setting a new standard
21 July 2008

It gave Standard Bank a 'buy' rating, while Absa was given a 'neutral' one, as was Nedbank, while FirstRand was given an 'underperform' rating.

Standard Bank's client reach, distribution foothold and experience "formed the cornerstone of its ability to provide broad-based growth at appropriate risk both within its current markets and developing ones," Merrill Lynch said.

In the context of a slowing South African banking outlook, Standard appeared "well positioned".  In wholesale banking, it was present in the areas of trade finance and project finance and had a Fixed Income, Currency and Commodities division.  In retail, it had taken on a prudent approach to asset quality risk demonstrated by higher provisions, Merrill Lynch said.

Opportunities for Standard Bank in the broader emerging markets appeared "appealing" in the short term, driven by commodity and infrastructure-led economic growth – and in the medium term by deepening corporate and consumer credit penetration.  "Falling levels of consumer indebtedness should offset in part the risk to earnings posed by a slowdown," Merrill Lynch said.

However, global credit issues and the liquidity squeeze should continue to weigh on short-term funding opportunities. Standard Bank is the biggest South African banking group ranked by assets and earnings.

Sapa,  www.businessday.co.za