Standard Bank joint CEO Sim Tshabalala. Picture: MARTIN RHODES
Standard Bank joint CEO Sim Tshabalala. Picture: MARTIN RHODES

STANDARD Bank hopes to close the sale of its controlling stake in the London-based Global Markets business in six months’ time.

It also plans to set up a self-standing branch in South Sudan by the end of the 2014 financial year as part of its growth plans in the continent.

In results for the six months ended June, Standard Bank on Thursday reported an improvement in its rest of Africa operations. If that improvement is sustained, it gives Standard Bank an opportunity to offset challenges in South Africa, should growth slow.

In terms of total income contribution to the group, the rest of Africa constituted 30% — growing from 17% in 2010.

Personal and business banking in the rest of Africa swung to headline earnings of R53m from a loss of R201m in the interim period in 2013. "It represents a change of strategy. They are looking for high-quality customers," Avior research analyst Harry Botha said on Thursday.

Personal and business banking in the rest of Africa grew customer numbers by 6% to 15.9-million.

Headline earnings from the overall group personal and business banking division grew 13% to R4.19bn, while its corporate and investment division suffered a 22% drop to R2.82bn, partly knocked by potential losses from fraud in physical aluminium held in bonded warehouses in China.

Standard Bank Group CEO Sim Tshabalala said on Thursday that the plan was to sustain the momentum in the rest of Africa. He said Standard Bank now had an infrastructure and a good product set in the continent, and if the macroeconomic environment remained positive the bank would sustain earnings growth.

South African personal and business banking posted a 6% rise in headline earnings to R4bn in the 2014 interim period, with the business banking unit delivering the biggest growth.

The group personal and business banking division at Standard Bank contributes 50% to group headline earnings.

However, instalment sale and finance leases — a unit within personal and business banking that provides financial facilities for the acquisition of vehicles and other assets — posed a challenge to the bank as its bad debts increased dramatically.

Credit impairments in the instalment sale and finance leases unit doubled to R504m in the six months to end-June 2014 compared with R251m before.

Mr Tshabalala attributed this partly to "suboptimal decisions" taken on credit in the instalment sale and finance leases.

At a group level Standard Bank posted a 2% rise in headline earnings to R8.3bn in the six months ended June, hit by an $80m provision held against suspected Chinese fraud affecting its commodity finance business.

The corporate and investment banking division reported a 22% fall in headline earnings to R2.8bn, contributing 34% to the Standard Bank Group.

Corporate and investment banking experienced an increase in operational costs, and slower growth rates in East Africa. The division was also affected by the alleged fraud in China.

One of the issues that Standard Bank Group will be dealing with in the next year is the maturity of its black economic empowerment deal and how it affects the transformation scorecard in terms of ownership. The scheme, known as Tutuwa, has a total value of R10.7bn.