Standard Bank on Thursday pledged to further slash costs after the largest banking group by market capitalisation acknowledged they could impede efforts to expand revenue in a subdued economic environment.

Group CEO Jacko Maree said at the release of the bank’s first-half results, to June, that the combination of an 11% growth in headline earnings to R7.4-billion, or 460.9c per share, and a 17% rise in costs by R2.84-billion was "disappointing".

Investors seemed to agree as they pushed the share price down to close 2.38% lower at R113.43.

Standard’s costs include dollar-based expenses converted into local currency and those to fund growth.

But analysts say the bank needs to get a firmer grip on how it manages expenses, while expanding revenue and further improving return on equity.

The group’s income rose 15% to R32.3-billion, boosted by an 18% rise in net interest income of R15.8-billion and a 13% rise in noninterest revenue of R16.5-billion.

Adrian Cloete, an equity analyst at Cadiz Asset Management, said although the results were "reasonable" they were still "a bit below" the expectations of sell-side analysts, which could trigger a downgrade of the bank’s full-year earnings.

Mr Maree said dollar-based costs were still too high, given the subdued revenue outlook, particularly at operations outside Africa. "We are going to be working incredibly hard to reduce the (dollar) cost base."

The group would, however, continue to invest for growth via organic expansion rather than through acquisitions, and also gradually transfer capital at its UK subsidiary to fund growth in Africa, even though the process was proving to be complicated.

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