Despite the various challenges in 2021, the Standard Chartered Bank continued to grow sustainably reflecting its resilience with a record H1 operating profit in the Africa and Middle East region. The Bank’s Angolan division reported 112% increase in profit and the income reported was above budget after the conclusion of trading project that exceeded the expected budget, as well as increased amounts invested in securities, although foreign exchange sales reduced.
Commenting on the results, Claudia Conceicao, CEO, Angola said: “Our first half performance was strong, underpinned by the successful execution of our strategy. This record performance is a clear testament to the commitment, hard work and resilience shown by the team.”
She added: “Over the last six months, we redirected resources within the AME region to those areas where we have the potential to scale and grow to better support our client needs. We further secured substantial financing for key infrastructure projects across several markets in the region, participated in sustainability initiatives across the region, and accelerated investments across our digital banking capabilities to ensure our clients continue to receive a personalised, seamless, and convenient experience.”
“Moving forward, we will continue to innovate and support our clients’ evolving needs, with a focus on accelerating our digital strategy and sustainable finance initiatives. We remain excited about the plethora of opportunities that are stemming from Africa. It is important to state that regardless of the Group’s decision in 2022 to exit the Angolan market and other AME countries, to sell its holdings for strategic reasons, it is however evident that SCBA is a profitable business in good financial health as presented in the 2021 results.” Claudia concluded.
The main highlights of our performance are:
· Revenue from banking activity of AOA 10,179m showed an increase of 43% compared to the previous year which was AOA 7,141 million. This strong performance was due to growth in net interest income (30%) and other extraordinary income which was a result of prior period transactions with related parties for written-off bonds. Underlying performance was resilient, driven by both net interest income and fees and commissions. Net interest income was underpinned by growth in investment earning assets, which reflected a more efficient allocation of resources to interest earning assets.
· Fees and commissions were mainly driven by client transactions from trade executions as well as foreign exchange translation activities undertaken during the year under review. Total structure cost closed at AOA 4,843m compared to AOA 6,386m recorded in the previous year. The increase in costs was driven by the resolution of foreign exchange liabilities that were subject to foreign exchange revaluation in the previous two years – the depreciation of the AOA against the USD resulted in a lower AOA cost. In 2021, the rate was stable and started to appreciate.
· Impairment net of reversals and recoveries was AOA 1,585 million, when compared to AOA 1,639 million of the prior period, mainly due to ECL provisions triggered by the impact of country credit risk reduction in 2020, reflecting lower oil prices and macroeconomic implications of COVID-19. In 2021 much better oil prices were seen, despite continued waves of COVID-19. Profit before tax closed at AOA 6,922m when compared to a loss of AOA 883m in the prior year reflecting a significant year-on-year increase. The performance mainly reflected the impact of growth in net interest income, further proceeds from the write-off of old debt and lower impairment charges. Profit after tax of AOA 6,922 million was the same as before tax reflecting the impact of tax loss credits from prior years.
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· Profitable assets were marginally lower compared to the previous year but showing greater efficiency in the overall earnings capacity of the balance sheet during the year. The reduction in treasury bill investments was offset by increases in repo investments. There is a gradual improvement over time in depositor concentration. Our deposits continue to be predominantly demanded deposits (84%), while the currency split is about 56%/44% between domestic and foreign currency (mainly USD and EUR currencies). The Return on Average Equity (ROAE) based on net income for the year is 58.38%, an increase from the -10.51% achieved in 2020.
· Capital position: the regulatory requirement is for banking institutions should maintain a minimum shareholder capital of AOA 7,500 million comprising of qualifying capital components. The Bank ended the year with a capital position of AOA 14,262 million which met the minimum requirements. The Bank monitors and manages its capital levels within regulatory and internal limits and believes that its operations and options are adequate to ensure that it will sustain capital adequacy and compliance for the foreseeable future.
At Group level, we saw the following highlights:
· 28% increase in operating profit compared to last year
· Highest half-yearly Operating Profit since 2015
· Angola, Ghana, United Arab Emirates and Pakistan record strong growth in income and operating profit
In the Africa and Middle East (AME) region, the Bank recorded USD 1.291 billion dollars income with USD 581 million in operating profits.
AME Region performance highlights:
· Broad-based growth across markets, segments, and products
· Income up 8 per cent Y-o-Y on constant currency to USD 1.291 billion
· Operating Profit USD 581 million up by 28 per cent Y-o-Y on constant currency basis
· Strong improvement in the region’s Return on Tangible Equity (RoTE) at 13 per cent
· Geographical Highlights – Double digit income growth and high Operating Profit growth in major
· markets like the UAE, Pakistan, and Ghana. Pakistan delivered its highest ever half yearly Operating Profit.
Standard Chartered Bank’s Africa, Middle East Region has received the following awards for the year 2021
and 2022 which solidifies the Bank’s robust progress as industry leaders in the region.
· Most Impressive Bank for Middle East and Africa Bonds by Global Capital
· Bond House of the Year by Bonds, Loans & Sukuk
· Middle East Bond House of the Year by IFR
· Bank of the Year – Middle East and Africa, Global Deal of the Year – Jazan IGCC, AME Deal
· of the Year – Dubai Waste to Energy, AME PPP Deal of the Year – Yanbu 4 IWP, Central Asian
· Deal of the Year – Sirdarya 1, Middle East Gas Deal of the Year – Basrah Gas Company,
· African Deal of the Year – OML 17 by Project Finance International
· Best M&A House in MENA by Global Finance
· Best M&A House in MENA by MEA Finance
· World’s Best Consumer Digital Banks in Africa and the Best Consumer Digital Bank in 9 of our markets in Africa by the Global Finance Magazine
· Sukuk Adviser of the Year – Global, Best Islamic Investment Bank – Middle East,
· Best Green Sukuk, Best SRI Sukuk and Best Sovereign Sukuk by The Asset Triple A Awards
· Best in Treasury & Cash Management – Middle East by The Asset Triple A Awards
· Social Impact SRI/ESG Deal of the Year by the Islamic Finance News Awards