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Standard Bank posts flat 2014 earnings

Bank’s shares rose nearly 3% in early trade, outperforming a flat Top-40 index.

Standard Bank posted a 20% rise in profit last year, after stripping out the loss-making global markets division it is selling, and surprised investors by raising its dividend 12%.

Shares in Africa’s largest bank by assets jumped more than 6 percent after it reported full-year headline earnings of R21.1 billion ($1.8 billion) after removing a 3.7 billion loss booked by Standard Bank Plc, in which Industrial and Commercial Bank of China (ICBC) is buying a controlling stake.

Standard Bank Group, which has operations in 20 countries, mainly in Africa, declared a 598 cents total dividend per share.

“They positively surprised on the dividend, which is driving the share price at this point,” said Abri du Plessis, Chief Investment Officer at Gryphon Asset Management.

The bank’s net interest income, a measure of earnings from lending, rose 15 percent to 45.2 billion rand, while loan provisions fell 2 percent as bad debts across operations outside South Africa declined.

Non-interest income, which includes revenue from arranging deals and advisory services, climbed 14 percent to nearly 39 billion rand while the bank’s costs to income ratio fell more than two percentage points to 54.5 percent from 56.8.

“It is a very decent set of results, for me definitely the best that I have seen out of the three banks,” said one analyst, who declined to be named. “What was impressive is the strong growth they have generated in the rest ofAfrica franchise.”

Smaller rivals Barclays Africa Group and Nedbank reported full-year earnings up 10 and 13% respectively by squeezing bad debts while growing income from lending.

Including Standard Bank Plc, the South African lender posted a 1% increase in headline earnings to R17.3 billion.

Standard Bank had previously agreed to sell a 60 percent stake in the London-based division to ICBC for $765 million, but revised the purchase price down by $75 million to reflect an exposure related to China’s Qingdao port metals scandal.

The bank has initiated legal proceedings to try to recoup losses from the disputed metals fiasco in which private trading firms used fake warehouse receipts to obtain multiple loans secured against a single cargo of metal.

“At this time, the precise quantum and timing of recoveries remains uncertain,” the bank said in a statement.

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