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State of Standard Bank’s loan book spooks investors

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Stndard Bank building.
 Photo: Gallo Images/Foto24/Brendan Croft
Stndard Bank building. Photo: Gallo Images/Foto24/Brendan Croft

It was always going to be a difficult environment for all banks to grow profits or provide for bad debt with precision. But some analysts are worried that the number of Standard Bank's customers who are still not able to service their debt have created a lot of uncertainty about the bank's recovery in the second half of this year.

On Thursday, Standard Bank announced a 166% jump in its credit impairment charges for the six months to end-June because of an "extraordinary strain" on households and businesses it serves because of Covid-19 restrictions in SA. The bank's credit loss ratio which more than doubled to 169 basis points by the end of June has already exceeded the 160 basis points recorded during the global financial crisis of 2008/9.

The market expected early on that banks' impairments would be elevated to varying degrees. But during its results presentation Standard Bank revealed that 50% of its customers in SA who had benefitted from Covid-19 payment relief before June have subsequently asked for extension of their payment holidays.

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