Standard Bank after-tax profit up 58%, beats expectations

Standard Bank plc yesterday reported a 58 percent rise in after-tax profit for the year ended December 31 2022 driven by growth in revenue from lending and cost-cutting operations.

The bank has posted a profit of K39.2 billion and this is the second consecutive year that the Malawi Stock Exchange-listed bank’s financial performance has exceeded expectations.

In the year under review, the macro-economic environment was characterised by scarcity of foreign currency and fuel, rising inflation and intermittent electricity supply.

“Despite the challenges in the operating environment, the group performed better-than-expected as it managed to grow its balance sheet which in turn resulted in higher profitability when compared to prior year,” reads the financial report co-signed by the board chairperson Ngeyi Kanyongolo, chief executive officer Phillip Madinga and other directors.

The report shows that total revenues grew by 40 percent year-on-year from 31 percent the year before, driven by growth in both net interest income and non-interest revenue.

Net interest income grew by 49 percent year-on-year from 25 percent buoyed by growth in loans and advances to customers and financial investments. The bank’s loan book grew by 14 percent while income from financial investments grew by 99 percent, according to the financial report.

“The growth in interest earning assets was as a result of growth in deposits from customers which also grew by 48 percent year-on-year,” reads the report.

It further says the bank’s non-interest revenue grew by 28 percent while an increase in transaction volumes boosted revenue from net fees and commissions by 15 percent with trading revenue growing by 35 percent boosted by an increase in trading volumes.

Although the 25 percent devaluation of the kwacha in May 2022 resulted in an increase in the bank’s operating costs by 28 percent, it reduced cost-to-income ratio from 52 percent in 2021 to 48 percent in 2022.

“The group continues to focus on cost and process optimisation initiatives in order to achieve operational efficiency,” reads the report, citing costs related to enhancing the security of transactions across digital platforms and foreign currency costs as part of the cost consideration for 2022.

The report shows that the bank’s highest credit exposures were experienced in personal markets and the agriculture, wholesale and retail and communication sectors.

To ensure transparency and accountability of the bank’s performance, the bank’s management will later this month hold an investors’ conference where shareholders and other key stakeholders will access material information related to its overall 2022 performance.

On the economy, Standard Bank says it remains cautiously optimistic about improved prospects despite concerns over global supply chain disruptions and foreign currency shortage which is expected to persist in 2023.

The bank also expects headline inflation, which exceeded 20 percent in 2022, to ease on account of base effects from food and foreign exchange markets.