Bull Case vs. Bear Case: Standard Bank

Standard Bank has been on a remarkable run since the COVID era. The share price is up roughly 160% over five years. If you include dividends, taking a total return view, you would have enjoyed a return of over 260% for that period!*

The positive momentum has continued this year, with a year-to-date share price move of nearly 10%. This growth is accompanied by a trailing dividend yield of 5.3%, taking the total return into the mid-teens.

But what about Capitec?

For context on this five-year performance, we can look at South African growth darling and sector peer Capitec. The iconic disruptor has achieved over 190% share price growth over five years, with a total return of around 225%.

Although Capitec’s share price return is well above that of Standard Bank over these five years, the inclusion of dividends puts Standard Bank ahead of Capitec. This demonstrates the relevance of dividends to overall returns.

It’s worth noting the significant valuation gap that still exists between these names, with Standard Bank currently at a Price/Earnings multiple of 10.5x and Capitec trading at 32.0x. Value investors would use Standard Bank’s five-year outperformance as a good example of why valuations matter!

What information can we use to assess Standard Bank’s prospects?

Can Standard Bank continue delivering solid returns across capital growth and dividends? And what are the underlying drivers of these returns?

Equally importantly, could we see a tougher period for Standard Bank in which it underperforms the broader market, or the broader banking sector for that matter?

These are the questions investors are contemplating ahead of the release of interim results in mid-August. In making this assessment, investors are working off recent updates like a pre-close call on 22 June 2026, as well as a Capital Markets Day in March 2026.

The bull case

Scale matters

One of the arguments in favour of Standard Bank would be the group’s scale.

In the Capital Markets Day presentation, one of the early slides refers to Standard Bank as “the largest African franchise with a proven track record.” The latter part of that sentence might be management’s opinion, but the former is merely a statement of fact: by total assets, Standard Bank is the largest financial services group in Africa.

The reference to the broader continent is critical, as this is central to Standard Bank’s strategy. They have over 20 million active customers across 21 African markets. The term “Pan-African” gets thrown around liberally by listed companies, but few could argue that Standard Bank doesn’t live up to that description.

Scale is important in banking. It creates resilience, as a more diversified business should be better equipped to withstand shocks in certain segments or geographies. It enables balance sheet flexibility, as larger balance sheets can be stretched across many products and regions. And although legacy banking groups struggle to compete with the likes of Capitec on a cost-to-income ratio, being a scale player does bring efficiencies that are difficult for smaller banks to achieve.

South Africa has also been a growth engine

A second bull argument would be the strength of the South African business alongside the Africa Regions story. In South Africa, the five-year headline earnings compound annual growth rate (CAGR) of 38% is way ahead of Africa Regions’ at 16%**.

On the pre-close call***, CFO Arno Daehnke highlighted the ongoing structural reform momentum in South Africa and the recent positive adjustments to sovereign credit ratings. Major banks, including Standard Bank, have received a related upgrade to their credit ratings.

A better credit rating and improved overall sentiment should help Standard Bank achieve a more competitive cost of funding. This filters down to the group’s ability to make money from its core lending operations.

Daehnke also highlighted various areas of underlying growth in lending, including energy infrastructure and real estate. These sectors aren’t just an African opportunity; they are also highly active in South Africa as well.

Overall, Standard Bank is the scale player on the continent. Investors who are bullish on Africa (and South Africa) could consider this as a proxy for broader economic activity.

The bear case 

Competition in banking is fierce

The first argument to consider is that Standard Bank operates in a highly competitive industry.

Although there are areas where it has an arguably wider moat, like corporate lending and structuring deals in Africa, there are also product lines that have attracted numerous competitors over the years.

On the pre-close call, Sayuri Govender (Chief Finance and Value Management Officer: Personal and Private Banking) noted that the group has been disciplined in areas like home loans. Where pricing has not met requirements, Standard Bank has been willing to lose out on deals and potentially let go of market share.

Although this demonstrates maturity in the group, it also shows that competitors represent a headwind to Standard Bank’s asset growth.

In Africa, banks also aren’t having it all their own way. Telecom players are investing heavily in fintech solutions focused on mobile banking. In countries where customers are hard to reach, turning a smartphone into a bank branch is a valuable strategy. This is further headwind for Standard Bank’s growth in retail banking on the continent.

Africa is vulnerable to macroeconomic headwinds

The second argument to look at is macroeconomic in nature. African economies are seen as frontier markets rather than emerging markets. They offer strong growth, but are also vulnerable to energy price shocks and commodity price volatility, with many of these countries reliant on just one or two commodities in their economies.

Standard Bank’s scale is valuable here (particularly compared to other South African banks with less diversified offerings in Africa), but it is still exposed to the fortunes of the broader continent. A strong dollar is one of the major risks, usually leading to rapid depreciation of African currencies. The recent Trump-era policies have weakened the dollar, giving Africa some breathing room, which has strongly boosted Standard Bank (and the likes of MTN). If this situation changes, Standard Bank’s growth can take a knock for reasons well beyond its control.

Forming a conclusion

Guidance for FY26 unchanged, but could be updated soon

On the pre-close call, the CFO noted that Standard Bank’s guidance for FY26 is unchanged. This means expected revenue growth in the mid- to high-single digits, accompanied by an improvement in the cost-to-income ratio.

This implies positive jaws (a banking sector metric: income growth less expenses growth) on a full-year basis, despite an expectation for flat jaws in the first half of the year. Analysts questioned this on the pre-close call, with the CFO confidently reminding the market that Standard Bank has achieved positive jaws five years in a row!

The credit loss ratio is expected to be up year-on-year, but should remain in the bottom half of the through-the-cycle range. In other words, the credit environment appears to be under control despite the volatile start to the year in global markets.

Overall, group return on equity (ROE) is expected to increase from 19.3% in 2025.

The market would’ve taken heart from the reaffirmed guidance on the pre-close call, particularly as it was after the first ceasefire in the Iran conflict. In other words, management was willing to affirm guidance based on an understanding of the performance during the conflict and various scenarios for its aftermath.

Management has noted that guidance will be updated at the time of interim results. This could be a significant catalyst for the share price in either direction.

A holding pattern, or a timing opportunity?

With a choppy share price in recent months and no obvious momentum, the market appears to be in a holding pattern while the geopolitical conflict plays out. Bullish investors may see that as an opportunity ahead of interim results, while risk-averse or bearish investors could see that as a sign to wait until detailed results become available.

Consider both the opportunities and risks discussed above when evaluating the information presented. It’s also important to do further research into the performance of the company in forming a view, as many more bull and bear arguments can be made.

Disclosure: The Finance Ghost does not have any position in Standard Bank at the time of writing.

Disclaimer: This article is provided for informational and educational purposes only and does not constitute financial advice, a recommendation, an offer, or a solicitation to buy, sell or hold any financial product. The views expressed are based on publicly available information and are intended to present a balanced discussion of potential opportunities and risks. Any forward-looking statements, expectations or opinions are subject to change and may not materialise. Past performance is not indicative of future results. Readers should conduct their own research and consider their individual objectives, financial circumstances and risk tolerance before making any investment decisions. Any investment decision remains the sole responsibility of the reader.

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* Moneyweb data, 23 July 2025

** Capital Markets Day presentation, slide 7

*** Standard Bank 1H26 pre-close call