Standard Bank share price: FY20 results update and trading review

Standard Bank FY20 results

As expected, the Covid-19 impact over the last financial year has placed pressure on Standard Bank Group Ltd across both retail and corporate segments locally.

However earnings have come in towards the better end of guidance with Headline Earnings per Share (HEPS) for the period down 43% (forecasted range was a decline of between 40% and 50%).

A breakdown of headline earnings for each business unit is as follows:

• Personal & Business Banking declined by 61% in FY20
• Corporate and Investment Banking declined by 6% in FY20
• Central & Other declined by more than 100% in FY20
• Banking Activities declined by 42%
• Other Banking Interests declined by more than 100%
• Liberty headline earnings declined by more than 100%

Net Interest Income (NII) declined by 2% and Non-Interest Revenue by 1% year on year. The credit loss ratio on banking activities increased to 1.51% from 0.68% previously. The group is hoping that credit impairment charges which have risen from R7.964m in FY19 to R20,594 in FY20 will start to stabilize and recover in FY21.

The Standard Bank group has declared a final dividend of 240c per ordinary share which is 76% lower than the final dividend in FY19.

Standard Bank Group: technical analysis

The share price of Standard Bank is currently testing the resistance of a short term range at 14400. The longer term trend for Standard Bank remains up and has been accelerating in the short to medium term.

In line with the longer term uptrend we continue to favour keeping a long bias to trades on Standard Bank. However the short term acceleration of the uptrend and overbought signal suggest that the recent move higher may be overheated.

In turn our preferred scenario is to look for long entry on a pullback towards range support at 13350 or the dotted trend line. Should an upside range breakout occur, we would still look for long entry on the first pullback thereafter, although the accumulation levels would need to be revised higher.

In Summary

• Full year HEPS down 43%
• A significant rise in impairment charges was noted from both the retail and corporate business units
• All business divisions of the group contracted in FY20
• NII and NIR figures were marginally lower than in the previous years
• The final dividend declared for FY20 is 76% lower than in the previous year
• A technical view of Standard Bank’s share price show a short term test of range resistance in what has been an accelerating uptrend