Standard Bank Group Limited · JSE:SBK
Standard Bank — Debt Investor Presentation (February 2024)
31 slides from Standard Bank's debt investor presentation, February 2024
Slide 1: Standard Bank Group Investor Briefing
STANDARD BANK GROUP INVESTOR BRIEFING February 2024
Slide 2: Contact details
Contact details Jan Brits Paul Burgoyne Marc Hearn Head: Group Capital Management Head: Treasury and Money Markets Head: Strategic Funding Tel: +27 82 856 4669 Tel: +27 11 415 6010 Tel: +27 74 138 4085 Email: Jan.Brits2@standardbank.co.za Email: Paul.Burgoyne@standardbank.co.za Email: Marc.Hearn@sta
Slide 3: Agenda
Agenda 1. Market update Page 4 2. Funding and liquidity Page 8 3. Regulatory update Page 11 4. Capital management Page 17 5. Sustainable finance Page 20 6. Term sheet Page 26 P3
Slide 4: Market update
1.0 Market update
Slide 5: South African macroeconomic outlook
South African macroeconomic outlook SA GDP to improve to 1.2% in 2024 Inflation expected to moderate; rate cuts expected in 2024 • Gradual SA policy reform to be growth-supportive 8 10 over time 6 8 4 1.2 6 • CPI expected to average 2 0.6 % y/y 4 % y/y 5.0% in 2024, supported 0 2 by a lack of demand
Slide 6: Market update: NCD issuances and pricing levels
Market update NCD Issuances and Pricing Levels (NCD vs Treasury Bills) 200 1.20% • Demand for bank credit risk by institutional investors was 180 strong in 2023, driving spread compression in pricing on the 1.00% shorter end of the curve 160 0.80% 140 • SBSA is the largest issuer of NCDs in the loca
Slide 7: SARB and NT updates
Market update SARB and NT updates Gold and Foreign Exchange Contingency Reserve Account (“GFECRA”) • SA's reserve account has grown over the recent years on the back of sharp currency weakness. Profits in the account arising from valuation gains on the SARB’s foreign reserves have grown to approxima
Slide 8: Funding and liquidity
2.0 Funding and liquidity
Slide 9: Strong liquidity position
Strong liquidity position Exceeding Basel III regulatory requirements Basel III Liquidity Coverage Ratio (daily avg.1) Liquidity Coverage Ratio (LCR) 150.0% 138.4% 144.3% 146.8% 136.4% 134.8% • SARB directive proposing the removal of the ability to use foreign currency HQLA to 124.4% 129.1% 133.0% c
Slide 10: Liquidity management
Liquidity management Diversified sources of liquidity, prudent redemption profile SBG debt redemption profile (ZARbn)1 70 Thousands 60 60 SBG and SBSA’s funding sources3 50 39 41 2% 1% 40 35 30 SBG 3% 21 20 9% 4% 10 20% 30% 11% 2% 1% 5% 0 2024 2025 2026 2027 2028 Structured Notes Senior debt Subordi
Slide 11: Regulatory update
3.0 Regulatory update
Slide 12: Regulatory update
Regulatory update Flac Latest proposals on calibration and qualifying instrument criteria. Planned 1 Jan’25 implementation date of the standard. Phase-in proposals for minimum requirements and minimum issuance requirements Positive Cycle Neutral Countercyclical Buffer (PCN CCyB) PCN Proposed PA dire
Slide 13: Flac requirements
Flac requirements Illustration of rules • Systemically important banks required to issue Flac instruments Total Loss Absorbing Capacity (“TLAC”) = Minimum Capital Adequacy Requirement ("minCAR ”) + Minimum Flac Requirement (MFR) • Base Minimum Flac requirement (bMFR) calculated assuming a resolution
Slide 14: Flac requirements: eligibility criteria
Flac requirements Eligibility criteria Unsecured, fully paid, subordinated debt instruments that meet the following criteria: • Contractual terms and conditions to set out the ranking of • External Flac issued by a holding company, internal the instruments in line with creditor hierarchy in insolven
Slide 15: Flac requirements: industry assessment of issuance
Flac requirements Industry assessment: Flac issuance requirements • Early indications are that required Flac issuances over the phase-in period are 250 likely to be lower than originally expected as banks should receive some ZARbn recognition for excess capital • Industry required Flac issuances (ba
Slide 16: Interest rate benchmark reform
Interest rate benchmark reform Jibar reform timeline and key industry milestones • JIBAR transition currently beginning the Adoption phase − Market led ZARONIA first initiatives expected to commence towards the end of 2024 for derivatives and during 2025 for cash products • SARB is expected to provi
Slide 17: Capital management
4.0 Capital management
Slide 18: Capital adequacy
Capital adequacy Robust capital position, materially above regulatory requirements SBG and SBSA meet the Prudential Authority’s Basel III aligned requirements SBG Capital Adequacy SBSA Capital Adequacy • SBG and SBSA remain adequately capitalised with as at 30 September 2023 as at 30 September 2023
Slide 19: Capital adequacy: resilience over time
SBG capital adequacy (%) and RWAs (ZARbn) Capital adequacy 18 16.0 16.7 16.1 16.9 16.6 16.4 16.0 2500 Resilience over time 16 14.1 14.7 13.9 14.7 14.5 14.5 14.0 14 2000 • Extensive track record of prudent capital management 12 13.5 14.0 13.2 13.8 13.5 13.4 13.0 1500 • Sep’23 capital ratios inclusive
Slide 20: Sustainable finance
5.0 Sustainable finance
Slide 21: Our approach to sustainability
Our approach to sustainability VALUE DRIVERS 1 Driving sustainable growth Growth opportunity - providing Maximising and value is a strategic products and services that meet the positive Transform priority for the group and development needs of Africa client experience impact is central to our purpos
Slide 22: SBG impact areas
SBG impact areas Sustainable Finance Mobilisation 1 2 3 4 Enterprise and job creation Infrastructure development and the Climate change Financial inclusion • SBG Focus: just energy transition • SBG Focus: • SBG Focus: – Facilitate African trade and • SBG Focus: – Partner with our clients to – Suppor
Slide 23: How do we measure our ESG performance
How do we measure our ESG performance What we measure • We track and measure our progress through our external ESG assessments and ratings in global ESG indices ESG Rating Progress 2023 2022 2021 2020 2019 2018 S&P Global CSA1 Score (%) 67 66 61 60 51 46 FTSE4Good Index series2 Included Included Inc
Slide 24: SBG climate policy
SBG climate policy Our approach Supporting the transition • Support a just transition that creates decent work opportunities and social • Targeting > R250 billion of sustainable finance mobilisation from 2022 - inclusion, addresses Africa’s energy poverty, acknowledges Africa’s negligible 2026 carbo
Slide 25: Sustainable Finance Framework and Second Party Opinion
Sustainable Finance Framework (“SFF”) and Second Party Opinion (“SPO”) Key Features Eligible Categories • Updated SFF replaces the Green Project Categories previous Sustainable Bond Framework (2020) • Renewable Energy • Electricity distribution networks Energy Efficiency • Pollution Prevention and C
Slide 26: Pricing thoughts and Tier 2 key features
6.0 Pricing thoughts and Tier 2 key features
Slide 27: Bank ZAR spreads and Tier 2 pricing
Bank ZAR spreads Issue date Senior spread Spread pickup (Tier Spread ratio Tier Tier 2 spread (c.5-year FRN) 2 - senior) (bps) 2/senior (x) (c.10NC5) ZAR Primary market pricing – big 4 banks Nov/Dec-23 124 Oct-23 119 71 1.60 190 • Tier 2 has followed the pricing trend of the senior bank curve Aug/Se
Slide 28: Tier 2 key features
Tier 2 key features Key Terms Summary Description Issuer Standard Bank Group Limited Notes Tier 2 Capital Notes Coupon [Fixed or Floating Rate] payable quarterly Maturity Minimum of 5 years First Call Date After minimum 5 years [●] [2029] Key Features Green Bond to be issued under the SFF1 off its D
Slide 29: Tier 2 key features continued
Tier 2 key features continued Key Terms Summary Description Customary early redemption of the Notes at any time (including prior to the First Call Date) in whole (but not in part) of the principal amount together with interest upon the occurrence of: Early Redemption • A Tax Event due to a change or
Slide 30: Disclaimer
Disclaimer This presentation has been prepared by Standard Bank Group Limited and its subsidiaries, including The Standard Bank of South Africa Limited (“SBSA”) (hereinafter, the “Group”). This presentation is strictly confidential and is being provided to you solely for your information, and may no
Slide 31: Thank You
Thank You P31
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