Fitch Affirms Standard Bank Group at ‘BB-‘; Outlook Stable
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of Standard Bank Group Limited (SBG) and its main operating subsidiary, The Standard Bank of South Africa Limited (SBSA), at ‘BB-‘ with a stable outlook.
According to Fitch, the long-term IDRs of SBG and SBSA are driven by their standalone creditworthiness, as expressed by their ‘bb-‘ Viability Ratings (VRs). The rating note said the VRs are one notch below the implied VRs of ‘bb’ due to operating environment and sovereign rating constraints.
This underlines the concentration of activities in South Africa and high sovereign-related exposure relative to capital (238% of SBSA’s equity at end-1M25).
The VRs reflect SBG’s leading domestic and regional franchise, strong profitability, and comfortable capital buffers and liquidity. The national ratings reflect the entities’ creditworthiness in local currency relative to that of other South African issuers.
The VR of SBG, a non-operating bank holding company (BHC), is equalised with the group VR due to the absence of double leverage (end-2024: 98%), and high fungibility of capital and liquidity within the group. SBSA’s VR is also aligned with the group VR as it is the main operating entity (64% of SBG’s end-2024 consolidated assets).
Fitch forecasts real GDP growth to reach 1.6% in 2025 and 1.1% in 2026, slightly above our estimate for the country’s medium-term real GDP growth potential of 1%. This steady but modest economic expansion reflects the impact of US tariffs on South African exports, combined with structural bottlenecks, although this forecast may be revised in light of the latest tariff announcements.
Growth is underpinned by a recovery in household consumption and rising investments alongside improved electricity supplies and easing price pressures. This will support banks’ ability to generate reasonable business volumes and perform profitably given still high interest rates and decreasing impairment charges.
SBG has a leading domestic franchise through SBSA, which accounted for 24% of South African banking system assets at end-1M25. SBG also has a leading sub-Saharan Africa (SSA) franchise, with operations spanning 19 other SSA countries (19% of consolidated assets at end-2024). Revenue diversification is strong by income stream and geography. SSA operations (excluding South Africa) contributed 41% of SBG’s headline earnings in 2024.
Retail lending made up 44% of gross loans at end-2024. It is concentrated within South Africa. In 2024, the majority of retail lending was floating-rate mortgages extended at high loan-to-value ratios.
SBG’s Fitch-adjusted impaired loans (Stage 3 loans under IFRS 9) ratio decreased to 6.7% at end-2024 after peaking at 7.1% at end-1H24 due to improving economic conditions. Fitch expects the Stage 3 loans ratio to further improve in 2025.
Wide net interest margins, high non-interest income and moderate loan impairment charges (LICs) support profitability. We expect the Fitch-adjusted operating profit/risk-weighted assets ratio (2024: 3.8%) to decrease slightly in 2025 as interest rates decline.
“ We expect SBG to retain its common equity Tier 1 (CET1) ratio (end-2024: 12.6%, excluding unappropriated profits) comfortably above the regulatory minimum. Fitch-adjusted pre-impairment operating profit (2024: 5.6% of average gross loans) gives a large buffer to absorb potential credit losses2.
Fitch-adjusted customer deposits are the main source of funding (75% at end-2024). Depositor concentration is fairly high, but behavioural stability benefits from a leading domestic franchise. We consider liquidity coverage healthy. MTN Nigeria Net Loss Grows by 192% to N400 billion
