Standard Bank Group Limited · JSE:SBK
Standard Bank — FY2023 Earnings Presentation
69 slides from Standard Bank's earnings presentation, Mar 14, 2024
Slide 1: 2023 Annual Results Presentation
STANDARD BANK GROUP 2023 ANNUAL RESULTS PRESENTATION 14 MARCH 2024 Angola | Mussulo STANDARDBayBANK GROUP FY23 FINANCIAL RESULTS PRESENTATION | 14 MARCH 2024 1
Slide 2: SBG overview – FY23 and beyond
SBG overview – FY23 and beyond Franchise performance – proved resilient over time 01 1 • Our purpose, strategy and targets • A difficult geopolitical and macroeconomic backdrop, but outlook improved as the year progressed • A business in good health that has proved resilient over the last five years
Slide 3: Franchise performance
Franchise performance 1.0
Slide 4: SBG overview – FY23 and beyond
SBG overview – FY23 and beyond Franchise performance – proved resilient over time 01 1 • Our purpose, strategy and targets • A difficult geopolitical and macroeconomic backdrop, but outlook improved as the year progressed • A business in good health that has proved resilient over the last five years
Slide 5: Our purpose, strategy and targets
Our purpose, strategy and targets Our purpose: Why we exist Africa is our home, we drive her growth Transform client experience Execute with excellence Drive sustainable growth and value Our 2025 financial targets: What we have committed to 7% - 9% ~50% 17% - 20% Revenue growth CAGR1 Cost-to-income
Slide 6: 2023 – a difficult geopolitical and macroeconomic backdrop
2023 – a difficult geopolitical and macroeconomic backdrop Global Sub-Saharan Africa South Africa • Severe geopolitical tensions throughout the • Serious conflicts persisted in some • Electricity disruptions and logistics year countries constraints placed pressure on businesses • Inflationary pressu
Slide 7: Last 5 years – a business in good health that has proved resilient over time
Last 5 years – a business in good health that has proved resilient over time Total income1 Headline earnings & ROE Dividend 80 Headline earnings Dividend +40% 2 000 16.0% 70 ROE 18.8% 20.0% CET 1 13.8% 13.7% 16.8% 60 14.0% 1 500 +43% 50 15.0% +52% 12.0% 40 1 000 10.0% 10.0% 30 8.0% 20 500 5.0% 6.0%
Slide 8: FY23 financial performance and 2024 outlook
FY23 financial performance and 2024 outlook 2.0
Slide 9: SBG overview – FY23 and beyond
SBG overview – FY23 and beyond Franchise performance – proved resilient over time 01 1 • Our purpose, strategy and targets • A difficult geopolitical and macroeconomic backdrop, but outlook improved as the year progressed • A business in good health that has proved resilient over the last five years
Slide 10: Group financial performance
Group financial performance 2.1
Slide 11: FY23 highlights – strong performance underpinned by our robust and growing franchise
FY23 highlights – strong performance underpinned by our robust and growing franchise1 Group headline earnings Banking headline earnings Insurance & Asset Management HE2 FY23: R42.9bn FY23: R38.8bn FY23: R2.8bn FY22: R33.9bn FY22: R29.6bn FY22: R2.3bn 27% 31% 22% Group return on equity Cost-to-income
Slide 12: Banking
Banking 2.2
Slide 13: Banking overview – strong performance drove improved returns
Banking overview – strong performance drove improved returns FY23 FY221 Change Change Rm Rm % CCY % Net interest income 97 495 77 953 25 30 Non-interest revenue 57 689 50 603 14 20 Total income 155 184 128 556 21 26 Operating expenses (79 722) (69 296) 15 19 Pre-provision profit 75 462 59 260 27 35
Slide 14: Gross loans and advances to customers – growth dampened by currency movements
Gross loans and advances to customers – growth dampened by currency movements Gross loans & advances to customers by product1, R1 471bn +6% South Africa YOY % change 1 200.0 (Dec-22/Dec-23) 1 150.0 +16% 8% 1 100.0 1 050.0 1 000.0 950.0 1 211 900.0 +2% 850.0 800.0 750.0 700.0 Rbn Dec-21 Dec-22 Dec-23
Slide 15: Deposits – growth driven by ongoing underlying client franchise growth
Deposits – growth driven by ongoing underlying client franchise growth Deposits and debt funding by product, R2 026bn +6% South Africa YOY % change (Dec-22/Dec-23) +5% 1 700.0 1 500.0 1 300.0 7% +12% 1 100.0 +2% 1 592 900.0 700.0 500.0 Rbn Dec-21 Dec-22 Dec-23 +13% +4% Africa Regions -4% 450.0 18% C
Slide 16: Net interest income – higher average interest rates supported strong NIM expansion
Net interest income – higher average interest rates across all regions supported strong NIM expansion Net interest margin Group NII and NIM trend Positive impact 494 NII (Rbn) Negative impact NIM (bps) 431 432 +62 bps 384 370 25% (4) 11 55 432 494 62.4 61.1 62.8 78.0 97.5 bps FY22 1 Endowment 2 Pric
Slide 17: Net fee and commission – healthy growth driven by increased clients and activity
Net fee and commission – healthy growth driven by increased clients and activity Net fee and commission revenue1 Fee and commission revenue, by category 35.0 Other, +10% 33.0 Account transaction 6.3 fees, +8% Knowledge-based +10% fees, -4% 10.9 31.0 1.5 Administration fees, +7% 2.7 29.0 R40.3bn2 +10
Slide 18: Trading revenue – increase linked to client flow volumes and market opportunities
Trading revenue – increase linked to client flow volumes as well as market-specific opportunities Trading revenue Trading revenue by CIB trading revenue by CIB trading revenue by product type business solution 0.2 - 0.2 +20% 3.3 4.6 6.2 R20.5bn1 R20.6bn R20.6bn1 14.4 15.8 17.4 Fixed income & currenc
Slide 19: Provisions – increased proportion of Stage 3 loans resulted in higher total coverage
Provisions – increased proportion of Stage 3 loans resulted in higher total coverage Gross loans and advances1 Provisions1 Coverage Stage 3 Stage 3 Stage 3 coverage Stage 2 Stage 2 Total coverage Stage 1 Stage 1 60 Stage 1 & 2 coverage 8.0 +7% 52 +15% 50 7.0 1 671 48 47 46 50 1 558 64.0 1 476 6% 6.0
Slide 20: Provisions – in 2H23 Stage 1 & 2 provisions were flat and Stage 3 increased
Provisions – in 2H23 Stage 1 & 2 provisions were flat and Stage 3 increased Stage 1 & 2 provisions and Stage 3 provisions and Drivers of growth coverage coverage Stage 1 & 2 provisions and coverage • Provisions: increased in 1H23 (Dec-22 to Jun-23) but were broadly flat in 2H23 (Jun-23 to Dec-23) 60
Slide 21: Credit charges – increase driven by home services and business lending
Credit charges – increase driven by home services and business lending Credit impairment charges 20 0 00 18 0 00 16 262 Financial investments & guarantees ( 8) 465 ( 700) 1 032 Loans and advances 23 16 0 00 370 208 195 13 312 14 0 00 1 388 723 Movement reflects the 12 0 00 Increased charges in non-r
Slide 22: Provisions – bolstered further, driven by client strain and a difficult macroeconomic outlook
Provisions – bolstered further, driven by client strain and a difficult macroeconomic outlook Balance sheet provisions IFRS9 Covid-19 Post Covid 80 4.5 Provisions Total coverage (RHS) 4.0 70 3.5 60 3.0 50 2.5 40 2.0 30 1.5 20 1.0 10 0.5 17.7 19.4 18.7 22.7 21.8 22.4 36.7 35.3 50.0 51.4 55.8 64.0 - -
Slide 23: Operating expenses – higher cost growth more than offset by strong revenue growth
Operating expenses – higher cost growth was more than offset by strong revenue growth to deliver positive jaws Operating expense movements YOY Drivers of growth Staff costs 10 000 20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 • Annual increases and additional headcount in all 3 FY2
Slide 24: IT spend – growth contained at 10%, continued “save to invest” approach
IT spend – growth contained at 10%, continued to drive “save to invest” approach Total IT spend Drivers of growth Amortisation Amortisation • Decline attributable the roll off of legacy intangibles Depreciation & other YOY % Staff costs and less capitalisation of new projects as we shift change Soft
Slide 25: Insurance & Asset Management
Insurance & Asset Management 2.3
Slide 26: IAM – growth realised across the business despite challenging environment
IAM – growth realised across the business despite challenging macroeconomic and business environment Life insurance, indexed new business Short-term insurance, GWP1 Asset Management, AUM & AUA2 South Africa South Africa South Africa 14.0 12.0 8% 8.0 7.0 8% 1 200 1 000 8% 10.0 6.0 800 8.0 5.0 600 6.0
Slide 27: IAM performance – continued earnings growth and capital efficiencies resulting in improved ROE
IAM performance – continued earnings growth and capital efficiencies resulting in improved ROE FY23 FY22 Change Rm Rm % Insurance operations 3 883 3 152 23 South Africa 3 948 3 113 27 Africa Regions (65) 39 (>100) Asset Management operations 928 1 155 (20) South Africa 237 511 (54) Africa Regions an
Slide 28: Capital & returns
Capital & returns 2.4
Slide 29: Capital and liquidity – maintained a strong position
Capital and liquidity – maintained a strong position Capital1 Capital adequacy1 Liquidity 16 Net stable funding ratio 274 246 33 15 230 31 20 Basel III 198 30 minimum 15 13.8 13.8 184 14 13.7 100% 12 26 13.4 22 13.2 9 8 13 221 Liquidity coverage ratio 200 12 188 154 163 SBG target ratio >11.0%1 11 S
Slide 30: CET1 ratio – grew as capital generation outstripped dividends and RWA growth
CET1 ratio – grew as capital generation outstripped dividends and RWA growth CET 1 ratio movement1 Risk-weighted assets Investments in FIs Equity risk 2 000 Operational risk YOY % 2.9 (1.6) Market risk change (1.0) Counterparty credit risk Credit risk 1 609 +8% 1 495 75 +10% 1 500 25 -11% 68 28 210
Slide 31: ROE & dividends – improved returns and increased dividends
ROE & dividends – improved returns and increased dividends Return on equity and cost of equity Dividend per share Payout 18.8 56% 24%2 55% 59% 55% Ratio 16.8 +18% 16.3 13.5 8.9 994 240 871 1 206 1 423 % cps FY19 FY20 FY21 FY22 1 FY23 FY19 FY20 FY21 FY22 FY23 Group ROE Cost of equity 1 Prior year num
Slide 32: Segmental disclosures
Segmental disclosures 2.5
Slide 33: SBG portfolio – diversified across four businesses and 26 countries
SBG portfolio – diversified, across four businesses and 26 countries, and delivering growth Business unit headline earnings, YOY change Legal entity headline earnings, YOY change IAM Other +22% Liberty -30% +46% 2.8 Offshore 1.6 2.0 +>100% PPB 4.3 +27% 10.7 16.8 South Africa R42.6bn1 19.8 CIB R42.9b
Slide 34: Business units – all franchise businesses contributed positively to growth and returns
Business units – all franchise businesses contributed positively to growth and returns Revenue % contribution1 Efficiency Returns Total income Cost-to-income ratio Return on equity PPB R57bn 32% 53.7% 22.4% +18% Banking BCB R38bn 21% 56.1% 37.0% +18% CIB R64bn 36% 45.6% 22.3% +19% IAM R22bn 13% 13.1
Slide 35: Business units – all franchise businesses delivered earnings growth
Business units – all franchise businesses delivered earnings growth Headline earnings growth drivers by business unit1 SBG Franchise Positive impact Negative impact 4 587 500 418 ( 631) 1 974 2 247 33 853 42 948 Rm FY22 1 PPB BCB CIB IAM Centre & other ICBCS FY23 (40% stake) HE, Rbn 10.7 9.3 19.8 2.
Slide 36: Africa Regions – all regions delivered very strong performances
Africa Regions – all 3 regions delivered very strong performances FY23 FY22 Change Change Headline earnings Rbn Rbn % CCY % Africa Regions 18.2 12.2 49 70 East Africa1 3.5 2.4 45 37 South & Central 8.4 6.2 36 52 Africa2 West Africa3 6.3 3.6 74 >100 Strong performance (>10% CCY growth) FY23 FY22 % %
Slide 37: Africa Regions – continued delivery underpinned by established portfolio of 19 countries
Africa Regions – continued delivery underpinned by our established portfolio of 19 countries Headline earnings by region Headline earnings by country YOY % South & Central CAGR change East Africa Other 20 000 (2013-2023) West Africa Namibia +49% 18 000 Zambia CAGR 16 000 16 000 Mozambique (2013-2022
Slide 38: 2024 outlook
2024 outlook 2.6
Slide 39: SBG 2025 targets
SBG 2025 targets1 Revenue growth, Rbn Cost-to-income ratio, % 180.0 60.0% 170.0 Target: 58.2% 13% 155.2 58.0% 160.0 7%-9% 150.0 CAGR 56.0% CAGR Tracking 140.0 54.0% Target: 130.0 108.6 ahead of 120.0 52.0% Approaching 110.0 50.0% 51.4% 50%2 plan 100.0 90.0 48.0% 2020 2021 2022 2023 2024 2025 2020 20
Slide 40: 2024 outlook – risks persist, but expect a soft landing
2024 outlook – risks persist, but expect a soft landing Global Sub-Saharan Africa South Africa3 • Inflation expected to continue to fall • While some markets may still see interest • Inflation expected to decline to 5.0% on providing scope for interest rates cuts rate increases in 1H24, most markets
Slide 41: FY24 macro outlook mixed – currency movements will be a headwind
FY24 macro outlook mixed – supportive on a portfolio basis but currency movements will be a headwind Inflation, % Interest rates, avg % Real GDP growth, % Currency impact vs ZAR 0 10 20 30 40 0 10 20 30 0 2 4 6 8 10 -70% -50% -30% -10% SA SA SA SA Average % 2022 2022 2022 2023 2023 change vs UK 2023
Slide 42: FY24 guidance – continued robust underlying growth diluted by currency movements
FY24 guidance – continued robust underlying growth diluted by currency movements FY24 guidance (ZAR) Commentary • Balance sheet growth to remain slow in 1H24 but improve in 2H24 Net interest income Low-to-mid single digits • Average interest rates to be marginally down and pricing to remain competit
Slide 43: Competitive position
Competitive position 3.0
Slide 44: SBG overview – FY23 and beyond
SBG overview – FY23 and beyond Franchise performance – proved resilient over time 01 1 • Our purpose, strategy and targets • A difficult geopolitical and macroeconomic backdrop, but outlook improved as the year progressed • A business in good health that has proved resilient over the last five years
Slide 45: Positive outlook – over the medium to longer term
Positive outlook – over the medium to longer term Our base case Downside risks • Moderating global inflation and improved growth outlook • Global economy experiences a hard landing • Sub-Saharan Africa • Intensifying populism and deepening fragmentation between power • Growth likely to pick up to 4%
Slide 46: Our business – well diversified with unmatched scale
Our business – well diversified with unmatched scale 4 businesses 26 countries #1 on the continent1 Personal & Private Banking Individual clients, from personal to R3.1trn private clients, as well as wealth Assets and investment Business & Commercial Banking R2.0trn Banking Small and medium-sized De
Slide 47: Client franchise – growing and engaged
Client franchise – growing and engaged Growing client base, CAGR1 Increasing client engagement PPB active clients, millions Pension fund administration 7% clients, millions 30% 15.6 6% Increase in PPB digital 14.8 2.1 transaction volumes 13.7 1.9 1.9 FY21 FY22 FY23 FY21 FY22 FY23 7% Increase in BCB
Slide 48: Technology – targeted investment enables competitiveness and resilience
Technology – targeted investment enables competitiveness and resilience BU-led investment in client systems Stable and secure Increasing productivity 95% decline in time to process cross- border payments for corporate clients in Total indicators >90% 30% South Africa BCB queries can decline in call
Slide 49: Africa’s energy transition – capturing opportunities
Africa’s energy transition – capturing opportunities Sustainable finance mobilised in 2023 Cumulative sustainable finance mobilised since 2022 Renewable energy 42% 8 % of Government-procured >R50bn Split by region >R105bn 2026 projects financed in 2023 Sustainable finance Sustainable finance target1
Slide 50: Our portfolio of businesses – steady growth and strong momentum
Our portfolio of businesses – steady growth and strong momentum Headline earnings1, 10-year trend Headline earnings1, YOY trend 10 year CAGR YOY % Other Liberty (FY13-FY23) Other change Standard Bank Offshore Africa Regions Offshore Namibia Zambia 42% +49% South Africa 2 headline earnings from 38% M
Slide 51: Our 2024 focus areas
Our 2024 focus areas 1 • Continue to grow our client base through our universal product offering and unrivalled network 2 • In all four business units, focus on defending where we lead, growing where we are sub-scale and optimising to create capacity to invest where needed 3 • Manage risk effectivel
Slide 52: | STANDARD BANK GROUP FY23 FINANCIAL RESULTS PRESENTATION | 14 MARCH 2024
| STANDARD BANK GROUP FY23 FINANCIAL RESULTS PRESENTATION | 14 MARCH 2024 52
Slide 53: Q&A
Q&A | STANDARD BANK GROUP FY23 FINANCIAL RESULTS PRESENTATION | 14 MARCH 2024 53
Slide 54: Thank you
THANK YOU | STANDARD BANK GROUP FY23 FINANCIAL RESULTS PRESENTATION | 14 MARCH 2024 54
Slide 55: Appendix – Additional disclosures
Appendix – Additional disclosures i
Slide 56: Interest rates – trended higher, providing a strong tailwind to net interest income
Interest rates – trended higher, providing a strong tailwind to net interest income South Africa, UK & USA, % Africa Regions, % 10 32 Angola SA Change since Jan-22 Change since Jan-23 Botswana 30 US Ghana 30.00 UK 2023: +125 bps 28 Kenya 26 Mauritius 8 2022: +325 bps Mozambique 24 Namibia 22 Nigeria
Slide 57: Disbursements – IB origination remained strong while PPB and BCB moderated
Disbursements – IB origination remained strong while PPB and BCB disbursements moderated Investment banking origination VAF – PPB Personal unsecured loans 7% 50.0 45.0 40.0 6% 49.5 44.5 39.5 9% 35.0 34.5 30.0 29.5 25.0 24.5 20.0 15.0 19.5 13.7 12.5 14.5 202 217 10.0 23.9 22.5 9.5 5.0 4.5 Rbn FY22 FY
Slide 58: SBSA – performance reflective of the difficult SA environment
SBSA – performance reflective of the difficult SA environment Key drivers of performance SBSA SBSA Change • Net interest income grew on the back of loan book growth FY23 FY221 % and higher average interest rates resulting in positive Rbn Rbn endowment Net interest income 54.5 46.9 16 • Non-interest
Slide 59: South Africa – client behaviour driving continued infrastructure optimisation
South Africa – client behaviour driving continued infrastructure optimisation Branch transaction volumes Branch, sqm Branches & other points of representation 260.0 700 11.0 650 10.0 11% 4% 18% 250.0 BCB 3.2 600 167 9.0 8.0 240.0 Other1 550 142 500 2.9 7.0 230.0 450 6.0 400 PPB 220.0 7.4 5.0 Branche
Slide 60: Africa Regions – delivered a robust performance in CCY and ZAR
Africa Regions – delivered a robust performance in CCY and ZAR Key drivers of performance FY23 FY22 Change CCY Rbn Rbn % change • Net interest income grew due to good balance sheet growth, % higher demand for trade facilities and positive endowment in a higher average interest rate environment acros
Slide 61: Africa Regions – client preference for digital is clear
Africa Regions – client preference for digital is clear Branch transaction volumes Branches & other points of Digital transaction volumes representation 31 22.0 650.0 402.0 20.0 600.0 39 41 28 5% 11% 352.0 18.0 550.0 BCB 16.0 Other2 BCB 302.0 6.5 9% 500.0 14.0 7.1 450.0 252.0 12.0 202.0 400.0 10.0 5
Slide 62: Personal & Private Banking – key highlights
Personal & Private Banking – key highlights Key drivers of performance FY23 FY221 Change Rbn Rbn % • Total income increased due to positive endowment in a higher average interest rate environment, increase in the active client Net interest income 39.1 33.0 19 base, on the back of successful client e
Slide 63: Personal & Private Banking – franchise momentum
Personal & Private Banking – franchise momentum South Africa Africa Regions NIR by geography, Rbn Active clients Active clients 6% 4% 18.0 16% 15.5 0.6 +41% 0.4 5.0 +31% 10.8 11.4 4.0 4.2 3.8 m FY22 FY23 m FY22 FY23 Digital transactional volumes Digital transactional volumes 3 000 33% 12% 11.3 12.4
Slide 64: Business & Commercial Banking – key highlights
Business & Commercial Banking – key highlights Key drivers of performance FY23 FY221 Rbn Rbn Change % • Total income increase linked to deposit growth, higher average interest rates, higher transactional activity, strong growth in VAF Net interest income 25.5 20.2 26 Fleet rental income, improved tr
Slide 65: Business & Commercial Banking – franchise momentum
Business & Commercial Banking – franchise momentum South Africa Africa Regions NIR by geography, Rbn Active clients Active clients 550 500 450 4% 400 350 4% 12.0 12.6 5% 400 300 0.3 350 300 250 0.3 +5% 250 200 200 510 528 150 281 291 4.3 150 +6% 100 100 4.1 ‘000 FY22 FY23 ’000 FY22 FY23 Card acquiri
Slide 66: Corporate & Investment Banking – key highlights
Corporate & Investment Banking – key highlights Key drivers of performance FY23 FY221 Change Rbn Rbn % • Total income growth driven by balance sheet growth, positive endowment impact of higher interest rates, and strong trading Net interest income 30.8 24.4 26 revenues underpinned by increased clien
Slide 67: Corporate & Investment Banking – client revenue
Corporate & Investment Banking – client revenue Client revenue by sector, +20% Total income by geography, +19%1 Real Estate IB Africa Regions Sovereign & Public Sector GM Africa Regions Telecommunications & Media TxB Africa Regions Diversified industries +2% IB South Africa +30% Mining & Metals +27%
Slide 68: ICBC Standard Bank plc – strong underlying operational performance
ICBC Standard Bank plc – strong underlying operational performance ICBCS performance SBG’s share of earnings 317 FY23 FY22 ICBCS earnings, USDm 186 317 203 @ % stake 40% 40% +63% SBG attributable earnings, 74 127 USDm 186 ZAR/USD1 17.4 15.1 114 SBG attributable earnings, 1 286 1 917 Rm USDm FY22 FY2
Slide 69: Disclaimer – Forward-looking statements
Disclaimer – Forward-looking statements The Group may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate t