Interest rates

Rising interest rates and end of lockdown boost Standard Bank earnings

Standard Bank’s profits rose 28% in the first three months of 2022 compared to the same period in 2021.

Gallo Images/Foto24/Brendan Croft

Rising interest rates, rising economic activity as more countries lift lockdowns and rising commodity prices have become a boon for Standard Bank.

The blue bank said its profits increased by 28% in the first three months of 2022 compared to the same period in 2021.

The 50 basis point increase in interest rates in SA – one in January and one in March – means the bank has received higher net interest income than in the first quarter of 2021, when the repo rate of SA was still at a historically low level.

And it’s not just in South Africa that the bank’s net interest income is improving. Angola, Ghana, Mauritius, Mozambique, Namibia and Zambia, where Standard Bank operates, also faced rate hikes.

“Higher average interest rates and a larger average balance sheet supported the group’s net interest margin and net interest income growth period-over-period. Higher transactional activity supported by a broader customer base and fewer restrictions have supported fee growth,” Standard Bank wrote in a business update. Monday.

The banking group said global market volatility and rising commodity prices also boosted its trading revenue as more customers transferred money. The result was slightly higher trading revenue than in the first quarter of 2021.

And the inconveniences that banks suffered at the start of the Covid-19 pandemic are also fading. Standard Bank said its credit impairment charges – which hit all-time highs in 2020 – continued to decline. The group’s credit loss ratio improved to the lower end of its target range of between 70 and 100 basis points.

The performance of the bank’s insurance business was equally positive. Standard Bank said Liberty Holdings – which became its wholly-owned subsidiary in February and delisted from the JSE – posted a small profit in the first quarter of 2022.

Get the biggest business stories sent by email every day of the week.

Go to the Front page of Fin24.