Standard Bank Group Limited · JSE:SBK
Standard Bank — FY2009 Earnings Presentation
34 slides from Standard Bank's earnings presentation, March 2010
Slide 1: Standard Bank Group financial results presentation
Standard Bank Group (SBG) Financial results presentation For the year ended 31 December 2009 Notes Financial highlights FY09 change h FY08 % Headline earnings (Rm) 11 718 (17) 14 150 Headline EPS (HEPS) (cents) 756.9 (20) 942.6 Diluted HEPS (cents) 750.6 (20) 935.6 DPS (cents) 386 386 NAVPS (cents)
Slide 2: Income statement highlights; Business unit view
Income statement highlights yoy 1H09 2H09 FY09 h change Rm Rm Rm % Net interest income 16 610 14 883 31 493 (2) Noninterest revenue 15 282 15 935 31 217 6 Total income 31 892 30 818 62 710 2 Credit impairment charges 7 115 4 982 12 097 7 Operating expenses 15 962 16 865 32 827 8 Banking activities –
Slide 3: Geographic view; Business unit abridged income statement
Geographic view Headline Headline Headline H dli earnings i earnings i earnings change mix ROE ROE FY09 FY09 FY09 FY09 FY08 Rm % % % % South Africa (Banking activities) 8 657 (9) 74 25.5 29.6 South Africa (Liberty) 72 (89) 1 1.2 12.8 Central and other 304 (63) 2 South Africa & Central and other 9 03
Slide 4: Balance sheet: Loans and advances
Balance sheet Notes Loans and advances FY09 h change FY08 Rbn % Rbn Personal & Business Banking 382 (2) 390 Mortgage loans 256 2 251 Instalment sale and finance leases 53 (15) 63 Card debtors 22 (4) 23 Other loans and advances 51 (4) 53 Corporate & Investment Banking 362 (12) 411 Banks 122 (6) 129 C
Slide 5: Deposit and current accounts; Group return on equity
Deposit and current accounts FY09 h change FY08 Rbn % Rbn Personal & Business Banking 363 (2) 372 Retail priced 172 (1) 174 Wholesale priced 191 (4) 198 Money market 40 40 Securitisation 16 (13) 18 Intragroup from CIB 135 (4) 140 Corporate & Investment Banking 419 (13) 480 Central and other (13) (8)
Slide 6: Banking activities NII and NIM
Income statement Notes Banking activities NII and NIM 35 000 4.0 3.45 30 000 3.32 3.5 3.21 3.09 2.97 2.95 2.78 3.0 25 000 2.89 2.81 2.70 2.5 20 000 2.33 2.37 2.15 2.0 15 000 1.97 1.5 10 000 10 1.0 5 000 0.5 11 390 11 619 13 357 17 001 22 896 32 117 31 493 0 0.0 Rbn FY03 FY04 FY05 FY06 FY07 FY08 FY09
Slide 7: Margin analysis; Non-interest revenue
Margin analysis 40 000 0.30% % (0 27%) (0.27%) 2 151 (1 957) 0.11% (0.58%) 38 000 799 (4 124) 1 374 36 000 1.66% 4.98% 3 363 35 480 (0.09%) 4.45% (1.24%) 34 000 790 34 513 (3 020) 3.32% 32 000 3.21% 32 117 31 493 30 000 28 000 FY08 Net non Interest Volume Loan pricing Loan IAS 39 Endowment Other Int
Slide 8: Non-interest revenue; Credit loss ratio and NPLs
Non-interest revenue FY09 h change FY08 Rm % Rm Net fee and commission revenue 18 108 3 17 607 Account transaction fees 7 967 13 7 054 Electronic banking fees 1 657 5 1 575 Knowledgebased fees 2 666 (24) 3 531 Other fee and commission 5 818 7 5 447 Trading revenue 10 621 12 9 463 Other revenue 2 488
Slide 9: Cost-to-income ratio; Liquidity and capital
Cost-to-income ratio 60 55.7 56.9 55.2 50 52.5 51.6 52.4 49.2 40 30 32.5 32.1 30.8 30.2 30.2 27.4 28.5 20 10 0 % FY03 FY04 FY05 FY06 FY07 FY08 FY09 Costtoincome ratio Staff costtoincome ratio 17 Notes Liquidity and capital Standard Bank Group (SBG) financial results presentation 31 December 2009 9
Slide 10: Liquidity management and focus; Net asset value movements
Liquidity management and focus • During 2H09, 2H09 availability of term funding improved gradually • Loan and debt capital markets selectively accessed to raise new term funding • Group long-term funding ratio 25.2% (FY08: 22.9%) • Liquidity premium levels since the global financial crisis - South A
Slide 11: Capital adequacy; Distributions per share
Capital adequacy 15 0.2 0.4 03 0.3 Tier I Total FY09 0.4 2.1 2.9 % % 2.4 12 1.9 SBSA 0.9 1.0 0.9 0.9 11.1 10.8 Capital adequacy ratio 10.6 14.1 10.5 10.1 9 Regulatory minimum 7.0 9.75 Internal target 9.0 11 12 6 SBG Capital adequacy ratio 11.8 14.9 3 Regulatory minimum 7.0 9.75 Internal target 9.0 1
Slide 12: Personal & Business Banking: Operating environment
Personal & Business Banking Peter Wharton Wharton-Hood Hood Notes Operating environment • Severe global economic downturn • Household debt-to-disposable income ratio remained elevated at 80% • Sustained decrease in customer spending and demand for credit • Locally, Locally steep decline in interest
Slide 13: PBB approach and performance
Personal & Business Banking approach to operating environment • Excellent consistent customer service • Transactional account base growth • Modest asset growth - influenced infl enced by b risk appetite and demand • Reduced reliance on wholesale funding • Engaged and connected people - no retrenchme
Slide 14: Personal & Business Banking South Africa
Personal & Business Banking South Africa • 68:32 Personal:Business total income split (FY08: 70:30) • Dedicated Business Banking focus now clear in the organisation • Customer service initiatives proving invaluable - 5% growth gro th to 7 7.8m 8m primar primary ccustomers stomers - Independently vot
Slide 15: PBB Rest of Africa; Early arrears
Personal & Business Banking Rest of Africa • Sustained marketing campaigns and branch network expansion • Products further embedded in-country with increased availability • Rand strengthened against African currencies - Dampened headline earnings by R44m - Loans L and d advances d d down 6% iin R Ra
Slide 16: NPLs in PBB South Africa; Proactive credit management
NPLs as a % of book in PBB South Africa 12 10.31 10 8.46 8 7.28 6 57 6.57 6 6.72 4.25 4 4.12 3.29 3.92 2.29 2 29 2 2.25 1.58 0 % 1H07 FY07 1H08 FY08 1H09 FY09 Mortgage loans l Instalment l sale l and d ffinance lleases Card debtors Card debtors before methodology change Other loans and advances 31 N
Slide 17: Contribution from product areas; Mortgage lending
Contribution from product areas Total income Headline earnings FY09 change FY09 change Rm % Rm % Mortgage lending 4 478 33 (490) 45 Instalment sale and finance leases 2 947 5 (464) (66) Card products 4 682 (7) 657 98 Transactional and lending products 19 871 (2) 3 417 (30) Bancassurance 2 124 3 715
Slide 18: Card products; Instalment sale and finance leases
Card products • Card debtors decreased by 4% - Reduced consumer spending - Positive revisions in card risk appetite in 3Q09 • 98% growth in headline earnings - Credit impairment charge down 44% • IAS39 methodology change to account for post write-off recoveries • Credit C dit loss l ratio ti att 5.5
Slide 19: Lending products; Transactional and investment products
Lending products • Book contracted by 4% - Reduced appetite for credit utilisation - Decrease in personal term loans and import and export financing Outside Africa • Term advances margins showed improvement • Increase in credit impairment charge by 40% to R2.6bn • Increased stress evident in SME mar
Slide 20: Bancassurance; Outlook
Bancassurance • Headline earnings up marginally to R715m - Increased penetration in South Africa • Home Loan protection at 28% • Vehicle V hi l Loan L protection t ti att 28% • Credit Card protection at 26% • Funeral cover stable at 29% - Average A erage premi premiums ms per policy polic up p 2.5%
Slide 21: Corporate & Investment Banking: Operating environment
Corporate & Investment Banking Rob Leith Notes Operating environment • Markets rebounded with government support measures but remain fragile • Emerging markets, including South Africa, slipped into recession - Corporate defaults increased • Distribution markets remain limited • Increased government
Slide 22: CIB approach and performance
Corporate & Investment Banking approach to the environment • Cautious on risk, risk capital and liquidity management • Intensive attention to credit exposures • Retained strategic focus on geographies, clients and products • Continued investment spend on people and platforms • Extended integrated Co
Slide 23: Strong performance from Global markets; Trading revenue
Strong performance from Global markets • Reflects performance across footprint - All geographies and major product lines performed well • Strong contribution from foreign exchange, interest rates and credit trading • Business benefitting from combination of domestic and cross border capabilities • S
Slide 24: Trading volatility and VaR; Daily trading profit and loss
Volatility increased in 2009 but risk was well contained Income of trading units and VaR 300 250 200 150 100 50 0 (50) (100) (150) Rm Jan 2009 Dec 2009 Income of trading units 95% VaR (including diversification benefits) 47 Notes Distribution of daily trading profit and loss remains positively skewe
Slide 25: Investment banking; Impairments
Investment banking – better second half • 1H09 held back by impairments and restriction of new business pipeline • Over 75% of total headline earnings delivered in 2H09 • Good performances from project finance and structured products • Overall performance reflects - Improved net interest income leve
Slide 26: Transactional products and services; Investment in CIB
Resilient performance in Transactional products and services • Solid income performance although down on 2008 - Margin income down due to the negative endowment effect and lower account balances - Fees up • higher transaction volumes in Rest of Africa • Important component of Corporate & Investment
Slide 27: Strategic partnerships; Outlook
Strategic partnerships • ICBC - Strategic partnership bearing fruit - Related revenues totalling $78m generated from the relationship - ICBC led $1bn 5 5-year ear term facility facilit for Standard Bank from a consorti consortium m of Chinese banks • Troika Dialog - Strong partnership with a market
Slide 28: Liberty: Financial results summary
Liberty Jacko Maree Notes Financial results summary • BEE normalised headline earnings R135m for the full year - marked recovery from 1H09 loss of R1.2bn • Capital p adequacy q y level increased to 2.8 times cover • Cash distribution maintained • Embedded value down 11% to R24bn • Cash flows net pos
Slide 29: Liberty earnings; Headline earnings by business unit
2H09 earnings significantly improved offsetting the 1H09 loss 1H09 2H09 1 500 1 342 1 000 500 0 ( 500) (1 000) (1 207) (1 500) Insurance LibFin shareholder asset base Rm Asset management Growth initiatives Other BEE normalised headline (loss)/earnings 57 Notes Headline earnings – business unit view
Slide 30: Liberty strategic issues
Strategic issues • Retail insurance - Persistency strategy confirmed - Retention initiatives gaining traction - New business reasonable given economic conditions • Liberty Corporate - Economic conditions impacted new business - Retrenchments in SA resulted in decrease in total fund membership • LibF
Slide 31: Outlook; Conclusion
Outlook • Difficult first half, half return to profit in second half • Action taken to address - Persistency - Balance sheet management - Investment performance • Growth strategy delivering results 61 Notes Conclusion Jacko Maree Standard Bank Group (SBG) financial results presentation 31 December 20
Slide 32: Strategy; Nigeria
Strategy • Vision and strategy remain unchanged • Resilience in the face of severe challenges of the past two years - confirms group is well positioned • Emerging markets accounted for two-thirds two thirds of global growth in 2009 • Africa’s growing ties to other emerging markets bodes well for gro
Slide 33: External pressures; Risk appetite
External pressures • Political pressures - Compensation • Regulatory pressures - Currently C rrentl eevaluating al ating capital and liq liquidity idit req requirements irements • Proposed by the Basel Committee on Banking Supervision 65 Notes Risk appetite • Tightening during 2008 affected asset gr
Slide 34: Outlook
Outlook • Recovery in normalised headline earnings from 2009 base • Aim to restore earnings to 2008 levels • Strong capital base and client franchise position us well 67 Notes 34 Standard Bank Group (SBG) financial results presentation 31 December 2009