Standard Bank Group Limited · JSE:SBK
Standard Bank — Deutsche SA Conference 2004
43 slides from Standard Bank's conference presentation, June 2004
Slide 1: Deutsche SA Conference
Deutsche SA Conference June 2004 1
Slide 2: Group structure
Group structure Standard Bank Group Domestic Banking International Africa Liberty Group Investment banking Retail, commercial and Value-added activities focused on investment banking financial and developing markets and services in 16 African associated non- natural resources through countries outsi
Slide 3: 15-year history
15-year history 500 4500 450 4000 400 3500 cents 350 cents 3000 300 2500 250 2000 200 1500 150 1000 100 50 500 0 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 DPS EPS Share price RHS 3
Slide 4: Financial highlights
Financial highlights 2003 2002 CAGR* % % % Return on equity 22.8 20.3 Cost-to-income 56.2 57.3 Provision for credit losses 0.91 1.08 Loans and advances growth 23.2 1.3 13 Risk-weighted assets growth 5.1 3.3 14 Headline EPS growth 18.2 18.3 19 DPS growth 21.8 21.6 21 * Compound annual growth rate fro
Slide 5: Main drivers of group performance
Main drivers of group performance • Strong growth in loans and advances • Declining domestic interest rates • Further improvements in credit experience • Rand strength • Recovery in emerging markets 5
Slide 6: Headline earnings mix
Headline earnings mix 13% (8%) 40% (41%) Retail Banking Liberty Africa Stanlib Corporate and Investment Banking 34% (35%) 4% (6%) International 1% (1%) 8% (9%) 2002 figures in brackets 6
Slide 7: Financial performance
Financial performance 470 64 420 62 370 247 320 215 60 270 182 cents 220 156 58 % 170 124 92 56 120 93 221 181 70 127 153 86 103 54 72 20 -30 1997 1998 1999 2000 2001 2002 2003 52 Headline EPS - first half Headline EPS - second half Cost-to-income ratio 7
Slide 8: Return on equity
Return on equity 32 24 21 27 * 18 22 15 Rbn % 17 12 9 12 6 7 3 2 0 1997 1998 1999 2000 2001 2002 2003 Net asset value (Rbn) Headline ROE (%) * Includes R1.8bn reversal of translation reserve 8
Slide 9: Headline earnings analysis
Headline earnings analysis 2003 % change 2002 Rm Rm Domestic Banking 4 609 16 3 960 Retail Banking 2 542 18 2 162 Corporate and Investment 2 150 19 1 814 Banking Central services (83) (16) Africa 489 1 482 International 866 >100 429 Stanlib 40 (35) 62 Central funding (26) 32 Standard Bank operations
Slide 10: Returns on equity
Returns on equity 2003 Cost of 2003 2002 equity * % % % Domestic Banking 31.4 31.2 15.2 Retail Banking 32.3 31.1 Corporate and Investment Banking 31.5 31.7 Africa 28.3 27.4 19.0 International 14.7 6.3 GBP 15.2 6.2 11.9 Standard Bank operations 24.0 21.2 15.4 Liberty 11.1 12.3 13.4 Standard Bank Grou
Slide 11: Loans and advances
Loans and advances Dec ’03 % Dec ’02 Rbn change Rbn Domestic Banking 169.8 20 142.1 Retail Banking 112.7 27 88.5 Corporate and Investment 57.1 7 53.6 Banking International 43.3 19 36.5 Africa 10.7 20 8.9 Central funding and eliminations (3.4) (8.6) Group 220.4 23 178.9 11
Slide 12: Credit provisioning
Credit provisioning 2003 % 2002 Rm change Rm Provision for non-performing loans (specific) 1 398 (22) 1 794 Provision for performing loans (general) 450 >100 161 Total income statement charge 1 848 (5) 1 955 Credit loss ratios (%) Group - non performing loans 0.69 0.99 Group - performing loans 0.22
Slide 13: NPLs and balance sheet provisions
NPLs and balance sheet provisions Dec ’03 Dec ’02 % of adv % of adv Gross NPLs 2.15 2.64 Provision for NPLs 1.08 1.01 Provision for performing loans 0.66 0.85 Total provisions 1.74 1.86 NPL coverage ratio (provision for NPLs as a percentage of gross NPLs) increased from 38% to 42% 13
Slide 14: Credit loss history
Credit loss history 6 5 4 % of advances 3 2 1 0 1998 1999 2000 2001 2002 2003 Income statement charge Balance sheet provision NPLs 14
Slide 15: Capital adequacy
Capital adequacy 16 400 % Rbn Dec ’03 Dec ’02 14 350 % % 12 300 Group 10 250 Primary 11.4 10.9 8 200 6 150 Total 14.8 14.3 4 100 SBSA 2 50 0 0 Primary 8.5 7.5 1999 2000 2001 2002 2003 Total 12.5 11.3 Primary capital Secondary capital Tertiary capital Risk-weighted assets 15
Slide 16: Preference share issue
Preference share issue • Group looking to raise R2 – 2.5 billion preference share capital • Tier 1 capital • Proceeds would enable group to: – Fund possible empowerment transaction; and/or – Return ordinary equity via share buy-backs and/or special or increased dividends • Standard Bank empowerment
Slide 17: Retail Banking
Retail Banking Standard Bank
Slide 18: Highlights year ended December 2003
Highlights year ended December 2003 • 18% profit growth • Improved branch service levels • Improved customer segmentation data • Vigorous sales emphasis led to good sales results in all core products • Average asset growth 23% • No compromise on credit quality 18
Slide 19: Select retail market share information
Select retail market share information Dec ’03 Dec ’02 % % Home loans 19.9 17.3 Vehicle and asset finance 21.3 20.3 Credit card 28.8 24.9 Branch lending (personal and unincorporated businesses) 22.7 20.9 Branch deposits (personal and unincorporated businesses) 24.9 24.4 Source: December DI 900 19
Slide 20: Credit
Credit Gross NPLs as a % of book Dec ’03 Dec ’02 Mortgages 2.8 3.5 Vehicle and asset finance 1.0 0.7 Loans and overdrafts 3.2 6.1 Card debtors * 1.1 0.9 • Provision coverage ratios have increased • PIPs reduced from 2 577 to 1 936 and from R204m to R159m • Significantly improved alignment with Retai
Slide 21: Home Loans
Home Loans • Good relationship with originators – 35% (2002: 26%) via independent originators – 30% (2002: 37%) via mobile sales force • Fairly young book with low fall off – >60% by value is less than 3 years old • Clear focus to improve processing capabilities 21
Slide 22: Home Loans
Home Loans New business registrations per month in 2003 3,000 2,700 2,400 2,100 Rm 1,800 1,500 1,200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ABSA Nedcor FNB Standard 22
Slide 23: Going forward
Going forward • Positive external environment should lead to further asset growth • Sensible cost containment • Careful margin management • Expand convenience banking (mass market) offering • Africa Retail opportunities 23
Slide 24: Africa
Africa Standard Bank
Slide 25: Highlights year ended December 2003
Highlights year ended December 2003 • Most businesses performed well in local currency • Nominal growth in rand terms due to rand strength • Focus on non-interest revenue generating results • Complete risk management framework aligned with group • Quality of lending portfolio continues to improve •
Slide 26: Africa – description of activities
Africa – description of activities Mozambique Zimbabwe Swaziland Botswana Tanzania Namibia Lesotho Zambia Nigeria Uganda Malawi Ghana Congo Kenya Retail Wholesale HP&L Treasury Custodial Services Asset Management Bancassurance Start Up In place (Products offered differ from country to country at thi
Slide 27: Africa - revenue
Africa - revenue Not reliant on any single country 8% Botswana 17% (7%) (12%) 9% Lesotho (8%) Malawi Mauritius 7% 8% (8%) (12%) Namibia Nigeria 1% Swaziland (1%) Tanzania 16% (17%) Uganda 21% Zambia 3% (20%) Other (5%) 7% 3% 2002 figures in brackets (7%) (3%) 27
Slide 28: Going forward
Going forward • Extract greater efficiencies from enhanced business processes and systems • Extend and upgrade – branch network – electronic banking • Bancassurance start up • Continue selective search for acquisitions 28
Slide 29: Corporate and Investment Banking
Corporate and Investment Banking 29
Slide 30: Highlights year ended December 2003
Highlights year ended December 2003 • Profit growth 19% • Cost containment • Customer focus and stronger franchise • Alignment with International and Africa • Credit quality • Investment revenue / Private equity • Capital optimisation • Name change 30
Slide 31: Domestic Corporate & Investment Banking
Domestic Corporate & Investment Banking ADVISORY / INVESTMENTS Corporate Finance Structured Debt Finance Capital Investment Division TRADING PROCESSING Forex Custody Capital Markets CORPORATE BANKING Business-on-line Gold IBC’s Equity International Derivatives SUPPORT Marketing Risk Finance IT HR FM
Slide 32: Going forward
Going forward • Opportunities arising from Financial Sector Charter • Client focus - further utilisation of CRM • Alignment with International and Africa • Risk management systems • Cost containment • Asset growth • People, people, people 32
Slide 33: International
International Standard Bank
Slide 34: Highlights year ended December 2003
Highlights year ended December 2003 • Strong performances across all major business units • Significant growth in customer revenues • Investment banks operative in Brazil and Russia • Franchise strengthened • Product capability enhanced • Management team expanded • Alignment with SA and the rest of
Slide 35: African roots, global reach
African roots, global reach Other emerging markets • HQ - London Russia China Brazil Africa South Africa 35
Slide 36: World class risk management
World class risk management Risk mitigants in International • Emerging markets bank, not an emerging markets balance sheet – Distribution and sell down • Local presence provides early warning • Robust governance • Strong systems • Diversification – Country and region limits – Counterparty limits • S
Slide 37: Going forward
Going forward • Increase depth in core product areas • Enhance client focus • Expand banks in Hong Kong, Brazil and Russia • Extend efficiencies through improved systems and infrastructure • Continue process of Group alignment 37
Slide 38: Looking ahead
Looking ahead Standard Bank
Slide 39: The Financial Sector Charter
The Financial Sector Charter Points Points Human resources development (HRD) 20 Senior management 5 Middle management 5 Junior management 5 Skills spend 3 2 Learnerships Access to financial services 18 Empowerment financing 22 Targeted investments 17 5 BEE transactions Procurement and enterprise dev
Slide 40: African roots, global reach
African roots, global reach Retail Liberty / Wealth Wholesale South South South Africa Africa Africa Other Africa Africa International Africa Emerging Margets 40
Slide 41: Striving for long-term growth
Striving for long-term growth • Retail Banking transformed, but a way to go • Corporate and Investment Banking continues to perform • International and Africa approaching critical mass • One brand • Liberty – getting the basics right • Good long-term macro-economic outlook (post Financial Sector Cha
Slide 42: The year ahead: financial objectives
The year ahead: financial objectives • ROE of 20%+ • Headline earnings growth of CPIX (estimate 5%) plus 10% • Cost-to-income below 56% • Credit loss ratio contained within 1% of average advances 42
Slide 43: Standard Bank
Standard Bank