Standard Bank Group (SBK) Trading Update summary

Macroeconomic and operational environment

• Global uncertainty, slower monetary policy easing, and US trade policies have moderated growth expectations, but sub-Saharan Africa is still forecast to grow at 3.8% in 2025.

• South Africa benefited from low inflation, interest rate cuts, and higher commodity prices, supporting real wage growth and disposable income.

• Market volatility and higher commodity prices created opportunities despite subdued confidence.

• Inflation moderated and interest rates declined across operating regions, but at a slower pace than expected.

• Macroeconomic uncertainty and geopolitics impacted demand and monetary policy, with global growth slowing.

Financial performance and business trends

• Headline earnings grew 10% in ZAR for 5M25, with mid-teens growth on a constant currency basis; ROE remained within the 17%-20% target range.

• Net interest income was flat, with net interest margin declining due to lower rates and competitive pricing, partially offset by Africa Regions growth.

• Non-interest revenue grew by mid-teens, driven by strong client activity, robust trading revenue, and fee income.

• Credit impairment charges were lower, with the credit loss ratio just above the top end of the 70–100bps range, mainly due to seasonal effects and Mozambique sovereign downgrade.

• Balance sheet growth was slower than expected, mainly due to delayed interest rate cuts and subdued credit demand in retail and business banking.

Cost management and capital actions

• Cost growth slightly outpaced revenue growth, mainly due to staff costs and specialist hires, but other expenses were well contained.

• Multiple cost initiatives are underway, including real estate optimization, technology rationalization, and efficiency programs in insurance and asset management.

• Headcount remains flat, with incentives adjusted to performance; cost growth is tracking slightly better than expected.

• Share buybacks totaling ZAR 7 billion since 2024 are expected to add 1%-2% to headline earnings per share.

• Cost-to-income ratio expected to be flat or down year-on-year.