Shares of Standard Bank Group rose the most in three weeks after a decline in first-half profit was less severe than expected for Africa’s largest lender. Earnings per share before one-time items in the six months through June probably fell 30% to 50% from a year earlier. The stock rallied as much as 4.4%, leading gains on the six-member FTSE/JSE Africa Banks Index and helping to pare the gauge’s decrease this year to 36%.
South Africa’s banks are preparing for what could be the worst earnings slump since World War II as measures to curb the coronavirus drag the economy deeper into recession. Lenders have to boost provisions for doubtful debts and restructure loans with companies and consumers struggling to meet their obligations. South African banks are also likely to see one-time earnings fall by the same margin.
FirstRand Ltd., the continent’s second-largest bank, will release full-year earnings in September. Absa Group Ltd. and Nedbank Group Ltd., the smallest of the so-called Big Four, have said interim profit will also drop by at least 20%. Capitec Bank Ltd. has guided for more than 70% decline for earnings in the six months through August. Standard Bank’s basic EPS probably declined as much as 80% due to accounting charges on the sale of its 20% stake in ICBC Argentina to Industrial and Commercial Bank of China and the impairment of some IT costs.