Standard Bank says Middle East conflict, inflation weigh on client confidence
· Citizen
Africa’s largest lender by assets, Standard Bank, has revealed that the Middle East conflict and inflation have impacted its operations, denting client confidence. High interest rates also did the bank no favours, as it recorded “moderate growth” in its home loan portfolio.
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In the bank’s voluntary trading update for the five months ended 31 May 2026, Standard Bank said it remains optimistic about the rest of the year.
“The uncertainty brought about by the Middle East conflict, and the subsequent inflation and related monetary policy actions, has temporarily weighed on our clients’ confidence to transact, invest, and borrow,” said the lender on Monday.
“Should the recent positive developments hold, we would expect confidence and momentum to return in the second half of the year.”
Standard Bank performance
Despite declining client confidence and an uncertain global and regional operating environment, the lender said it recorded a resilient performance during the period.
It said that in the five months of 2026, compared to the same period in 2025, earnings growth was underpinned by ongoing franchise momentum, which drove balance sheet and revenue growth and a disciplined approach to costs and credit risk.
“The group continued to benefit from its scale and diversification,” said Standard Bank.
Slower growth in home loans
During the five months, Standard Bank’s Personal and Private Banking portfolio recorded moderate growth, while the home loans portfolio continued to grow at low single digits.
The lender noted that there had also been ongoing competitive pricing pressures in the country’s home loan portfolio, with the group saying the pricing in the mortgage market had been aggressive.
Standard Bank said it prefers that rates be cut to support the economy, following the country’s central bank’s interest rate hike last month.
Standard Bank operating environment
The lender said its operating environment became more complex as geopolitical tensions, higher energy prices, and ongoing trade-policy uncertainty weighed on global growth and inflation expectations.
“Across the group’s countries of operation, macroeconomic conditions were mixed,” said Standard Bank. “While inflation was relatively contained across several markets, the outlook became less benign.”
Coming to SA, Standard Bank said the domestic backdrop continued to be supported by ongoing structural reform momentum, an improved fiscal trajectory, and resilient terms of trade.
In May 2026, against the backdrop of inflation risks, the South African Reserve Bank increased the repo rate by 25 basis points to 7.0%.
Growth in Investment banking
Standard Bank said its balance sheet growth was supported by strong origination in Investment Banking and increased disbursements in Business and Commercial Banking, particularly in South Africa.
“Pleasingly, current accounts and term deposits recorded strong growth, in line with the group’s transactional client franchise focus,” said the lender.
“Income growth was supported by balance sheet growth, increased client activity, and an increased client base, which drove higher transactional activity, period on period.
“This was partly offset by the negative endowment impact of lower average interest rates across the portfolio, period on period.”
Credit impairment charges
The lender said credit impairment charges were lower on a period-on-period basis, despite an increase in forward-looking provisions in response to the deteriorating macroeconomic outlook.
Lower credit impairment charges, combined with a growing balance sheet, resulted in a lower credit loss ratio, period on period.
“The strong earnings growth momentum reported by the Insurance and Asset Management business in 2025 continued into 2026,” said Standard Bank.
“This was supported by improved life risk experience, continued good persistency levels, and good growth in assets under management in South Africa and Nigeria, period on period.”
Latest on Middle East conflict
The United States (US) waived sanctions on Iran for 60 days from Monday after the first talks under a nascent peace deal, with US President Donald Trump saying he will “do what I have to do” if Iran does not stick to its side of the agreement.
Reuters reported US Vice President JD Vance said talks with Iranian officials in Switzerland had laid a good foundation for a final peace deal, although Iran denied that it had begun discussions of its nuclear program.
The two sides, trying to build on the interim deal they signed last week, agreed on a roadmap towards a permanent agreement within 60 days at the talks in the Qatari-owned Swiss mountain resort of Buergenstock, mediators Pakistan and Qatar said.
They also agreed on a mechanism to end fighting in Lebanon between US ally Israel and Iran-aligned Hezbollah, and opened a communications line to help ensure safe passage for commercial ships through the Strait of Hormuz in order to avoid conflict in the strategic waterway.