Standard Bank Group takes advantage of R26bn momentum

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JIMMY MOYAHA: The Standard Bank Group reported interim results for the six months ended 30th of June 2026. Headline earnings for that business grew in double digits, with return on equity well within the target range for their 2028 targets.

The business is showing strength across all metrics locally and on the African continent. We’re going to look at the results in more detail with the group chief executive officer, Sim Tshabalala. He joins me on the line now to see what we make of the performance.

Malume Sim, lovely having you on the show, as always. Thanks so much for taking the time.  The group just can’t stop winning.

SIM TSHABALALA: You know, 52 000 people making 10 decisions every day is a huge, huge momentum that gets built …

Resulting in that [headline earnings figure of] R26 billion – up 10%.

And ROE [return on equity] up to 19.8%.

It’s the outcome of thousands of people doing good work every day.

JIMMY MOYAHA: Malume Sim, let’s take a look at the operational performance of the business, especially on the African continent. Globally we find ourselves in a very precarious position with all of the geopolitical events that are unfolding, and have been unfolding for the majority of this year.

Despite this, the group was still able to have 40% of its earnings coming from the rest of Africa – currently almost 50% of the African countries. The Standard Bank Group has a presence in 21 out of the 54 countries on the continent.

The business has not been particularly fazed by some of the macro factors that are out of your control, carrying on almost as though these factors will find you along the way. What’s the secret for the business here?

SIM TSHABALALA: Jimmy, it’s portfolio theory – where parts of the business are doing well in this year, CIB [Corporate and Investment Banking] – and others will struggle; BCB [Business and Commercial Banking] and BPB [Personal and Private Banking].

But when the cycle turns, it’ll be the retail bank doing better than the wholesale bank.

That’s been the case over the last 30 years for as long as I’ve been in banking.

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So we have a great portfolio – 21 countries. Those countries that you referred to make up 80% of African GDP, which is large. And they may, as you correctly point out, have been at 10.4%. That is 7% up.

The really interesting thing, Jimmy, to make your macro point, was that interest rates declined throughout the continent – well, in many countries on the continent – in addition to which the currencies in a number of countries weakened versus the South African rand.

So that 10.4% growth was actually 11%.

That growth of 10.4% is 11% in constant currency – in other words, in local currency. But when you convert it to the rand it was 7%.

So yes, a portfolio – East Africa flat, South and Central up 6%. And the hero in that set of businesses was West Africa. They were up 13%.

JIMMY MOYAHA: Malume Sim, can we take a look at the investment from the business’s perspective, increasing or adding another $80 million into expanding Tanzanian operations – just recently announced there, of course. We’re looking at this set of numbers; we’re looking at the growth from a revenue perspective. And it’s important to contextualise this – we are only halfway through the year.

SIM TSHABALALA: Yes. So we are making investments and those investments are meant to do exactly what you refer to – add to our top line, to our revenues.

So we’ve made an investment that the CFO spoke about this morning into our business in Tanzania.

And we’re about to do the same, actually increase our shareholding, in our Angolan bank to 75%.

It’s going to happen by way of an IPO. How much we will be pumping in will be dependent on the pricing of that IPO.

We continue, as we said in the presentation, to support our clients as they make investments, as they put in place their trading activities – whether they’re importers or exporters.

And we’re doing that throughout the continent and therefore growing organically and taking advantage of these secular trends on the continent – infrastructure, demographics, growing trade with other trading blocs, but also trade on the African continent.

The group is well positioned to take advantage of all of that.

JIMMY MOYAHA: Speaking of taking advantage of those relationships and those trade routes that are opening up, I want to get your thoughts, Malume Sim, around how it is that the bank then approaches the remainder of the year and perhaps subsequent years.

We [you] are well on course to hitting the 2028 targets of return on equity of between 18% and 22%. We are almost at the 20% mark, and I suspect by the end of the year we could very well have breached that level.

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We know that 2028 is a couple of years away – but at the rate at which the bank is moving, this target could be reached sooner rather than later. How, then, does the bank start to think about growth differently on the African continent with a presence that, as we said earlier, is already almost at 50% of the continent? And that’s not where the bank is limited to. There are operations in London, there are operations in Hong Kong.

How does the business then start to execute the remainder of the strategy between now and 2028?

SIM TSHABALALA: Jimmy, the rugby enthusiasts among your listeners will say that the Currie Cup was not won in June. We are really only in August right now, and we’ve committed to the investment community that on banking revenues our guidance is it will be in mid to high single digits.

We’ve [noted] a cost-income ratio below 50%. And then we’ve set a group ROE that will be higher than in 2025, and we think we will get there.

We’ve also said – as you correctly analysed – that we are going to get our headline earnings per share to between 8% and 12% CAGR (compound annual growth rate) during that period, 2028.

And we’re going to get our ROE in the target range of 18-22%. Every action that we take is calculated to get us there.

In fact, having said that to you, you’re familiar with the Gordon Growth Model where you need to grow your return on equity, but also you need to grow your revenues and your earnings – and we are laser-focused on all the levers necessary to do that.

Those levers include growing our lending book, making sure that it’s appropriately managed from a risk perspective. So allocate the capital, but make sure that the risk is tight, holding our costs tightly.

We’ve had 10 consecutive reporting periods of positive draws. That’s some kind of a record, Jimmy.

There are many things we cannot control like the macros and interest rates, but we can control who gets hired, at what cost, how productive they are – and so forth. So we are heavily, heavily focused on those.

On the continent, we think the entire continent is attractive.

We think that as it gets increasingly integrated, it becomes more and more attractive to people who are looking for either the resources that the continent produces, or to invest in the infrastructure that the continent will be building; or to invest in the human capital that is on the continent.

All of those factors will generate higher revenues.

We will manage the cost as best as we can. We’ll be judicious in allocating our capital. That will produce headline earnings as well as the return on equity we’re referring to.

JIMMY MOYAHA: Well, Malume Sim, before I let you go, what has you and the management team concerned, if anything? It doesn’t seem at face value that there’s a lot that can concern the group, given the current momentum track you’re on.

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But I can imagine with external factors such as those we alluded to earlier, there must be something that keeps you wanting to stay laser focused on your objectives. What are those concerns for you and the group?

SIM TSHABALALA: We are paranoid about competition.

The competition in South Africa and on the continent is ferocious, and so we obsess about what our competitors are doing.

It’s Absa’s home loans business getting better than ours – why is it getting better than ours? Where can we learn from what they’re doing?

What’s FirstRand doing? What can we learn?

What is StanChart [Standard Chartered] doing?

So it’s being focused on competition.

What are the fintechs doing that we’re not doing?

So being focused on competition.

Secondly, crime generally but cybercrime in particular. The sophistication of the crime out there is astonishing.

And then thirdly, the war in the Middle East as well as in the Ukraine, and also the various wars on the African continent – are a deep source of concern.

JIMMY MOYAHA: A laser focus on continuing momentum and not being distracted by external factors that the business has no control over.

The Standard Bank Group reported strong headline earnings for the first six months of their new financial year, return on equity growing in line with their expectations and the business continuing to focus on how they keep those metrics on the up.

We’ll leave the conversation on that note. Group chief executive officer Sim Tshabalala joined us to reflect on the first six months of their financial year and what the next six months could hold.

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