Investors update: Africa’s biggest bank posts record profit as economies recover

Africa’s biggest bank posts record profit as economies recover

Highlights

• Standard Bank Group, Africa’s biggest bank by assets, reported a record pretax profit in the first half of 2023, driven by a recovery in sub-Saharan economies that helped the lender shake off the gloomy outlook in its home market of South Africa.
• Profit attributable to ordinary shareholders climbed 36% to $1.1 billion for the six months through June, fueled by gains in Ghana, Kenya, Mozambique, Nigeria, Uganda, and Zimbabwe.
• As part of its optimistic outlook, the Johannesburg-headquartered lender expects revenue growth to beat the rate of cost increases.

Source: Bloomberg

Our Takeaway

South African banks are among the largest on the continent and are known for their well-capitalized balance sheets, conservative lending practices, and strong retail customer base. But local daily power blackouts and a rapid rise in interest rates – by 350 basis points in the last 12 months – have put retail and small business customers of banks under extreme pressure, leading to a spike in bad loans. But Standard Bank’s credit loss ratio, a measure of bad loans as a percentage of total loans, stood at 97 basis points (bps), close to the upper range of its target of 100 bps or 1.0%.

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Bitcoin drops to new two-month low as world markets sell off

Highlights

• Top cryptocurrency bitcoin hit a fresh two-month low on Friday, breaking out of its recent tight range as a wave of risk-averse sentiment swept through world markets.
• On Thursday, bitcoin fell 7.2% in its biggest one-day drop since November 2022 when top exchange FTX collapsed.
• It then slipped to a two-month low of $26,172 during Asian trading hours on Friday, its lowest since June 16. By 0835 GMT, it had partly recovered to $26,441, down 0.8% on the day.

Source: Reuters

Our Takeaway

Bitcoin’s whipsaw price action, which reversed most of the cryptocurrency’s gains since June, echoes recent declines in other financial assets. Stocks and bonds have fallen since the Fed raised its benchmark interest rate to the highest level in 22 years last month while leaving the door open to further increases this year. Perhaps more significant to the decline, however, was the report that SpaceX, which is run by Elon Musk, wrote down the value of its bitcoin holdings by a total of $373 million, and that the space travel company had sold the virtual currency.

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A $3bn crude oil deal lifts Nigeria’s Eurobonds, local currency

Highlights

• Nigeria’s naira and Eurobonds rose sharply on Thursday buoyed by a $3 billion loan to help calm the currency market.   
• The state oil firm NNPC secured the loan to increase the supply of hard currency on the local foreign-exchange market, igniting fresh hopes for a beleaguered naira that has fallen almost 40% in the black market since May.   
• The naira rose to 860 to the US dollar on the black market from a record low of 960 earlier in the week, while the country’s Eurobond prices also rallied on positive sentiment.

Source: Zawya

Our Takeaway

Africa’s largest economy’s Eurobond prices have had a roller coaster few days after taking a beating earlier in the week when Tinubu’s special advisor and spokesman Ajuri Ngelale said on Tuesday that the president did not see petrol prices rising any further, raising concerns that the fuel subsidy could be restored. Ngelale however confirmed that the subsidy would not be reinstated, saying the government was moving forward “without looking back” to the days when the subsidy – which cost the treasury $10 billion last year alone – was in force.