With a supporting slide deck featuring more than 120 images, Standard Bank delivered a capital markets day in March that gave investors plenty of information on its strategy.
The share price is up nearly 50% in the past year, so this stock is firmly on the radar of investors looking for financial services exposure in emerging and frontier markets.
Standard Bank’s lofty long-term ambition is to be “Africa’s undisputed financial leader”, a particularly strong statement that feels like an attainable outcome. In the meantime (which it defines as 2026-2028), it wants to “accelerate Africa’s growth” — and its own earnings.
Here’s the thing, though: Standard Bank already has the largest footprint among African financial services groups! Investors might not be sure exactly what it means by undisputed financial leader, as there’s an argument to be made that it is there already.
The foundation is strong here. Standard Bank achieved numbers in 2025 that were ahead of target across major metrics. Return on equity (ROE) of 19.3% is a solid performance, particularly alongside a conservative CET 1 ratio — a measure of the amount of equity on the balance sheet — of 13.8%.
For all the excitement around the rest of Africa, earnings in the Africa regions achieved a compound annual growth rate (CAGR) from FY20 to FY25 of 16% vs a far meatier 38% in South Africa. Financial 2020 is a cheeky base of course, thanks to Covid, but we are comparing apples with apples here. This shows South Africa remains an important source of growth.
South Africa may be ahead on the five-year CAGR, but recent performance in Africa has been encouraging. We’ve seen a far more favourable macroeconomic environment than in years gone by. If this situation continues, Standard Bank is in a great position to capitalise on African markets that offer much higher GDP growth rates than South Africa.
Admittedly, the higher growth also comes with more risk (political and otherwise), so returns need to be juicy enough to reward shareholders for that risk. To drive those returns, Standard Bank has identified clear opportunities in Africa to deploy capital and earn fees.
Recent volatility has seen the stock bounce between R290 and R330, so buying the dip is probably the most sensible strategy
Infrastructure feels like the obvious, though perhaps more difficult, option as these long-term projects rely on governments creating safe environments for capital — something African governments are particularly bad at. Still, Standard Bank cites research that estimates $170bn in total infrastructure investment a year on the continent, funded 50/50 by African and international sources. Those sound like potentially lucrative term sheets for the bank.
The arguably less risky opportunity lies in trade flows, with Africa having built numerous trading relationships with the Global South — an important political grouping in a world where the West is becoming fragmented. Rather than relying on patient capital and supportive governments, this is simply a function of the flow of goods. Standard Bank describes itself as the leading bank in Africa for trade finance, and the leading foreign exchange provider in 10 countries on the continent. It is ready for those flows.
There are a number of other important tailwinds, with digital adoption a particularly interesting discussion point. Aside from the broader payments ecosystem and the number of fintechs operating in this space, there’s also consumer demand for digital smartphone banking solutions. With 20-million customers, Standard Bank certainly has no shortage of data.
What do the financials tell us? Standard Bank is targeting a headline earnings per share (HEPS) CAGR from 2025-2028 of 8%-12%. This is a function of revenue growing at 7%-10%, while expenses are expected to increase by 6%-8% a year.
This growth algorithm implies expanding margins, which would then support a modest uptick in ROE. The targeted ROE range is 18%-22%, with the midpoint being 70 basis points higher than the ROE of 19.3% achieved in 2025.
ROE is a game of inches. If Standard Bank can achieve the elusive combination of strong HEPS growth and expanding ROE, then the valuation multiple should move higher. It is already trading at a demanding premium though, with a price/book of just more than 2.
Investors are therefore only receiving an effective ROE of under 10%. This is well below the cost of equity for African exposure, so substantial growth assumptions are being priced in. Perhaps this is why many Standard Bank directors have been selling over the past year.
With trading at almost 52-week highs, there’s an argument to be made for patience here. Recent volatility has seen the stock bounce between R290 and R330. Upside is likely to be modest from the top of this range, so buying the dip is probably the most sensible strategy here.
