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Standard Bank Group SWOT & PESTLE Analysis

ID : 52220053| Mar 2018

COMPANY PROFILE -Standard Bank Group

Business Sector :Banking and Financial Services

Operating Geography :Africa, Global

About Standard Bank Group :

The Standard Bank Group is one of South Africa's largest financial services groups having presence in 20 countries in sub-Saharan Africa as of 2018. Established in 1864, it is headquartered in Johannesburg, South Africa and has over 55,000 employees as of 2016. The bank also has a strategic partnership with the Industrial and Commercial Bank of China (ICBC). Its mission is to provide exemplary service to its customers, up-skilling its people and delivering a superior rate of return to its shareholders.

Standard Bank Group Revenue :

R23 009 million- 31st Dec 2016 (up 4% from FY15)

Competitive Analysis of Standard Bank Group

SWOT
PESTLE
The SWOT analysis for Standard Bank Group is presented below:
Strengths
Weaknesses
1. Consistent value creation and returns for shareholders
2. Strategic cooperation agreement with ICBC
3. Revised strategic direction with Africa growth focus
4. Strong core banking platform built for the digital journey
1. Downgrade in credit ratings by Moody’s
Opportunities
Threats
1. Rapid urbanization in Africa to increase the potential customer segment
2. Project financing in renewable energy sector
1. Economic slowdown in most African economies
2. Cyber-security resilience required to combat fraud
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Detailed SWOT Analysis of Standard Bank Group

 

Strength

1. Consistent value creation and returns for shareholders: Standard Bank Group has delivered consistent shareholder returns over the past several years. The results are commendable taking into account the challenging economic conditions in Africa marked by political uncertainty and weakness in asset prices. Dividend per share has increased by a CAGR of 13% from 2011 to 2106 while EPS has seen a CAGR of 10% over the same period. Standard Bank gave a Return on Equity (ROE) of 15.3% in 2016.

2. Strategic cooperation agreement with ICBC: Standard Bank’s partnership with the Industrial and Commercial Bank of China is an important strategic alliance. It serves the banks African and global interests and gives opportunity to provide financial services to clients in the China-Africa sector. The bank has also a funding agreement with ICBC for renewable projects in South Africa. Standard Bank’s Corporate & Investment Banking (CIB) division has also developed a joint client franchise with the ICBC. Standard Bank is also working with ICBC on the internationalization of the Chinese currency, the Renminbi (RMB) which will increase its RMB dominated cross border capabilities. ICBC is also a 20.1% shareholder in the Standard Bank group.

3. Transparency Revised strategic direction with Africa growth focus: Standard Bank revised its strategic direction from aspiring to be a leading player in emerging markets to a being an established market leader in Africa, its home continent. In 2010, Standard Bank had $3 bn in international operations (23% of NAV) which was reduced to US$ 800 million (7% of NAV) in 2016. Africa region infrastructure and reach was increased considerably with number of branches increasing to 570 branches from 98 in 2010. The Africa region revenue has also trebled from R10 bn to R30 bn in the span of 6 years.

4. Strong core banking platform built for the digital journey: Standard Bank’s core banking program (CBP) across Africa is a key differentiator amongst its peer group. New implementations went live in Nigeria, Zambia, Zimbabwe and Swaziland and more countries are scheduled for 2017. The South African implementation will get completed in 2017 after the release of updated versions. Standard Bank has invested considerable financial and human capital into these implementations and the new platforms will help bank serve its clients better through the digital journey. The core banking platforms will also help Standard Bank leverage data analytics to understand customers better through a 360 degree customer view and thus improve customer centricity, credit risk and reduce costs. The CBP implementation has also enabled the roll out of integrated mobility platforms across the Standard Bank Group

Weakness

1. Downgrade in credit ratings by Moody’s: Moody's downgraded Standard Bank Group’s long-term local and forex issuer ratings to Ba1 from Baa3 in June 2017. Other major banks in South Africa were also subject to the downgrade. This is due to weakening of South Africa government’s credit profile and the weakening macro-economic outlook in South Africa. The rating thus indicates the government’s reduced capacity to support banks if required. Also it increases the cost of raising new funds from the international markets for banks and the government.

Opportunity

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Threat

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References

1. Standard Bank Group Annual Report 2016: https://thevault.exchange/?get_group_doc=18/1492755204-SBG_FY16_Annual%20integrated%20report.pdf

2. Standard Bank Group Annual Presentation 2016: https://thevault.exchange/?get_group_doc=18/1488430892-SBK_FY16_Resultspresentation.pdf

3. Moody's downgrades the five largest South African banks to Baa3; outlook negative: https://www.moodys.com/research/Moodys-downgrades-the-five-largest-South-African-banks-to-Baa3--PR_367888

4. Economic Snapshot of Sub-Saharan Africa: http://www.focus-economics.com/regions/sub-saharan-africa

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Standard Bank Group SWOT and PESTLE analysis has been conducted by and reviewed by senior analysts from Barakaat Consulting.

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