Standard Bank Group Limited (OTCPK:SGBL.Y) Update / Briefing Transcript

Summary of Standard Bank Group Limited Update / Briefing Company Overview - Company: Standard Bank Group Limited (OTCPK:SGBL.Y) - Date of Call: December 01, 2025 - Participants: CFO Arno Daehnke, Business Unit CFOs, and other executives Key Industry Insights - Macroeconomic Environment: - Global economic activity remains resilient despite geopolitical uncertainties - IMF revised global growth projections for 2025 to 3.2% from 3.0% in July 2025 [3][4] - Inflation has declined, allowing for monetary policy easing in many countries [3] - Interest rates have decreased in most sub-Saharan African countries, with notable cuts in Ghana (900 basis points to 18%), Mozambique (325 basis points to 9.5%), and Kenya (200 basis points to 9.25%) [4] - South Africa's Economic Outlook: - Improved environment with declining inflation and interest rates; repo rate reduced to ZAR 6.75% [5] - Expected real GDP growth of 1.0% for 2025 and 1.3% for 2026 [7] - S&P Global Ratings upgraded South Africa's local currency credit rating to BB+ with a positive outlook [6] Financial Performance Highlights - Banking Revenue: Grew by mid to high single digits year-on-year [8] - Net Interest Income (NII): Growth driven by strong origination in investment banking, particularly in energy and infrastructure [9] - Deposit Growth: Strong in both South Africa and Africa regions, with 8% year-on-year growth in South Africa as of September 2025 [9] - Credit Loss Ratio: Approximately 70-100 basis points for the 10 months to October 2025, with provisions in Malawi and Mozambique due to sovereign stress [10] Operational Trends - Insurance and Asset Management: Robust performance with higher earnings driven by improved retail life insurance and claims ratio [11] - Investment Banking: Strong performance in precious metals and energy sectors, contributing positively to Group earnings [12] - Cost Management: Cost growth contained despite increased activity-related costs, with revenue growth slightly ahead of cost growth [10] Guidance and Future Outlook - 2025 Guidance: - Banking revenue growth of mid to high single digits - NII growth at low to mid single digits - Non-interest revenue growth at high single digits [13] - Long-term Targets (2026-2028): - Compound average headline earnings growth per share of 8%-12% - Return on equity of 18%-22% [13] Additional Insights - M&A Considerations: Exploring opportunities in Kenya, focusing on maintaining diversification and not exceeding 5-6% of group earnings from any single country [45] - Retail Asset Quality: Improvement in non-performing loans (NPLs) with a steady recovery expected [33] - Black Friday Performance: Positive year-on-year growth observed, indicating improved consumer activity [32] Conclusion - Standard Bank Group continues to perform well, supported by a diversified portfolio and positive macroeconomic trends. The outlook for 2026 remains optimistic with expected growth in various sectors, particularly in investment banking and retail lending. The Group is committed to maintaining strong financial health and delivering on its strategic targets.