Standard Bank resilient amid Covid-19, profit 50% up

Standard Bank plc has posted a 50 percent increase in profit after-tax to K23.7 billion in the year ended December 31 2020, reflecting resilience amid a challenging operating environment due to the Covid-19 pandemic.

The Malawi Stock Exchange-listed bank’s consolidated results show that net profit was 50 percent above that of 2019 (K15.9 billion), owing to growth in net interest income as a result of growth in deposits and its investments and loan book.

The results show that net interest income grew by six percent to K41.2 billion in 2020, up from K38.8 billion, with financial investments growing by 42 percent while customer deposits were up 30 percent.

“2020 was a challenging year due to the impact of the pandemic which affected the economy and operations of most businesses.

“However, despite the uncertain and challenging operating environment, the group posted a set of strong results,” reads a statement accompanying the financial results co-signed by the bank’s chief executive Phillip Madinga, board chairperson Ngeyi Kanyongolo, chief financial officer Temwa Simwaka and director Andrew Chioko.

The bank forecasts that Covid-19 will likely continue to affect business growth despite a good agricultural season, which could help offset the negative effects.

At the micro level, Standard Bank notes that the pandemic hampered the growth of its non-interest revenue due to reduced business activity and a 40 percent reduction of fees on Internet banking, mobile payments and other related services as a cushion for customers against the Covid-19 impact.

In contrast with 2019 and prior to the Covid-19 outbreak, Standard Bank’s non-interest revenue was three percent above 2018 levels due to growth in transaction volumes.

“The negative economic effects of the Covid-19 pandemic will likely continue in 2021. Currency pressures are expected to continue largely driven by weak foreign currency inflows, which can be partly attributed to the ongoing pandemic,” reads the statement.

Notwithstanding the negative effects of the pandemic, Standard Bank’s earnings per share grew by 48 percent from K68 in 2019 to K101 in 2020.

On measures to sustain its profitability amid Covid-19, Standard Bank says it will continue to focus and drive digitisation to improve customer experience as well as operational cost management.

“We will continue to drive cost rationalisation by investing for the future, prudent management of risk and liquidity, diversifying balance sheet and maintaining a healthy capital position,” reads the statement.