Standard Bank shares plunge on disappointing 2024 earnings outlook

By Adelaide Changole

Shares of South Africa’s Standard Bank Group Ltd. slumped the most in more than six months after the lender’s earnings outlook for 2024 disappointed some investors.

The stock dropped as much as 5.4% in Johannesburg, the biggest intraday loss since Sept. 13. The bank flagged low to mid-single-digit growth in net interest income, mid-single-digit gains in fee and commissions and lower trading revenue for this year, Morgan Stanley said in a note after the earnings report.

“Putting all this together suggests mild downside risk to the earnings outlook,” analyst James Starke said in the emailed note. 

Sim Tshabalala

The slowdown in the revenue print will be due to greater competition and some one-off events that happened throughout the continent that may not repeat themselves in 2024, Chief Executive Officer Sim Tshabalala said in an interview with Jennifer Zabasajja of Bloomberg Television. An elevated cost base given the lender operates in Africa, as well as currency weakness in nations where the bank has business will “create some pressure” in 2024, he said. 

“That is just rational,” Tshabalala said. “It’s just being sanguine about what is likely to happen and that’s why we have guided the market in the way that we have.”

Africa’s biggest lender by assets still reported record profit in 2023 as business across the continent helped counter tepid growth at home. The rest-of-Africa operation overtook its South Africa unit last year and now accounts for 42% of the bank’s headline earnings, the lender said in a filing on Thursday. Its home market brings in 34% of earnings.

The lender’s operations outside of South Africa posted a 49% jump in headline earnings in the year, lifting the bank’s after-tax profit to a record 44.21 billion rand ($2.4 billion), surpassing analysts’ estimates of 43.07 billion rand. 

Its South African business, on the other hand, grew just 3%, as the continent’s most-advanced economy struggles with energy and logistics crises. 

“We won’t grow as fast in 2024, but we remain very much on track to meet the financial targets,” Tshabalala said in an earlier statement. 

The bank proposed a dividend payout of 14.23 rand per share for the period, less than an estimated 14.61 rand.

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