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African growth boosts Standard Bank’s half-year profit

By BusinessNews Staff on August 17, 2014

Standard Bank Group Limited said first-half profit rose two per cent, sustained by business beyond South Africa’s borders as the economy there slumped.

Net income rose to 8.23 billion rand ($778m) from 8.07 billion rand a year earlier, Africa’s largest lender said on Thursday in a statement. Earnings per share excluding one-time items rose 1.4 per cent to 5.13 rand, while the bank increased its dividend 11 per cent to 2.59 rand a share.

“Sluggishness in the South African economy is expected to persist for the remainder of 2014, which is likely to hamper domestic revenue growth and may affect the confidence of our customer base,” the Johannesburg-based bank said.

Other South African lenders, including Old Mutual Plc’s Nedbank, have said profit will be constrained this year as consumers struggle to repay loans. South Africa’s economy contracted in the first quarter for the first time since 2009 and inflation has accelerated as interest rates rise.

Income from continuing operations increased by 12 per cent “due mainly to strong growth in the group’s rest of Africa subsidiaries,” Sim Tshabalala, joint chief executive officer, said in an e-mailed statement.

In July, Standard Bank said it had started legal proceedings in China over possible losses on about $210m in aluminum, thought to be held in bonded warehouses in Shandong province. The bank cited evidence of a mismatch between amounts of the metal pledged in documents to various banks as collateral for loans.

“The impact of this on the group’s income statement has been estimated at 854 million rand and is reflected as a single line item on the income statement within discontinued operations,” Standard Bank said.

The stock fell as much as two per cent and was trading 0.5 per cent lower at 145.18 rand as of 9:21 a.m. in Johannesburg.

Bloomberg News also reported on Thursday that emerging-market stocks rose for a fourth day as President Vladimir Putin said Russia will do all it can to end the Ukraine conflict, spurring speculation tensions will ease. The ruble and South Korean won advanced.

The Micex Index rose to a three-week high. The Ibovespa ended a two-day drop on speculation Brazilian president Dilma Rousseff is less likely to be re-elected as the death of one of her rivals reset the outlook for the race.

Polish clothing retailer LPP SA rallied after MSCI Incorporated said it’s adding the stock to its developing-nation gauge. The ruble strengthened 0.1 per cent against the dollar. South Korea’s won rose the most among Asian currencies as the central bank cut interest rates.

The MSCI Emerging Markets Index rose 0.2 per cent to 1,072.61, bringing its four-day increase to 2.6 per cent. Russia shouldn’t isolate itself from the outside world and will do all that is possible to end the conflict in Ukraine, Putin said near Yalta in Crimea on Thursday. Applications for unemployment benefits in the United States rose more than forecast last week, a Labor Department report showed on Thursday.

“Putin’s speech reassured investors,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail. “This gives hope that markets won’t see an escalation in the geopolitical situation.”

A Bloomberg gauge tracking 20 developing-nation currencies rose 0.3 per cent in its second day of gains. The premium investors demand to own emerging-market debt over US Treasuries narrowed two basis points to 287, according to JPMorgan Chase & Co. indexes.

[Punch]

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