Standard Bank released an operational performance update for the three months ended 31 March 2021 (1Q21) on 22 April. On the face of it, 1Q21 was a reasonable quarter (earnings rose 20% YoY), albeit far from an exceptional one, especially when considering that 1H20 was already a low base (1H20 headline earnings were down 43% YoY). The bank said that during 1Q21, the operating environment in South Africa (SA) remained difficult, citing the continuation of electricity supply disruptions and January and February 2021 being negatively impacted by the tighter lockdown restrictions introduced in late December. While these restrictions had eased by March, activity levels remained below those seen in 1Q20 (pre-pandemic).
Below we highlight some of the points coming out of this trading update:
Figure 1: Overview of Standard Bank’s performance vs peer group
Source: Bloomberg, Anchor. * as at 23 April 2021.
SA banks are hardly inspiring at current levels and in the present operating environment. However, we do believe that there is a catch-up trade here for standard Bank, especially after its recent share price underperformance (the share price is down c. 7% YTD and has dropped by c. 18% from10 March 2021 to Monday’s [26 April] close).