Net Worth Clients, added that there are early signs of double-digit increases in disbursements, particularly in personal loans and mortgages.
Q: What gives you confidence that currency devaluations in Africa will not repeat in 2025? A: Arno Daehnke highlighted that improved macroeconomic outlooks in countries like Nigeria, Ghana, Malawi, and Angola, with expected reductions in inflation, should stabilize currencies. This improved outlook is expected to prevent a repeat of the significant currency devaluations seen in 2024.
Q: What elements of the income statement or balance sheet need to change to achieve the 18% to 22% ROE target? A: Arno Daehnke emphasized the need for revenue growth, cost discipline, and capital efficiency. The focus will be on driving top-line growth, maintaining positive operating leverage, managing credit portfolios carefully, and optimizing capital deployment to meet hurdle rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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