Standard Bank says that inflation in South Africa is expected to remain well anchored in the target band of 3% to 6% and interest rates are expected to decline to 7.25% – representing one more 25 basis points interest rate cut in March 2025 – and then remain flat for the rest of the year.
“This, together with ongoing policy reform and improved business and consumer confidence, will support economic growth,” the bank said.
Economic consensus suggests a potential interest rate cut of between 25 and 50 basis points for the remainder of 2025, with the South African Reserve Bank (SARB) scheduled to meet again on 20 March.
Inflation increased slightly to 3.2% year-on-year in January, up from 3.0% in December, but remains well within the Reserve Bank’s target range of 3% to 6%.
South Africa’s real GDP growth is projected to rise to 1.7% in 2025, with expectations to exceed 2.0% by 2026, according to Standard Bank.
The International Monetary Fund (IMF) forecasts South Africa’s GDP to grow by 1.5% this year, with a slight uptick to 1.8% by 2030.
It said that if South Africa continues to implement structural reforms in the electricity, logistics, and business enablement sectors, the country could potentially achieve a 3% growth rate in GDP.
If inflation rises due to his global trade policies, the South African Reserve Bank may adopt a more hawkish stance on interest rates to curb inflationary pressures. In response, investors could take a wait and see approach, holding off on decisions until the impact of Trump’s policy moves becomes clearer.
Standard Bank on Thursday (13 March) reported R45 billion of headline earnings and a return on equity of 18.5%. This performance, it said, was underpinned by continued balance sheet growth, lower credit impairment charges and flat costs in the banking franchise and a robust performance in Insurance & Asset Management.
Sim Tshabalala, Standard Bank Group CEO said: “Our performance in 2024 reflects the strength of our diversified business and our commitment to delivering value to our stakeholders. We have seen double-digit earnings growth in South Africa, good contributions from our insurance and asset management business, and a strong operational performance from Africa Regions. The group remains on track to deliver on its 2025 strategy and targets.”
Operational Achievements
-Active clients: Increased by 4% to 20 million
-Retail transactional clients in South Africa: 64% of clients are digitally active
-Digital revenue from retail clients in South Africa: Grew by 36%
-Mobile app logins by retail clients in South Africa: over 130m per month
-SME mobile banking volumes: Grew by 10%
The South African franchise delivered double-digit earnings growth in 2024, supported by increased client activity and improving credit trends. The formation of the Government of National Unity and stabilisation of electricity supply boosted consumer and business confidence, the lender said.
The group said its focus on digital transformation led to a 6% increase in digitally active retail clients, enhanced customer experience and operational efficiency.
The Insurance and Asset Management business recorded a strong performance, with headline earnings growing by 17% to R3.3 billion. Assets under administration and management in the South African asset management business increased by 13% to R1.1 trillion, driven by positive net external third-party customer inflows and favourable investment market movements.
Outlook
For the twelve months to 31 December 2025 (FY25), the group said its three core metrics are as follows:
-Banking revenue growth of mid-to-high single digits in ZAR;
-Banking revenue growth slightly higher than operating expenses growth, resulting in a marginally declining cost-to-income ratio year on year; and
-Group ROE will remain well anchored in the group’s 2025 target range of 17% to 20%.
“We remain highly positive about Africa’s growth outlook, and we are confident in our ability to continue to manage risk efficiently, and to balance growth and returns. Our strong capital position and diversified earnings streams provide us with the flexibility both to fund growth opportunities and to pay dividends,” said Tshabalala.
