Standard Bank Group Limited · JSE:SBK
Standard Bank — FY2012 Earnings Presentation
49 slides from Standard Bank's earnings presentation, March 2013
Slide 1: Financial results presentation for year ended 31 December 2012
_ Financial results presentation for year ended 31 December 2012 In Uganda, we acted as transaction advisor, sole international book-runner and lead receiving bank for the Umeme initial public offering and listing on the Uganda Securities Exchange. Umeme is the primary power distributor in Uganda an
Slide 2: Key metrics
Key metrics change FY12 % FY11 Headline earnings (Rm) 15010 10 13 599 Profit attributable to ordinary shareholders (Rm) 16 492 23 13 425 Headline EPS (HEPS) (cents) 940.7 10 856.9 Diluted HEPS (cents) 933.2 10 852.1 DPS (cents) 455 7 425 NAVPS (cents) 7 092 10 6 453 ROE (%) 14.2 14.3 Credit loss rat
Slide 3: Group income statement
Group income statement FY12 change FY11 Rm % Rm Net interest income 34 233 18 29 027 Non-interest revenue 34 474 16 29724 Total income 68 707 17 58 751 Credit impairment charges 8 800 37 6 436 Income from operations 59 907 15 52 315 Operating expenses 39 998 15 34725 Net operating income 19 909 13 1
Slide 4: Business unit view of headline earnings
Business unit view of headline earnings Contrasting results from key business units FY12 change FY11 Rm % Rm Personal & Business Banking 7 476 27 5 872 Corporate & Investment Banking 4784 (13) 5521 Central and other 717 (8) 778 Central and other — Continuing operations 44 (>100) 321 Argentina — Disc
Slide 5: Geographic view of headline earnings
Geographic view of headline earnings Key growth markets delivering good results FY12 change FY11 Rm % Rm South Africa 15 078 21 12 475 PBB 7598 25 6 058 CIB 5 407 23 4413 Other domestic 78 (>100) 587 Liberty 1995 41 1417 Rest of Africa 1 840 69 1 086 PBB (258) 13 (297) CIB 2 060 50 1 372 Liberty 38
Slide 6: Loans and advances
Loans and advances FY12 change FY11 Rbn % Rbn Personal & Business Banking 502 10 458 Mortgage loans 300 5 286 Instalment sale and finance leases 63 17 54 Card debtors 24 16 21 Other loans and advances 115 19 97 Corporate & Investment Banking 358 (7) 384 Loans to banks 106 (17) 129 Loans to customers
Slide 7: Deposit and current accounts
Deposit and current accounts FY12 change FY11 Rbn % Rbn Personal & Business Banking 461 9 422 Retail priced 248 9 228 Wholesale priced 213 10 194 Corporate & Investment Banking 472 1 467 Central and other (3) (>100) (0) 930 5 889 SBSA 718 4 688 Rest of Africa 132 25 106 Standard Bank Plc 88 (25) 117
Slide 8: NII and Margin
Nil and Margin Net interest income up 18% Margin analysis 20 000 18 000 16 000 14 000 12 000 10 000 8 000 6 000 4000 2 000 13 414 15 613 15 794 18 439) Rm 1H11 2H11 1H12 2H12 8 Financial results presentation for year ended 31 December 2012 440 430 420 410 400 390 380 370 360 350 bps 13 96} FY11 A24
Slide 9: Non-interest revenue
Non-interest revenue 35 000 30 000 25 000 20 000 15 000 10 000 5 000 8 868 7895 10 032 8 032 17 395 17 883 19 782 21319 FY09 FY10 FY11 FY12 = Net fee and commission revenue eTradingrevenue Other revenue 9 Financial results presentation for year ended 31 December 2012 iS) Standard Bank
Slide 10: Net fee and commission revenue
Net fee and commission revenue 12 000 10 000 8 000 6 000 4000 2H11 1H12 2H12 = PBB =CIB 10 Financial results presentation for year ended 31 December 2012 iS) Standard Bank
Slide 11: Credit impairment charges
Credit impairment charges 14 000 1.8 1.57 1.53 12 000 16 1.4 10 000 1.2 8 000 1 6 000 0.8 0.6 4000 0.4 2.000 0.2 7 394 6 436 0 Rm FY07 FY08 FY09 FY10 FY11 FY12 % mam Credit impairment charges -®=-Credit loss ratio 11 Financial results presentation for year ended 31 December 2012 i) Standard Bank
Slide 12: Loan book and NPL ratio
1H11 FY11 mam Mortgage loans mam Card debtors mm Corporate loans 12 Financial results presentation for year ended 31 December 2012 1H12 mam Instalment sale and finance leases os Other loans =@=NPL ratio FY12 i) Standard Bank °
Slide 13: PBB credit impairment charges
PBB credit impairment charges Cee ge Credit loss ratios FY12 FY11 FY12 FY11 Rm Rm % % Mortgage loans 2 648 2 968 0.91 1.07 Instalment sale and finance leases 490 358 0.85 0.72 Card debtors 384 375 1.73 1.90 Other loans and advances 3 136 1725 2.92 1.91 Personal unsecured lending 2 304 1 301 6.47 5.3
Slide 14: CIB credit impairment charges
CIB credit impairment charges FY12 change FY11 Client location Rm % Rm Outside Africa 1546 601 Rest of Africa 308 267 South Africa - 15 Top 10 specific credit impairments 1854 >100 883 Other specific credit impairments 466 >100 91 CIB specific impairments 2 320 >100 974 Portfolio credit impairments
Slide 15: Coverage ratios
Coverage ratios Increased coverage for mortgage and corporate loans FY12 FY11 % % PBB coverage ratio 38 30 Mortgage loans 26 20 Instalment sale and finance leases 49 57 Card debtors 65 73 Other loans and advances 73 66 CIB coverage ratio 49 31 Corporate loans 51 31 Commercial property finance 24 22
Slide 16: Staff costs and operating expenses
Staff costs and operating expenses FY12 change FY11 Rm % Rm Staff costs 22195 16 19141 Information technology 3 636 14 3 183 Depreciation, amortisation and impairments 3 341 24 2704 Communication 1 403 14 1227 Premises 3 133 9 2 876 Other 6 290 12 5594 Total banking activities 39 998 15 34725 16 Fin
Slide 17: Costs and revenues
Costs and revenues Cost-to-income ratio Jaws analysis 80 000 62 70 000 60 60 000 50 000 58 40 000 56 30 000 54 20 000 10 000 52 0 50 FY10 FY11 FY12 Rm mas Total income mmm Operating expenses incl restructure charges == Cost-to-income ratio =© -Cost-to-income ratio excl restructure charges 17 Financi
Slide 18: Several dynamics impacted the total cost line
Several dynamics impacted the total cost line Contribution to FY12 group cost growth Rm % Total costs up by 5 273 15 Currency translation impact 1335 4 Incremental spending for growth across Africa 544 2 Amortisation and depreciation for new IT systems and capex 514 1 Incremental regulatory and comp
Slide 19: Capital ratios and risk-weighted assets
Capital ratios and risk-weighted assets 900 800 700 600 500 400 300 Rbn 12.9 FY09 FY10 FY11 FY12 mam Risk-weighted assets =-®=Tier 1 capital adequacy ratio a Oe 12.0 . 11.7 12 10 8 6 4 2 711 790 0 FY12 pro forma Basel 3 % 2013 — 2015 B3 tier 1 target range of 9.5% - 12% 19 Financial results presenta
Slide 20: Dividends
Dividends 500 2.5 450 400 2.0 350 300 1.5 250 200 1.0 150 100 0.5 50 } 386 425 00 cps FYO9 FY10 FY11 FY12 times mmm Dividend per share =®=Dividend cover * Total dividend of 455cps (FY11: 425cps) * Cover ratio of 2.1 times - gradual rebuilding * Scrip alternative available (no discount) for sharehold
Slide 21: Corporate & Investment Banking
Corporate & Investment Banking W Standard Bank
Slide 22: Features of FY12
Features of FY12 Strong revenue growth reflecting focus on client engagement and execution - Impressive performance from the Africa franchise - Key client deals completed in strategic areas of focus Good transactional business growth vindicated our investment in technology Good progress developing h
Slide 23: CIB summarised income statement
CIB summarised income statement change FY12 FY11 change % (excl Rm Rm % FX) Total income 26 938 22 479 20 13 Credit impairments 2 340 1021 >100 Income from operations 24 598 21 458 15 Operating expenses 16 394 14000 17 10 Restructure charge 758 Net income before tax 7 431 7504 (1) Headline earnings
Slide 24: CIB income FY09 to FY12
CIB income FYO9 to FY12 Income surpasses levels achieved in FYO9 16 000 14 000 12 000 30% 10 000 8.000 41% 37% 32% 38% 37% ELT 37% 6 000 4000 2 000 0 Rm tHo9 2HO9 1H10 2H10 1H11 2H11 1H12 2H12 =Non trading revenue = Trading revenue 24 Financial results presentation for year ended 31 December 2012 iS
Slide 25: Several dynamics impacted the total cost line
Several dynamics impacted the total cost line Contribution to CIB FY12 cost growth Rm % Total costs up by 2394 17 Currency translation impact 951 7 Incremental regulatory and compliance spend 277 2 Incremental spending for growth across Africa 170 1 Other 996 7 25 Financial results presentation for
Slide 26: CIB business units
CIB business units Total income Net income before tax change FY12 change % (excl FY12 change Rm % FX) Rm % Transactional Products and Services 8 325 32 27 3267 28 Global Markets 10 262 8 1 2799 2 Investment Banking 6757 11 4 1417 (43) Real estate and Principal Investment 1521 60 57 704 5100 Manageme
Slide 27: CIB business unit commentary
CIB business unit commentary ° TPS revenues benefited from strong asset and deposit growth - Income up in excess of 40% in the Rest of Africa - Positive income growth across all product lines in South Africa * Strong Global Markets performance in key strategic areas of Africa and commodities - Recor
Slide 28: Right sizing operations Outside Africa
Right sizing operations Outside Africa * 2012 has been a key year in terms of - Simplifying our business - Reducing our future cost base - Maintaining our ability to service our targeted client base ¢ Reduced the geographic reach and capital deployed across the international footprint - Sale of Arge
Slide 29: Looking ahead
Looking ahead Increase ROE We have a sustainable client franchise which generates ‘capital light’ TPS revenues Continue - Positive momentum in revenue growth on the African continent - Focus on client engagement, execution and winning mandates - Leveraging product and geographic capability - Utilisi
Slide 30: Personal & Business Banking
Personal& Business Banking W Standard Bank
Slide 31: Complex operating environment
Complex operating environment South African economic growth below trend Low interest rate environment in South Africa Consumer indebtedness at elevated levels Formal banking penetration increasing Growth in middle class consumers slowing Growth in new business banking limited Highly competitive bank
Slide 32: PBB summarised income statement
PBB summarised income statement FY12 change FY11 Rm % Rm Net interest income 23 834 20 19 936 Non-interest revenue 18 446 8 17 081 Total income 42 280 14 37017 Credit impairment charges 6 658 23 5 426 Operating expenses 25 620 10 23 224 Headline earnings 7 476 27 5 872 Net interest margin (%) 4.88 4
Slide 33: Strong growth in PBB headline earnings
Strong growth in PBB headline earnings change FY12 % FY11 South Africa 7598 25 6 058 Rest of Africa (258) 13 (297) Outside Africa 136 23 111 PBB 7 476 27 5 872 33 Financial results presentation for year ended 31 December 2012 iS) Standard Bank
Slide 34: PBB SA summarised income statement
PBB SA summarised income statement PBB SA aA change a Net interest income 19121 17 16 328 Non-interest revenue 15 810 5 14 987 Total income 34931 12 31315 Credit impairment charges 5553 14 4891 Operating expenses 19181 8 17814 Headline earnings 7 598 25 6 058 Credit loss ratio (%) 1.33 1.27 Cost-to-
Slide 35: Well balanced SA portfolio with strong growth opportunities
Well balanced SA portfolio with strong growth opportunities Total income Headline earnings FY12 change FY11 FY12 change FY11 Rm % Rm Rm % Rm Business Banking 10 041 10 9138 3 305 12 2 950 Personal Markets 16 852 11. +15 203 3 370 41 2 398 Inclusive Banking 5 289 16 4548 (283) (14) (248) Bancassuranc
Slide 36: PBB SA commentary
PBB SA commentary * Strong Business Banking position - Significant improvement in acquiring and VAF businesses - Robust deposit growth of 11% - We remain a business bank of choice Fighting for Personal Market customers - Successfully growing active customer base from 3.9m to 4.2m - Significant growt
Slide 37: Healthy balance sheet growth in SA
Healthy balance sheet growth in SA Total deposit growth 9% A13% 70 60 416% 50 40 A1% A4% 30 A1% 20 A24% te) Rbn Cash management Savings accounts = Term deposits Call deposits Money market call Current accounts deposits mFYI1 mFY12 Total loan growth 9% 60 A17% A28% 4% 300 50 250 40 200 30 416% 150 20
Slide 38: PBB SA product reporting
PBB SA product reporting Total income Headline earnings FY12 change FY11 FY12 change FY11 Rm % Rm Rm % Rm Mortgage lending 5 030 11 4519 1024 >100 404 Instalment sale and finance leases 2 209 12 1974 408 14 359 Card products 4 372 8 4045 1 329 31 1018 Transactional products 15 148 5 14492 2 742 (1)
Slide 39: Core banking transformation
Core banking transformation Making good progress in the multi-year core banking transformation journey On track for delivery of 2013 goals - Currently have >3m customers on the new platform - By end May 2013 should have >7m customers on the new platform New mobile and paperless origination resulting
Slide 40: PBB Rest of Africa
PBB Rest of Africa Challenging macro-economic conditions in East and West Africa Healthy revenue growth - 33% year-on-year - 16% of PBB’s revenues (FY11: 13%) Good balance sheet growth - Deposits from customers up 24% - Loans and advances to customers up 20% Credit loss ratio increased to 3.31% from
Slide 41: Looking ahead
Looking ahead Good people engagement Need to further improve efficiencies while building new capabilities to meet customer needs Still focused on getting key markets Nigeria, Ghana and Kenya to scale and acquiring the right customers ¢ Focusing on getting PBB Rest of Africa profitable in 2013 * Stre
Slide 42: Liberty
Liberty W Standard Bank
Slide 43: Good results on all metrics
Good results on all metrics Return on BEE normalised group equity value 21% Long-term insurance indexed new business up 18% Value of long-term insurance indexed new business up 69% Group cash flows R19bn Long-term insurance new business margin 2.0% CAR cover 2.7 times 43 Financial results presentati
Slide 44: Strong earnings performance
Strong earnings performance FY12 change FY11 Rm % Rm Retail SA 1 299 (1) 1314 Liberty Corporate 75 >100 36 LibFin 2116 88 1124 Stanlib 489 18 414 Liberty Properties 48 (50) 96 Liberty Africa 69 >100 21 Liberty Health (42) 35 (65) Other (286) (3) (277) Headline earnings 3 768 41 2 663 SBG share of he
Slide 45: Conclusion
Conclusion W Standard Bank
Slide 46: Defending our strong position in SA
Defending our strong position in SA * SBSA headline earnings increased 21% to R11.5bn * Total revenue up 18% and costs up 15% resulting in positive jaws of 3% ¢ ROE maintained at 18.5% Consistent efforts over the last few years to gain new customers in PBB has paid off * Winning new mandates in CIB,
Slide 47: Africa doing well
Africa doing well Headline earnings for Rest of Africa increased 68% supported by excellent revenue growth and strong positive jaws ¢ Represented in all of the high growth economies in Sub-Saharan Africa Linkage to ICBC increasingly visible in supporting China-Africa trade and investment ¢ Leveragin
Slide 48: Africa doing well
Africa doing well ° We have positive momentum across our network ¢ We are relevant in the economies in which we operate - We are the top player in many areas in many markets and have won many local accolades ° We have expertise and a distribution capability to enhance the service offering especially
Slide 49: Conclusion
Conclusion * Our strategy is intact and we are executing against it ¢ The external environment is supportive - Sub-Saharan Africa is expected to grow by 5% ° We are a real economy bank * We have done a huge amount to realign our business - Cleaner balance sheet - SB Plc much smaller, lower risk enti