Standard Bank Group Limited

Analyst thesis

Our recommendation is based on:

• Africa’s leading bank with a diversified pan-African franchise: Standard Bank is Africa’s largest bank by assets, operating across multiple financial sectors with a presence in 20 sub-Saharan African countries and select offshore hubs. Its regional and international operations contribute ~40% of total net income, providing differentiated exposure to faster-growing sub-Saharan African economies, rising demand for banking and financial services, and infrastructure and energy-transition financing opportunities that most domestic peers cannot replicate.

• SBK benefits from an improving South African backdrop, reduced load-shedding, logistics reform and FATF grey list removal, while also supported by structural growth in sub-Saharan Africa. However, lower South African GDP growth (~1.6%), high unemployment and FX and political volatility across African markets remain key constraints on credit demand and earnings growth.

• Robust returns and capital discipline: SBK delivers strong profitability, with ROE reaching 19.3% in FY25, at the top of the group’s 2025 target range of 17%–20%. Capital generation remains robust, with CET1 of 13.8%, supporting a 56% dividend payout ratio, and enabling both organic and inorganic investment, through mergers and acquisitions (M&A), across the franchise.

• Despite strong share price performance in 2025, the stock now trades above our intrinsic value. The NTM P:E of 9.4x remains above the five-year average of 7.8x, suggesting that the quality of the franchise and its multi-year growth outlook are largely priced in.