JOHANNESBURG, April 25 (Reuters) - South Africa’s No.2 lender by value Standard Bank reported a “low single digit” rise in quarterly net interest income on Tuesday, weighed down by weak credit demand at home and lower appetite for risk elsewhere on the continent.
Lending to companies had become the mainstay for banks in Africa’s most industrialised economy as they pull back from high margin but risky unsecured consumer credit, which relies solely on a customer’s promise to pay it back, due to dangerously high personal debt levels.
But weak economies both at home and elsewhere on the continent has hit both consumption and investment spending and forced Standard Bank, as well as rivals, to tighten its risk appetite.
“Subdued credit demand in South Africa combined with tighter risk appetite across the Africa Regions translated into muted year to date growth in gross loans and advances across all categories,” Standard Bank said in a statement on Tuesday.
That resulted in net interest income, an important gauge of lending profitability, increasing by a “low single digit” in the three months to the end of March.
Standard Bank, 20 percent owned by China’s Industrial and Commercial Bank of China Ltd, reiterated that it was well capitalised to withstand the impact of South Africa’s sovereign credit rating downgrade to ‘junk’ status.
South Africa lost its highly prized investment grade ratings from S&P Global Ratings and the Fitch earlier this month. Both agencies cited likely changes in economic policy after a cabinet shake-up that saw a respected finance minister Pravin Gordhan sacked.
Shares in Standard Bank were little changed at 147.95 rand as at 0710 GMT, largely in line with the sector. (Reporting by Tiisetso Motsoeneng, editing by Louise Heavens)