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Standard Bank Profit Little Changed as Costs Offset Income

March 6 (Bloomberg) -- Standard Bank Group Ltd., Africa’s largest lender, said full-year profit was little changed as higher costs countered an increase in interest income.

Net income rose to 16.2 billion rand ($1.52 billion) from 16 billion rand a year earlier, the Johannesburg-based bank said in a statement today. Earnings per share excluding one-time items increased to 10.65 rand, beating the 10.32 rand median estimate of 13 analysts surveyed by Bloomberg.

Growth in higher-margin unsecured lending and a repricing of mortgages in South Africa helped boost interest income, the bank said. The sale of 60 percent of its London-based markets business to Industrial & Commercial Bank of China Ltd. for about $765 million will boost Standard Bank’s return on equity, said Neville Chester, senior portfolio manager at Coronation Fund Managers Ltd. in Cape Town.

“ROE will pick up sharply in 2015,” Chester said in an e-mailed response to questions. “It was a solid result and the business is on the front foot.”

Standard Bank rose 0.4 percent to 125 rand as of 11:28 a.m. in Johannesburg trading, paring this year’s decline to 3.4 percent. The stock is the second-worst performer on the six-company FTSE/JSE Africa Banks Index after Capitec Bank Holdings Ltd.

Return on equity was little changed at 14.1 percent compared with 14 percent a year earlier, Standard Bank said. The bank plans to pay a total dividend of 533 cents per share, 17 percent higher than the 2012 payout.

Challenging Environment

Standard Bank, which operates in 18 countries on the continent, said higher interest rates and subdued consumer demand will keep growth in South Africa at 2.2 percent this year, below the government’s forecast of 2.7 percent.

“Competition is high in all the markets we serve and business operating environments remain challenging,” Standard Bank said in the statement. “The group’s capital and liquidity strength, together with our firm commitment to our strategy which includes the building of world-class information systems, provides substantial opportunity to elevate our return on equity” over the medium term, it said.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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