Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Presentation (2021)
27 slides from Standard Bank's investor presentation, 2021
Slide 1: Financial Roadmap
DRIVE SUSTAINABLE GROWTH AND VALUE FINANCIAL ROADMAP Arno Daehnke, Chief Finance and Value Management Officer 1
Slide 2: Agenda
Drive sustainable growth and value | Financial roadmap Agenda Resource allocation Financial outcome targets Attractive investment proposition 2
Slide 3: Resource Allocation
RESOURCE ALLOCATION 3
Slide 4: Strong balance sheet to support the growth of our client franchise
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Strong balance sheet to support the growth of our client franchise CET1 capital and CET1 ratio LCR NSFR R’bn 200 16.0 13.9% 13.5% 13.5% 14.0% 135% 138% 135% 141% 125% 125% 119% 119% 13.2% 13.5% 1.4 12.9% 14.0 180 117% 11
Slide 5: Track record of good risk management and returns; withstand pandemic stress
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Track record of good risk management and returns; and ability to withstand 1:100- year pandemic stress event Credit loss ratio Shareholder value add bps % 170.0 IFRS9 and pandemic driving volatility 18.0% 151 17.1% 150.0
Slide 6: Rigorous resource allocation framework embedded to drive sustainable growth and value
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Rigorous resource allocation framework embedded to drive sustainable growth and value Led through the Supported by a Resource allocation Allocations tested Progress lens of client prioritised decisions informed against r
Slide 7: Demonstrated diligent resource allocation to deliver value
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Demonstrated diligent resource allocation to deliver value Net asset value - capital tilt towards Africa Regions and Cumulative incremental capital allocation to Insurance and Investments Africa Regions yielding positive
Slide 8: Looking forward, we will continue to allocate our resources to tilt our portfolio
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Looking forward, we will continue to allocate our resources to deliberately tilt our portfolio Protect, streamline Grow capital Invest in high Scale new business and continue to efficient businesses growth markets models
Slide 9: Summary of client strategy-led growth vectors
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Summary of client strategy-led growth vectors Protect, streamline and Grow capital efficient continue to grow the core Invest in high growth markets Scale new business models businesses banking franchise • Retain strong
Slide 10: Client strategy-led growth vectors – resource requirements and returns
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Client strategy-led growth vectors – resource requirements and returns Protect, streamline and Grow capital efficient continue to grow the core Invest in high growth markets Scale new business models businesses banking f
Slide 11: Purposeful resource allocation to deliver value; tilt will drive growth and ROE
Drive sustainable growth and value | Financial roadmap | 1. Resource allocation Purposeful resource allocation to deliver value; tilt will drive growth and ROE Net asset value tilt to continue R’bn 2% 3% 14% Liberty: 9% • Capital tilt towards Banking - Africa Regions and Insurance and Investments 5%
Slide 12: Financial Outcome Targets
FINANCIAL OUTCOME TARGETS 12
Slide 13: NII supported by interest rate normalisation
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets NII supported by interest rate normalisation South African Repo rate Net interest margin % bps 431 7% 7.0% 370 361 6% 6.0% 5% 5.0% 2015 2016 2017 2018 2019 2020 1H21 2025 4% 4.0% 3% Interest rates across the 3.0% L
Slide 14: NIR growth driven by banking, supplemented by new revenues beyond financial services
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets NIR growth driven by banking, supplemented by new revenues beyond financial services Non-interest revenue R’bn Core banking franchise Target range CAGR 2020/25 9% • New client acquisition, particularly 48% - 58%² 8
Slide 15: Total revenue growth acceleration expected in all segments
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Total revenue growth acceleration expected in all segments, supported by strategic distribution partnerships Revenue by segment Revenue by solution R’bn R’bn CAGR 2020/25 Target range CAGR 2020/25 28% - 32%1 9% 6%
Slide 16: Cost growth has tracked below inflation since 2017
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Cost growth has tracked below inflation since 2017 Group cost growth vs inflation Index 140 Inflation1,2 130 +6.5% Cost growth1 R6.4bn +4.4% Cumulative 120 efficiencies achieved between 2015 and 2020³ 110 100 2015
Slide 17: Save to invest philosophy embedded
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Save to invest philosophy embedded Levers to maintain CTI target will be achieved by maintaining cost growth below inflation 5.5 - 6.0% inflation¹, CAGR 2020/25 cost growth < inflation • Lower origination costs and
Slide 18: Cost efficiencies and operational leverage to support lower CTI target
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Cost efficiencies and operational leverage to support lower CTI target Cost-to-income ratio % 5% CTI reduction due to revenue growth 3% CTI reduction due to cost management Approaching 50% 58.2% 56.3% ¹ ¹ Investmen
Slide 19: Cost-to-income ratio reduction relies on continued cost efficiencies
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Cost-to-income ratio reduction relies on continued cost efficiencies Cost-to-income ratio to approach 50%… …with efficiencies identified in the % costs-to-assets ratio to continue… % 4% - 5% Total costs CAGR 2020/2
Slide 20: Credit provisioning returns to previous through-the-cycle range
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Credit provisioning returns to previous through-the-cycle range Credit loss ratio bps 151 Proven track record of managing credit risk across sub-Saharan Africa 87 86 87 88 70bps – 100bps 56 68 Credit loss ratio Cov
Slide 21: Strong capital ratios maintained, despite increasing dividend payout ratio
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Strong capital ratios maintained, despite increasing dividend payout ratio CET1 ratios to be run closer to internal Optimised capital stack % minima % 14.0% 0.1 13.2% 13.5% 0.4 2.4 2.3 0.6 >11.0% CET1 ratio Interna
Slide 22: ROE to return to pre-pandemic levels
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets ROE to return to pre-pandemic levels Protect, streamline and Invest in Scale new continue to grow the high growth Grow business core banking franchise markets capital efficient businesses models Target range 20% 17
Slide 23: Creating value for shareholders with ROE well above COE
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Creating value for shareholders with ROE well above COE Return on equity % 18% - 20% 17% - 20% 17% – 20% 15% - 18% ROE target range ~14% COE Target range withdrawn 2015 2016 2017 2018 2019 2020 1H21 2025 ROE COE Ta
Slide 24: Standard Bank Group 2025 financial targets
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Standard Bank Group 2025 financial targets • Banking 7% - 9%1 REVENUE GROWTH (CAGR 2020/25) 7% – 9% • Insurance and Investments 10% - 14%1 • Beyond financial services ~50% COST-TO-INCOME RATIO Approaching 50% Disci
Slide 25: Client acquisition and engagement will drive sustainable growth and value
Drive sustainable growth and value | Financial roadmap | 2. Financial outcome targets Client acquisition and engagement will drive sustainable growth and value Medium-term targets summary OUR SUCCESS MEASURES: OUR • Top quartile client and • Upward trend in eNPS • Operate within risk • Lower cost to
Slide 26: Attractive Investment Proposition
ATTRACTIVE INVESTMENT PROPOSITION 26
Slide 27: Attractive investment proposition
Drive sustainable growth and value | Financial roadmap | 3. Attractive value proposition Attractive investment proposition Compelling macro-economic and market trends • Pandemic and its socio-economic effects will fade • Exciting demographic trends providing growth in sub-Saharan Africa Massive exis