TRADING updates by two leading banks indicate that earnings of South Africa’s major banks are on track to rebound sharply in the six-month period to June 30, in line with their share prices.
The banks have benefited from a better-than-expected local economic rebound in the first six months, lower than expected growth in impairments, and the fact that this year’s half-year results will be compared with a period of very low banking activity last year, due to Covid-19-related lockdowns.
On Friday, the Standard Bank Group said its headline earnings per share (heps) were expected to increase 45 to 55percent in the six months to June 30, after results in the past two months of the period were impacted mainly by the base effects of the Covid-19 pandemic last year.
Heps were expected to range between 687 and 734.4 cents, the group said in a trading statement. In the two months of May and June 2021, relative to the two months in the prior period, revenues grew, driven from stronger non-interest revenue, costs grew as incentives normalised and credit performance was significantly better, and the credit-loss ratio remained below the top of the group’s through-the-cycle target range of 70 to 100basis points.
Standard is releasing its interim results on August 19. In an earlier trading statement for the four months to April 30, the bank had predicted Heps to be more than 40percent up.
Its share price traded 11.62percent higher, at R133.78, on Friday morning. Later in the day it closed 1.11percent higher at R133.11. Over a year, the price had gained 29.6percent.
On Friday, Absa Group said it expected Heps for the first half to increase by more than 100percent from the first half of 2020 comparative to between 982c and 988c.
Absa said earnings per share were expected to rise more than 100percent to between 979c and 985c, from 58.8c in the first half of 2020.
Normalised Heps were expected to increase by more than 100 percent, to between 1 007c and 1 024c, from 173.6c in the first half of 2020. Absa expects to release its half-year results on August 16. In an earlier trading statement for the three months to March 31, it predicted between five and six times the normalised headline earnings per share of 173.6c for the first half of 2020.
Absa’s share price closed up 0.61 percent to R149.83 on Friday. Over a year, its share price has increased by more than 98percent.
Last week, Nedbank said that Heps were expected to increase by between 145 and 150percent, resulting in a range of between 1 073c and 1095c a share.
The bank will release its interim results tomorrow. Nedbank’s share slipped 1.27 percent, to R1860 on Friday. The share price represented an 80percent gain over a year.
In a trading statement in June, FirstRand said it anticipated Heps for the year ending June 30, 2021, to be exceeded by more than 35percent from the Heps of the previous year.
FirstRand’s share price closed down 0.35percent, to R57.30 on Friday. Over a year, the share price was up 58percent.
BUSINESS REPORT ONLINE