Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Presentation (June 2003)
56 slides from Standard Bank's investor presentation, June 2003
Slide 1: Blueprint for growth
blueprint for growth 1
Slide 2: Standard Bank Group Presentation to investors June 2003
Standard Bank Group Presentation to investors June 2003 2
Slide 3: Main drivers of Group performance
Main drivers of Group performance • Domestic margins widening slightly after years of gradual tightening • Non-interest revenue continued strong growth • Domestic credit risk well managed • International credit risk impacted performance • Internal generation of capital • Cautious acquisition strateg
Slide 4: Key financial statistics
Key financial statistics Standard Bank Group Dec % Dec ‘02 change ‘01 Headline earnings Rm 5 263 19 4 419 Headline EPS cents 396 18 335 Dividends per share cents 124 22 102 Cost-to-income ratio % 57.3 57.4 Headline ROE % 20.3 20.1 Translation (reversal)/gain Rm (3 271) 4 037 NAV per share cents 1 95
Slide 5: Rand translation effect
Rand translation effect 20 ZAR/GBP 15 10 Jan Feb March April May June July Aug Sep Oct Nov Dec 2001 2002 2003 •Rand weaker for most of 2002 •Accounting treatment – movements taken to reserves •Strengthening of the rand in the last quarter of 2002 – R3.3bn reversal 5
Slide 6: Financial performance
Financial performance 430 396 64 380 63 335 330 62 283 215 61 280 227 182 60 230 156 cents 178 59 % 165 180 124 58 130 92 93 57 80 181 153 56 103 127 72 86 30 55 -20 54 1997 1998 1999 2000 2001 2002 Headline EPS - first half Headline EPS - second half Cost-to-income ratio 6
Slide 7: Headline earnings mix
Headline earnings mix Property Finance Business Banking 3% 12% SCMB (3%) (10%) 25% Stanbic Africa (22%) 10% (7%) Liberty 6% (10%) InternationalOperations 8% STANLIB (14%) 1% Retail Banking (1%) 35% (33%) ( ) Dec 2001 7
Slide 8: Headline earnings breakdown
Headline earnings breakdown Dec ’02 % change Dec ’01 Rm Rm Domestic Banking 3 960 33 2 971 Retail Banking 1 796 25 1 441 SCMB 1 301 36 955 Business Banking 635 38 461 Property Finance 166 32 126 Central services 62 (12) Stanbic Africa 482 48 325 International Operations 429 (34) 648 STANLIB 62 (24)
Slide 9: Headline return on equity
Headline return on equity 32000 24 21 27000 18 22000 15 Rm 17000 12 % 9 12000 6 7000 3 2000 0 1996 1997 1998 1999 2000 2001 2002 Shareholders' funds Headline ROE 9
Slide 10: Returns on equity by business unit
Returns on equity by business unit Dec ’02 Dec ’01 ROE ROE % % Domestic Banking 31.2 27.0 Retail Banking 31.7 26.9 SCMB 28.0 26.8 Business Banking 35.2 30.4 Property Finance 28.5 22.3 Stanbic Africa 27.4 21.4 International Operations 6.3 10.9 STANLIB 23.9 54.7 Central funding and Liberty Group 7.6 1
Slide 11: Summarised balance sheet
Summarised balance sheet Dec ’02 % Dec ’01 Rbn change Rbn Cash and short-term funds 45.4 8 42.2 Advances 170.4 5 162.0 Other assets 88.1 (14) 102.0 Total banking assets 303.9 (1) 306.2 Liberty 85.8 (4) 89.0 Total assets 389.7 (1) 395.2 Shareholders’ funds 26.1 1 25.7 Minorities 6.0 - 6.0 Deposits 23
Slide 12: Analysis of advances
Analysis of advances 180 160 140 120 100 Rbn 80 60 40 20 0 1999 2000 2001 2002 Total Retail Wholesale/Corporate Africa 12
Slide 13: Group funds margin analysis
Group funds margin analysis % Average funds margin December 2001 3.31 Domestic operations Average prime interest rate 0.07 2001:13.85% 2002:15.6% Higher branch deposits and endowment effect 0.40 Growth in low margin wholesale money market assets (0.25) Lending margin (0.08) Stanbic Africa 0.02 Inter
Slide 14: Composition of total income
Composition of total income 100% 80% 45% 47% 49% 51% 53% 52% 60% 40% 55% 53% 51% 49% 47% 48% 20% 0% 1997 1998 1999 2000 2001 2002 % Net interest income % Non-interest revenue 14
Slide 15: Provision for credit losses
Provision for credit losses 2,500 2,000 1,500 Rm 1,000 500 0 -500 1999 2000 2001 2002 Domestic International Africa 15
Slide 16: Non-performing loans and provisioning
Non-performing loans and provisioning 6 5 4 NPLs % of advances Accumulated balance 3 sheet provision Charge to income 2 statement 1 0 1999 2000 2001 2002 16
Slide 17: Cost-to-income ratios
Cost-to-income ratios Dec ’02 Dec ’01 % % Domestic Banking 53.4 55.9 Retail Banking 62.2 64.5 SCMB 49.6 52.8 Business Banking 36.2 39.0 Property Finance 28.9 26.8 Stanbic Africa 60.8 58.3 International Operations 71.4 63.8 Standard Bank operations 57.3 57.4 17
Slide 18: Capital adequacy
Capital adequacy • Group tier I ratio 10,9% 16 14 (2001: 11.1%) 12 • Banking capital adequacy 10 % 8 13.8% (2001: 13.5%) 6 • Aggregate regulatory 4 2 requirement 10.6% 0 1998 1999 2000 2001 2002 (2001: 10.7%) • Lower dividend cover Tier I Tier II Tier III Required capital 18
Slide 19: Retail Banking
Retail Banking
Slide 20: Retail Banking Results review – December 2002
Retail Banking Results review – December 2002 • Home loans • New loans up 48% to R16.6bn • New business market share consistently above 20% • NPL’s reduced from 2.9% to 2.7% of book • Card • 26% growth in debtors • Market share growth from 21% to 25% • NPL’s reduced from 1.52% to 0.93% of book • Out
Slide 21: Retail Banking Results review – December 2002
Retail Banking Results review – December 2002 • Mass Market • Active accounts grew from 2.2m to 2.5m • Transaction balances up 20% • Processes significantly improved • Total microlending (ABIL) JV balance at R256m • Bancassurance • Embedded product penetration increased to 22% (2001: 21%) • Complex
Slide 22: Retail Banking: Improve service and market share in 2003
Retail Banking Improve service and market share in 2003 • Continue initiatives to become customer service leader • Continue trend in market share increases • Grow share of the middle market segment • Further expand our mass market distribution and product offering • Improve branch and support proces
Slide 23: SCMB (Standard Corporate and Merchant Bank)
SCMB (Standard Corporate and Merchant Bank)
Slide 24: SCMB Results review – December 2002
SCMB Results review – December 2002 • Strong revenue growth with good performances from core businesses • Integration of SCMB and International Operations • Creation of STANLIB • Strong credit processes • Improved provision coverage 24
Slide 25: SCMB: Good revenue growth from all businesses
SCMB Good revenue growth from all businesses 1400 1200 +7% 1000 +70% +51% 800 Rm 600 +4% 400 +13% 200 +22% +26% 0 Treasury Corporate and Project and Foreign Custody Electronic Other Investment Structured Banking Banking Banking Finance 2002 2001 25
Slide 26: SCMB: Build and integrate in 2003
SCMB Build and integrate in 2003 • Maintain market share and positioning in core operations • Exploit efficiencies in integration of international treasury operations • Grow our leadership in provision of electronic business solutions in South Africa • Focus on cost containment • Transformation and
Slide 27: Stanbic Africa
Stanbic Africa
Slide 28: Stanbic Africa Results review – December 2002
Stanbic Africa Results review – December 2002 • Good performances across most businesses • Broader portfolio of banks creating sustainable earnings growth • New management in Botswana, Ghana, Nigeria and Swaziland delivered results • Zimbabwe performed well in local currency, but NAV written down to
Slide 29: Stanbic Africa: Integration with the group delivering benefits
Stanbic Africa Integration with the group delivering benefits • Treasury focus is enhancing revenue • Retail Africa gaining momentum • Banking technology upgrade ahead of schedule • Quality of risk management enhanced • Active capital management improved returns 29
Slide 30: Stanbic Africa: Acquisition successes
Stanbic Africa Acquisition successes • Acquisitions in Malawi and Uganda • Both are performing ahead of expectations • Integration of the operations is progressing well • Risk management disciplines are in place 30
Slide 31: Stanbic Africa: Progress since 1998
Stanbic Africa Progress since 1998 1998 2001 2002 Representation (# of countries) 14 17 17 Capital (Rm) 830 1 926 1 592 Headline earnings (Rm) 196 325 482 Dividends received (Rm) 121 326 522 31
Slide 32: Stanbic Africa: Further expansion in 2003
Stanbic Africa Further expansion in 2003 • Develop a customer focused African wholesale banking offering working with SCMB and International • Increased intensity of Retail Banking rollout in selected markets • De-emphasise geographic reporting and move towards a focus on product delivery and custom
Slide 33: International Operations
International Operations W Standard Bank Group
Slide 34: International Operations Results review – December 2002
International Operations Results review – December 2002 Tough global markets • Increasing volatility in asset prices • Deepening corporate credit pressures • Latin American instability 34
Slide 35: International Operations: Revenues net of provisions down by 5%
International Operations Revenues net of provisions down by 5% 60 50 40 £m 30 20 10 0 Capital Markets Resource Treasury Trade Finance Advisory Private client Own Funds & Banking & Banking services & fund Other management 2002 2001 35
Slide 36: International Operations: Resource Banking the flagship
International Operations Resource Banking the flagship • Successful year for both earnings and business development • Record performances from precious metals trading and financing businesses • Base metals recorded solid performance, despite depressed prices and low market activity • Mining finance
Slide 37: International Operations: Provisioning adequacy
International Operations Provisioning adequacy • Provisioning charge of £30.9m (2001: £14.9m) reflects extremely difficult credit markets • Level of general provision maintained at 1.4% of risk weighted banking portfolio • Liquidity and structural provisions against trading book and longer-term tran
Slide 38: International Operations: Accelerated integration in 2003
International Operations Accelerated integration in 2003 • Cautiously optimistic, recognising state of global economy • Continued focus on customer activities • Brazil and Russia upgraded to fully licensed investment banks • Further benefits from full integration of Asian operations • Management cha
Slide 39: Conclusion
Conclusion W Standard Bank Group
Slide 40: Standard Bank Group: Risk management
Standard Bank Group Risk management • Group’s approach is maturing • Fraud, money laundering • Tax risk management • Multiple jurisdictions • Disaster recovery 40
Slide 41: Standard Bank Group priorities for 2003
Standard Bank Group priorities for 2003 • Retail Banking • Mass market • African retail expansion • Doing things “Simpler. Better. Faster.” • Bancassurance • Wholesale Banking • Client focus • Closer integration of Stanbic Africa, SCMB and International Operations • Performance of International Oper
Slide 42: Standard Bank Group priorities for 2003
Standard Bank Group priorities for 2003 • Africa • Acquisitions • Capital management • Financial Services Charter 42
Slide 43: Black economic empowerment
Black economic empowerment • Sold 25.2% of Stanlib (asset and wealth management JV between Standard Bank and Liberty groups) to BEE consortium • Andisa • Creation of new empowerment financial services company • Sold two SCMB businesses into this company • Owned 51% by BEE consortium and 49% by Stand
Slide 44: Standard Bank Group
Standard Bank Group Retail Life Wealth Wholesale Banking Assurer Banking •South Africa •South Africa • Selected African •Selected countries emerging markets 30% 65% 100% 100% 44
Slide 45: Appendices
Appendices
Slide 46: Awards received in 2002
Awards received in 2002 • Euromoney - South Africa’s best bank • Global Finance - best bank in South Africa and Africa • PricewaterhouseCoopers – respected jointly first by its pears • The Banker - Africa’s Bank of the Year • Investor Relations Awards - winner-best corporate governance • Risk magazi
Slide 47: Standard Bank Group transformation
Standard Bank Group transformation AIC 2002 2001 % % Managerial staff ABSA 10 7 FirstRand 24 18 Nedcor 20 21 Standard Bank 28 23 Total staff ABSA 35 33 FirstRand 50 50 Nedcor 49 50 Standard Bank 64 55 Source: annual reports 47
Slide 48: The South African macro environment: Economic Outlook
The South African macro environment Economic Outlook • Macroeconomic stability achieved & rewarded with credit upgrades by Moody’s (Baa2) and Standard & Poor’s (BBB) during May 2003. • South Africa increasingly stands out among emerging markets • Rand correction & monetary policy have helped lower i
Slide 49: The South African macro environment: Interest rates and inflation
The South African macro environment Interest rates and inflation Forecast 30 • Substantial scope for lower 25 interest rates (cumulative cuts of 450 basis points) in short- to 20 medium-term % 15 • 2003 CPIX inflation target remains out of reach (forecast 10 of 6.7%); but CPIX expected to fall below
Slide 50: SCMB/International integration
SCMB/International integration Mining deals Corporate Finance Advisory (SCMB & International) Fee Income Underwriting / Arranging Project Finance (Risk) (Structuring) (SCMB & International) Corporate Banking Bridging Finance (SCMB & International) Term Facility (amortising) Margin Bullet Project Fin
Slide 51: SCMB / International / Africa Integration: Vodacom Tanzania
SCMB / International / Africa Integration Vodacom Tanzania - Euromoney Africa Deal of 2002 Project Finance Advisory Advised / Arranged (SCMB & International) Fee Income Project Finance Export Credit Facility (SCMB) Margin Local Syndication with Corporate Banking Development Finance Institutions (Int
Slide 52: SCMB / International / Africa Integration: MTN
SCMB / International / Africa Integration MTN – Demonstrating relationships working Project Finance Guarantees / LC’s / Bid Bonds (SCMB) Fee Income Stanbic Nigeria Africa Banking (Stanbic Africa) Retail Transactional Banking (SBSA) Electronic Banking SCMB Corporate Banking Relationship Managers (SCM
Slide 53: International operations deals
International operations deals 53
Slide 54: International operations deals
International operations deals 54
Slide 55: International operations deals
International operations deals January 2001 December 2001 April 2001 Brazil Brazil Brazil US$ 50,000,000 US$ 175,000,000 US$ 125,000,000 5-year Loan Facility 1-year Short Term Notes Euro Medium Term Currency Constrained Notes Due 2002 MANDATED ARRANGER AND UNDERWRITER SOLE MANDATED JOINT LEAD MANAGE
Slide 56: Standard Bank Group
Standard Bank Group
Standard Bank Group — Investor Presentation (June 2003) on 6ix