Standard Bank on Tuesday withdrew its financial guidance citing uncertainty caused by the coronavirus which has forced South Africa into a 21-day lockdown expected to take a toll on an already sputtering economy.
Africa’s largest lender by assets is the first of South Africa’s major lenders to warn that its outlook and guidance might no longer stand.
“While the COVID-19 pandemic continues to unfold and countries respond to this crisis in different ways, there is a high degree of uncertainty regarding the impact it will have on Standard Bank’s financial performance in the 2020 financial year,” Standard Bank said in a statement.
“Shareholders are advised that the outlook and guidance… are hereby withdrawn.”
The bank’s guidance, given just weeks ago when it reported 2019 results, was already relatively pessimistic, with the lender warning that the outlook and operating environment in its markets was uncertain and challenging.
Rivals Nedbank and Absa both said then they would not meet key profitability targets on time due to a further deterioration in the South African economy, which slipped into recession in the final quarter of 2019.
The outbreak of coronavirus looks set to exacerbate these conditions, even for lenders that have seen continental operations boost their profits as growth at home lagged, such as Standard Bank.
The bank said it would hold an investor call at 1500 GMT on Tuesday and would update the market further once sufficient certainty exists.
Its shares rose 4.8% at market open, outperforming the Johannesburg Stock Exchange’s banking index which was up 3.3% in a relief rally after recent sharp falls.
Lenders’ shares suffered on Monday after the South African rand hit an all-time low, and the local stock market has seen huge volatility since the outbreak of the coronavirus.