Standard Bank Group Ltd., Africa’s largest lender, may pay a special dividend of as much as 7 billion rand ($654 million) after selling many of its overseas assets, according to RMB Morgan Stanley.
“Standard Bank is finally in a position to release excess capital post the major restructuring of its international business,” Greg Saffy, banking analyst at Johannesburg-based RMB, wrote in an e-mailed note to clients today. The payout could be as much as 4.40 rand a share, he said.
The comment on a special dividend is “rather speculative,” Ross Linstrom, a spokesman for Standard Bank in Johannesburg, said in an e-mailed response to questions. The sale of the lender’s London-based global markets business by the fourth quarter will boost capital-adequacy ratios by 50 to 70 basis points, allowing the bank to consider “opportunities” for deploying capital, he said. Expanding its African business will be one focus, he said.
Standard Bank said today it’s selling its Brazilian unit to Mexico’s Grupo Financiero Inbursa SAB for about $45 million, six weeks after announcing an agreement to sell control of the global markets business to Industrial & Commercial Bank of China Ltd. for about $765 million. The lender is renewing its focus on Africa after selling more than $1.5 billion of assets over the past three years.
Standard Bank climbed 4 percent to 129.20 rand by the 5 p.m. close in Johannesburg, its highest level in two months and paring this year’s decline to 0.2 percent. The six-member FTSE/JSE Africa Banks Index has dropped 0.8 percent over that period.
“Africa now contributes about 15 to 20 percent of overall group earnings and is expected to grow by 20 to 25 percent over the next three years,” said Saffy, adding that Standard Bank has the highest-rated African franchise among South African lenders. He expects the company’s return on equity, a measure of profitability, to recover to 16 percent over the next three years, from 14.1 percent in 2013.