T2iB04846 Std Bank PPT 1 - The Vault Central and other (7) (3) 793 9 729 FY13 loans and advances to...

Standard Bank Group Financial results presentation for the year ended 31 December 2013 1

Financial results presentation

for year ended 31 December 2013

Financial results

Notes

2 Standard Bank Group Financial results presentation for the year ended 31 December 2013

Notes

3 Financial results presentation for year ended 31 December 2013

Key metrics

FY13

change

% FY12

Headline earnings (Rm) 17 194 15 14 918

Headline EPS (HEPS) (cents) 1 064.9 14 934.9

Diluted HEPS (cents) 1 054.7 14 927.4

DPS (cents) 533 17 455

NAVPS (cents) 8 127 14 7 136

ROE (%) 14.1 14.0

Credit loss ratio (%) 1.04 1.08

Cost�to�income ratio (%) 58.5 58.9

Total capital adequacy ratio (%) 16.2 14.3*

Tier I capital adequacy ratio (%) 13.2 11.2*

* Pro forma B3


Return on RWA improving

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

0

100

200

300

400

500

600

700

800

900

FY10 FY11 FY12 FY13 %

Closing RWA Average RWA Return on average RWA

Rbn


Notes


Diversification

49%

38%

13%

Even and stable contribution to headline earnings from business units

PBB CIB Liberty

68%

26%

6%

Africa a meaningful contribution to group revenue

SBSA

Rest of Africa legal entities

Other legal entities


Business unit view of headline earnings

FY13

Rm

change

%

FY12

Rm

Personal & Business Banking 8 358 14 7 343

South Africa 8 538 15 7 410

Rest of Africa (361) (73) (209)

Outside Africa 181 27 142

Corporate & Investment Banking 6 591 49 4 419

Central and other 34 (93) 493

Continuing operations 14 983 22 12 255

Argentina – Discontinued operations 673

Banking activities 14 983 16 12 928

Liberty 2 211 11 1 990

SBG 17 194 15 14 918


Notes


Summarised group income statement

FY13

Rm

change

%

FY12

Rm

Net interest income 39 225 15 34 233

Non�interest revenue 36 669 6 34 474

Total income 75 894 10 68 707

Credit impairment charges 9 214 5 8 800

Income from operations 66 680 11 59 907

Operating expenses 44 862 10 40 826

Headline earnings – Continuing operations 14 983 22 12 255


Headline earnings – banking activities 14 983 16 12 928

Headline earnings – Liberty 2 211 11 1 990

SBG headline earnings 17 194 15 14 918


Summarised constant currency income statement

FY13

Rm

change

%

FY12

Rm



Total income 75 894 7 71 098

Credit impairment charges 9 214 (0) 9 232



Headline earnings – Continuing operations 14 983 29 11 609






Notes


IFRS discontinued operations

FY13

Rm

change

%

FY12

Rm

Profit for the year from continuing operations 16 660 14 14 565

(Loss)/profit from discontinued operations (1 022) (>100) 817

Profit from discontinued operation – Argentina 910

Profit from disposal of discontinued operation – Argentina 1 525

Loss from discontinued operation – Global markets OA (419) 74 (1 618)

Held for sale impairment – Global markets OA (603)

Profit for the year 15 638 2 15 382





Loans and advances to customers

FY13

Rbn

change

%

FY12

Rbn

PBB 515 8 475

Mortgage loans 309 3 300

Instalment sale and

finance leases71 12 63

Card debtors 28 16 24

Other loans and advances 107 21 88

Inclusive banking in SA 3 (29) 4

Other personal unsecured

lending47 23 39

Business lending and

other57 24 45

CIB 285 11 257

Corporate loans 243 11 219

Commercial property

finance42 11 38

Central and other (7) (3)

793 9 729

FY13 loans and advances to customers

Mortgage loansInstalment sale and finance leasesCard debtorsPersonal unsecured lendingBusiness lending and otherCorporate loans


Notes


Deposit and current accounts

FY13

Rbn

change

%

FY12

Rbn

Personal & Business

Banking515 12 461

Retail priced 298 20 248

Wholesale priced 217 2 213

Corporate & Investment

Banking499 7 467

Central and other (14) (3)

1 000 8 925

17% 9%20%

0

200

400

600

800

1 000

FY10 FY11 FY12 FY13

Other deposit and current accounts

Retail priced deposits

Rbn


NII and Margin

27 028 29 027 34 233 39 225 0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

FY10 FY11 FY12 FY13

Net interest income

Rm

415 429

1510

3

11

5

380

390

400

410

420

430

440

FY12 Loanpricing

Fundingcost

Endow-ment

Mix Other FY13

Margin analysis

bps


Notes


Non-interest revenue

17 883 19 782 21 319 23 147

8 0327 895

8 86810 202

2 8052 047

4 287

3 320

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

FY10 FY11 FY12 FY13

Net fee and commission revenue Trading revenue Other revenueRm


Non-interest revenue

0

5 000

10 000

15 000

20 000

25 000

FY10 FY11 FY12 FY13

Net fee and commission revenue

Account transaction fees Electronic banking

Knowledge-based fees Card-based commission

Bancassurance Other incl fee expenses

Rm

Trading revenue

FY13

Rm

change

%

FY12

Rm

FIC 7 039 (3) 7 280

Commodities 1 984 28 1 553

Equities 1 179 >100 35

10 202 15 8 868

Other revenue

FY13

Rm

change

%

FY12

Rm

Banking and other 1 356 (40) 2 253

Property�related revenue 474 (29) 663

Insurance –

bancassurance income1 490 9 1 371

3 320 (23) 4 287


Notes


Non-performing loans and coverage ratios

0

1

2

3

4

5

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

FY11 FY12 FY13

NPLs

Corporate loansBusiness and other lendingRetail unsecuredRetail securedNPL ratio

Rm %

FY13

%

FY12

%

FY11

%

PBB coverage ratio 44 38 30

Mortgage loans 28 26 20

Instalment sale and finance

leases51 49 57

Card debtors 71 65 73

Other loans and advances 68 73 66

CIB coverage ratio 65 49 31

Corporate loans 70 51 31

Commercial property

finance28 24 22

Total coverage ratio 48 41 30


Credit impairment charges

11 719 7 394 6 436 8 800 9 2140

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

FY09 FY10 FY11 FY12 FY13

Credit impairment charges Credit loss ratio

Rm %


Notes


PBB credit impairment charges

Credit impairment

chargesCredit loss ratios

FY13

Rm

FY12

Rm

FY13

%

FY12

%

Mortgage loans 2 411 2 648 0.79 0.91

Instalment sale and finance leases 789 490 1.18 0.85

Card debtors 840 384 3.26 1.73

Other loans and advances 3 777 3 136 2.83 2.92

Personal unsecured lending 2 726 2 304 5.73 6.47

Business lending and other 1 051 832 1.22 1.16

PBB 7 817 6 658 1.47 1.39

South Africa 6 554 5 553 1.45 1.33

Rest of Africa 1 261 1 108 2.92 3.33


CIB credit impairment charges

Client location

FY13

Rm

change

%

FY12

Rm

South Africa 340 67 204

Rest of Africa 415 (37) 661

Outside Africa 797 (45) 1 455

Specific credit impairment charges 1 552 (33) 2 320

Portfolio impairments (155) 20

CIB credit impairment charges 1 397 (40) 2 340

Credit loss ratio 0.36 0.63


Notes


Cost-to income ratio and jaws* analysis

( 5)

5 18 11 712 0 17 10 4

55

56

57

58

59

60

61

62

FY10 FY11 FY12 FY13 FY13 constantcurrency

(10)

(5)

0

5

10

15

20

Total income growthTotal cost growthCost-to-income ratio (RHS)Cost-to-income ratio excluding Global Markets OA (RHS)

% %

* Difference between income growth and cost growth


Staff costs and operating expenses

• Total IT function spend including staff costs increased 15%

• Information technology line increased by outsourcing activity, but savings realised in other

expense lines

FY13

Rm

change

%

FY12

Rm

Staff costs 24 760 11 22 265

Other operating expenses 20 102 13 17 803

Information technology 4 456 23 3 636

Depreciation and amortisation 3 587 15 3 121

Impairment of intangible assets 308 40 220

Communication 1 463 4 1 403

Premises 3 335 6 3 133

Professional fees 1 742 (18) 2 114

Other 5 211 25 4 176

Restructure charge 758

Total banking activities 44 862 10 40 826

Constant currency 44 862 4 43 127


Notes


11.2 13.2

0.9

1.2

0.2 0.1 0.6

0.7

0.1

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

FY12 proforma B3

Retainedincome

RefinancingBEE deal

Regulatoryapproved

modelchanges

Operationaldecrease in

RWA

Impact ofFx on RWA

Impact ofFx on NAV

(FCTR)

Other FY13

%

Progression of Tier 1 capital adequacy ratio


790 842 8415

6

7

8

9

10

11

12

13

14

15

16

17

300

400

500

600

700

800

900

FY12 Basel 2.5 FY12 pro forma Basel 3 FY13

Risk-weighted assets Total capital adequacy ratio

Tier 1 capital adequacy ratio Common equity tier 1 capital adequacy ratio

Rbn %

Capital ratios and risk-weighted assets


Notes


Dividends

386 386 425 455 5330

0.5

1

1.5

2

2.5

0

100

200

300

400

500

600

FY09 FY10 FY11 FY12 FY13

DPS Dividend cover ratio

cps times

Corporate & Investment

Banking


Notes


CIB summarised income statement

FY13

Rm

change

%

FY12

Rm

Total income 28 304 9 25 927

Credit impairments 1 397 (40) 2 340



Restructure charge 758

Net income before tax 9 466 43 6 630

Headline earnings 6 591 49 4 419

ROE (%) 14.3 9.6




CIB income

36%35%

36%37%

0

5 000

10 000

15 000

20 000

25 000

30 000

FY10 FY11 FY12 FY13

Non trading revenue Trading revenueRm


Notes


CIB business units

Total income Headline earnings

FY13

Rm

change

%

FY12

Rm

FY13

Rm

change

%

FY12

Rm

Transactional Products and Services 8 884 19 7 455 2 212 29 1 712

Global Markets 11 934 16 10 301 2 403 96 1 225

Investment Banking 6 140 (7) 6 627 1 672 (6) 1 774

Real estate and Principal Investment

Management and curtailed operations1 346 (13) 1 544 304 24 246

28 304 9 25 927 6 591 33 4 957

Restructure charge (538)

CIB 28 304 9 25 927 6 591 49 4 419


Opportunities and priorities

• Relentless focus on serving our clients in a challenging operating environment

– Focus on client engagement, execution and winning mandates

– Leverage product and geographic capability

– Optimise cross-selling opportunities

• Maintain financial performance momentum

– Positive trajectory in revenue growth on the African continent

– Strive for positive jaws by balancing investment with revenue growth

• RWA discipline

– We have a sustainable client franchise which generates ‘capital light’ TPS revenues

– Utilise capital in the most efficient way by originating and distributing African risk

– Drive ROE higher for shareholder value creation

• Work closely in partnership with ICBC to develop the Global Markets business in London

• Passionate and committed people

– Our people are the critical success factor in our efforts to strengthen and maintain excellent client service

– We offer interesting and rewarding careers to our people, and we are dedicated to their ongoing development

– In return we expect their commitment to a culture of high performance, honesty, transparency, teamwork and collaboration


Notes

Personal & Business

Banking


PBB summarised income statement

FY13

Rm

change

%

FY12

Rm



Total income 48 596 14 42 544

Credit impairment charges 7 817 17 6 658



Net interest margin (%) 5.06 4.79



ROE (%) 18.5 19.4


Notes


PBB product reporting


FY13

Rm

change

%

FY12

RmFY13

Rm

change

%

FY12

Rm

Transactional products 20 703 8 19 188 2 727 (2) 2 789

Mortgage lending 6 243 21 5 161 1 516 57 966

Instalment sale and finance leases 2 954 15 2 565 181 (21) 229

Card products 5 070 13 4 472 1 334 11 1 199

Lending products 8 520 24 6 896 785 25 629

Bancassurance and wealth 5 106 20 4 262 1 815 19 1 531

PBB 48 596 14 42 544 8 358 14 7 343


Key SA portfolios delivering good growth


FY13

Rm

change

%

FY12

Rm

FY13

Rm

change

%

FY12

Rm

Business Banking 11 218 11 10 135 3 658 11 3 304

Personal Markets 20 648 17 17 590 4 339 23 3 531

Inclusive Banking 3 862 (10) 4 283 (843) (37) (617)

Bancassurance and wealth 2 991 12 2 663 1 384 16 1 192

PBB SA 38 719 12 34 671 8 538 15 7 410


Notes



• Deliver excellent customer experience

– We aspire to make a difference in the lives of our customers

– Offer customers convenience and allow them to choose how and when they bank

• The digital revolution is fundamentally changing the way in which consumers and businesses interact

– Smart mobile devices will become our most crucial customer interaction

– Simplify technology and standardise processes to remain efficient and agile enough to meet our customers’ needs

– Deliver integrated channels and world class efficient technology

• A truly digital bank requires a new engine and IT capabilities

• New digital channels and products to support the demands of our customers and clients

– Therefore we are investing in IT to renew our core banking systems

• Strong focus on cost control

– Increasing pressure on NIR

– Amortisation of IT assets will increase over the next 3 years as new systems are “switched on”

Liberty


Notes


Liberty delivered an excellent result

• BEE normalised ROE 23.3%

• Return on BEE normalised group equity value 16%

• Long-term insurance indexed new business up 15%

• Value of long-term insurance new business up 21%

• Customer net cash inflows R22bn

• Retail long-term insurance new business margin 2.4%

• CAR cover 2.6 times

• Strong South African franchises supported by innovative products, multi-distribution

capabilities and risk management

• Profitable bancassurance arrangement enhancing penetration

• Investments made are delivering value

• Strong capital position


Earnings performance

FY13

Rm

change

%

FY12

Rm

Retail Insurance SA 1 467 24 1 179

Liberty Corporate 121 83 66

LibFin 2 015 (5) 2 116

Stanlib 633 18 537

Liberty Properties 44 (8) 48

Liberty Africa 52 >100 21

Liberty Health (40) 5 (42)

Other (216) 9 (237)


SBG share of headline earnings (54%) 2 211 11 1 990


Notes



• Maximise bancassurance, wealth and asset management synergies in SA

• Leverage

– Standard Bank network and Liberty’s products and expertise to compete in the fast-growing African

markets

• Capture affluent and aspirational middle market retail growth in insurance and investments

• Capture growth in asset management fund flows from international flows into SSA

– Insurance balance sheet and asset management competency in new regulatory environment

Conclusion


Notes


Group in good shape

• FY13 results are sound

• Headline earnings increased 15% to R17.2bn

• Total revenue up 10% and total costs up 10%

– On a constant currency basis revenue up 7% and costs up 4% resulting in positive jaws of 3%

• Credit loss and cost-to-income ratios have both improved slightly

• Strong Tier 1 capital adequacy ratio to enable growth

– From 11.8% at FY12 on B2 basis to 13.2% at FY13 on B3 basis

• Excellent performance from the Rest of Africa legal entities

– Headline earnings growth of 44%

– ROE up from 16.6% to 19.7%


We have returned to trend performance…

0

2

4

6

8

10

12

14

16

18

20

0

10

20

30

40

50

60

70

80

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 RbnRbn

Total income Headline earnings (RHS)

Total income

CAGR 13%

Headline

earnings

CAGR 12%


Notes


… but improving ROE is our primary aim

91 103 115 1310

2

4

6

8

10

12

14

16

0

20

40

60

80

100

120

140

FY10 FY11 FY12 FY13

NAV ROE

Rbn %

NAV

CAGR 13%


Strategy

• Our strategy is unchanged

• We aim to build the leading Africa-focused financial services organisation using all our

competitive advantages to the full

– We have simplified our business

– We have narrowed our focus to the African continent

– We are well positioned for organic growth

• To deliver on our strategy

– We carefully consider the levers we have to accelerate earnings growth and improve ROE

• Efficient capital allocation

• Productivity and costs and revenues per employee

– We think in decades and try to deliver every year

• We aim to provide investors with short-term value and a robust plan to ensure future value


Notes


Rest of Africa has grown consistently as a % of group income…

17%

FY10Total income


26%

FY13Total income



… as we focus on growing our balance sheet on the African continent

12%

FY10NAV


16%

FY13NAV



Notes


Conclusion

• We have a clear plan for what needs to be done over the next few years

– Simplified organisation focused on Africa with reduced management stretch

– Rest of Africa providing a meaningful and growing contribution the group

– Focus on growing and strengthening our franchise in South Africa continues

• We are confident in our strategy

• Our relationship with ICBC continues to strengthen

• We are working hard to deliver an improvement in returns both in the short and over the

longer term

– Medium-term ROE target of 15 – 18%

– Medium-term Tier 1 CAR target of 10.5 – 12.5%


Notes

Date post:	07-Mar-2018
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T2iB04846 Std Bank PPT 1 - The Vault Central and other (7) (3) 793 9 729 FY13 loans and advances to...

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