Standard Bank

Standard Bank

JSE-listed South African banking group with pan-African presence operating across 20 African countries with leading positions in CIB, retail, and investment banking.

"In 2021, the group set out detailed financial targets for 2025 that were comfortably met or surpassed in its recently published results. The 2020 financial year was heavily distorted by Covid, so it is preferable to work off a "clean" 2019 base. In the last six years, the group has grown earnings per share at a respectable 9% compound annual growth rate, while the group's ROE has risen from 16.8% to 19.3%. A large contributor to this performance is its Africa Regions footprint – i.e., its presence in 20 countries outside of South Africa. This franchise has been built up steadily over many years and today accounts for c. 40% of group earnings. Over the same six-year period, the Africa Regions business has more than doubled earnings (in rands), with no single country contributing more than 11% to the total. This footprint is particularly beneficial to its Global Markets business in the group's CIB division, which now generates revenues twice those of its South African peers. Standard Bank's significant presence on the rest of the continent exposes it to higher expected rates of economic growth and the ability to participate in significant infrastructure spend as well as growth in trade and capital flows that are expected to shift as African countries forge closer ties with Asia and the Middle East. The group's relationship with China's ICBC bank should provide additional support for this theme. While traditional banks face increasing competition from new entrants, particularly in retail and SME banking, we believe that Standard Bank's formidable Africa Regions franchise sets it apart from its peers. The group recently updated its targets to 2028. It set out in some detail how it aims to compound earnings at 8-12% p.a. and generate ROEs of 18-22%. These targets look eminently achievable to us."