Standard Bank [JSE:SBK] says lower transaction volumes due to depressed spending during the lockdown, coupled with decreased loans and debt relief for customers have negatively impacted its earnings by some R2 billion.
In June, Africa's largest lender had already detailed in another trading update how the lockdown had put the brakes on ATM volumes. It added then that on lending activities, its home loans division had to halt payouts of mortgage as deeds offices were closed during the hard lockdown, while vehicle and asset finance saw disbursements tank 70% in April.
Both transactional and lending activities have improved since then, but Standard Bank said it was still receiving additional requests for debt repayment holidays from clients in June. Total relief provided to clients increased from May to June.
By 28 May, Standard Bank's personal and business banking division had already provided R92 billion in relief to individual clients and businesses in SA. A further R11 billion and R30 billion was extended to commercial clients in Africa, as well as Corporate & Investment Banking division clients respectively.
As more clients sought relief in June, Standard bank has now warned shareholders that this will cause its headline earnings to tank by between 30% and 50% compared to June 2019. The group’s earnings per share would be more severely impacted, declining by between 60% and 80%.
Standard Bank said it would provide more details when it presents its half year results on 20 August. But it said the gains from sale of its 20% stake in ICBC Argentina to the Industrial and Commercial Bank of China, finalised in June, was the reason for the discrepancy between its headline earnings and its earnings per share.