Standard Bank Group Limited · JSE:SBK
Standard Bank — H1 2024 Earnings Presentation
60 slides from Standard Bank's earnings presentation, Aug 15, 2024
Slide 1: Interim Results Presentation
AFRICA IS OUR HOME, WE DRIVE HER 2024 INTERIM RESULTS PRESENTATION STANDARD BANK GROUP 15 AUGUST 2024
Slide 2: Agenda
Agenda 1.0 Backdrop and 2.0 1H24 Financial 3.0 Strategy and progress performance outlook | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024 2
Slide 3: Backdrop and progress
Backdrop and progress 1.0
Slide 4: Backdrop – despite a difficult macroeconomic environment in 1H24
Backdrop – despite a difficult macroeconomic environment in 1H24… • Serious geopolitical tensions persisted • Elections created uncertainty in several countries Global • Global inflation moderated, but slower than expected • While the EU central bank cut interest rates in June, the BOE and the Fed d
Slide 5: We executed our strategic priorities
… we executed our strategic priorities Our purpose: Why we exist Africa is our home, we drive her growth Our strategic priorities: What we need to Transform client Execute with Drive sustainable do to deliver our purpose experience excellence growth and value | STANDARD BANK GROUP 1H24 FINANCIAL RES
Slide 6: Enabled by our technology
… enabled by our technology Strengthened our core Delivered best-in-class client Powered 24/7 full-scale infrastructure, system stability platforms financial services across our and security 20 countries Total indicators of outages 1 Investment in core banking systems 500k 70% 18000 Unsecured person
Slide 7: We delivered against our 2024 focus areas
… and we delivered against our 2024 focus areas In 1H24, we delivered 1 Continued growth in our client franchises 19.5m 3m R22bn Active clients +5% Embedded policies Sustainable finance1 2 Focused on defending and growing our businesses 10% 28% 11% PPB SA fees Digital transactions2 AUM in SA 3 Manag
Slide 8: SBG – a business that has proved resilient over time
SBG – a business that has proved resilient over time… Sizable and growing income Strong earnings growth and 35 000 Growing dividend stream +7% +10% +12% stream1 attractive returns 800 54% Total banking income 30 000 Headlineearnings Headline earnings 18.5% 20.0% 51% ROE 700 25 000 600 Interim divide
Slide 9: Recognised as a leader on the continent
… and is recognised as a leader on the continent | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024 9
Slide 10: 1H24 Financial performance
1H24 Financial performance 2.0
Slide 11: Performance – strong returns, improved efficiency, higher dividends
Performance – we delivered strong returns, improved efficiency, and higher dividends Group headline earnings SBG Franchise headline earnings1 Dividend per share 1H24: R22.0bn 1H24: R21.4bn 1H24: 744c 1H23: R21.2bn 1H23: R20.1bn 1H23: 690c 4% ZAR 7% ZAR 8% 17% CCY 21% CCY Group return on equity Cost-
Slide 12: Banking
Banking 2.1
Slide 13: Banking overview – growth off a high base
Banking overview – growth off a high base, supported by positive jaws and improved credit charges 1H24 1H23 Change Change Rm Rm % CCY % Net interest income 50 425 46 946 7 19 Non-interest revenue 26 926 29 340 (8) 2 Total income 77 351 76 286 1 13 Operating expenses (38 406) (38 080) 1 10 Pre-provis
Slide 14: Gross loans and advances to customers
Gross loans and advances to customers – growth driven by strong corporate origination Gross loans and advances to customers by product, R1.5trn South Africa HOH % change (Jun-23/Jun-24) HOH % change (Jun-23/Jun-24) +8% 1 400.0 6% 3% ZAR 1 200.0 1 000.0 800.0 7% CCY 600.0 1 240 +1% 400.0 200.0 0.0 Ju
Slide 15: Deposits – continued growth, particularly term deposits
Deposits – continued growth, particularly term deposits as clients took advantage of higher interest rates Deposits and debt funding by product, R2.0trn South Africa HOH % change (Jun-23/Jun-24) HOH % change (Jun-23/Jun-24) 4% 1 800.0 2% ZAR 1 600.0 1 400.0 1 200.0 1 000.0 6% CCY 1 622 +3% 800.0 600
Slide 16: Average balance sheet – continued growth, but slowed
Average balance sheet – continued growth, but slowed due to the difficult environment Average interest-earning assets Average interest-bearing liabilities 5 year CAGR, +8% 5 Year CAGR, +8% +5% +5% 1 417 1 617 1 673 1 771 1 945 2 039 1 401 1 608 1 683 1 821 1 978 2 084 Rbn 1H19 1H20 1H21 1H22 1H23 1H
Slide 17: Net interest income – margin expansion
Net interest income – margin expansion as higher interest rates more than offset tighter pricing Banking NII and NIM trend Net interest income 80 NII Positive impact NIM 70 487 497 Negative impact 444 60 387 390 2.3 2.2 (1.0) 0 361 +7% 50 40 30 20 10 30.9 31.0 29.8 34.2 46.9 50.4 46.9 50.4 0 Rbn 1H1
Slide 18: Net fee and commission – continued growth
Net fee and commission – continued growth in the active client base, digital adoption and volumes Net fee and commission revenue1 Fee and commission revenue, by category 5-year CAGR, 3% 17.0 +4% Other, CCY: +12% +0% 15.0 Account Arrangement & 1.9 transaction knowledge-based fees, +8% fees, +2% 13.0
Slide 19: Trading revenue – strong underlying trend
Trading revenue – strong underlying trend, down relative to an exceptional 1H23, up on 2H23 Trading revenue Trading revenue by region 5-year CAGR, 11% 14 000 -16% Africa Regions SBSA +10% 12 000 Average Average R9.3bn 10 000 Average R8.5bn R7.4bn 8 000 Average R6.0bn 6 000 4 000 2 000 5.8 6.3 8.1 5.
Slide 20: Global Markets revenue – client driven franchise
Global Markets revenue – client driven franchise Global Markets revenue Market making Liquidity management Elevated volatility in <20% 17 000 Client revenue Africa of GM revenue is 16 000 Regions market making 15 000 14 000 13 000 22% 12 000 11 000 COVID-19 13% +6% 16% 14% 13% Market-making 21% 10 0
Slide 21: Provisions – higher coverage
Provisions – balance sheet grew slower than provisions resulting in higher coverage Gross loans and advances1 Provisions1 Coverage Stage 3 Stage 3 coverage Stage 3 Stage 2 Stage 2 Total coverage Stage 1 Stage 1 Stage 1 & 2 coverage +3% 60 8.0 +8% 51 1 682 7.0 1 626 50 46 47 46 47 1 538 6% 70 66.8 6%
Slide 22: Provisions – PPB SA slowdown in inflows
Provisions – PPB SA evidence of a slowdown in inflows Early Delinquency (1 – 89 days past due) Non-performing loans 1 - 29 days 70 70 000 30 - 59 days 10% 65 65 000 60 - 89 days 12% 60 60 000 55 55 000 17% 50 50 000 6% 8% 45 45 000 20% 40 40 000 35 35 000 31% 30 30 000 25 25 000 20 20 000 15 15 000
Slide 23: Credit impairment charges – decline driven by CIB
Credit impairment charges – decline driven by CIB restructures and a slowdown in PPB and BCB charges Credit impairment charges1 PPB1 PPB CLR1 12 000 -15% 10 000 4 667 4 713 6 185 5 983 161 144 179 170 Rm 1H21 1H22 1H23 1H24 bps 1H21 1H22 1H23 1H24 8 000 BCB1 BCB CLR1 6 000 1 414 1 206 1 652 1 603 11
Slide 24: Credit impairment charges – most products lower
Credit impairment charges – most products lower, particularly Corporate and Financial investments Credit impairment charges 3 000 1H23 1H24 2 500 2 000 1 500 1 000 500 121 128 183 1 746 1 655 1 083 1 041 1 148 1 005 2 530 2 505 1 309 1 341 972 17 584 0 Rm Home Vehicle Card Personal Business Corporat
Slide 25: Operating expenses – disciplined cost management
Operating expenses – disciplined cost management and currency weakness in Africa Regions, <1% growth1 Staff costs Software, cloud and Premises Other expenses technology related costs, amortisation and IT +2% 25 000.0 depreciation2 25 000.0 25 000 25 000.0 20 000.0 20 000.0 20 000 20 000.0 15 000.0 1
Slide 26: IT spend – diligent save to invest strategy
IT spend – ongoing diligent “save to invest” strategy led to well-contained cost growth at 2% Total IT spend1 Areas impacting growth 5-year CAGR 8% Depreciation and other Depreciation and other Amortisation • Reduced investment in on-premises 16000 16 000 % infrastructure Staff costs change Amortisa
Slide 27: Insurance & Asset Management
Insurance & Asset Management 2.2
Slide 28: IAM – increasing sales and higher margins
IAM – increasing sales and higher margins, especially in guarantee-type products Life insurance, indexed new business Short-term insurance, GWP1 Asset Management, AUM & AUA2 South Africa South Africa South Africa 6 000.0 4% 1 800.0 6% 1 200 11% 5 500.0 1 750.0 1 000 5 000.0 1 700.0 800 4 500.0 1 650
Slide 29: IAM performance – improved insurance earnings
IAM performance – improved insurance earnings, favourable shareholder portfolio, and capital actions drove ROE up 1H24 1H23 Change Rm Rm % Insurance operations 2 131 1 853 15 South Africa 2 191 1 927 14 Africa Regions (60) (74) (19) Asset Management operations 472 584 (19) South Africa 181 187 (3) A
Slide 30: Capital and returns
Capital and returns | 2.3
Slide 31: Capital – robust capital position
Capital – robust capital position Risk-weighted assets Capital1 Capital adequacy1 Investments in FIs Equity risk Operational risk 16 Market risk % Counterparty credit risk change 2 000 Credit risk 274 276 +4% 15 1 667 246 33 31 1 609 250 230 77 +2% 31 19 75 20 13.8 1 500 198 30 14 13.7 220 +5% 15 13
Slide 32: ROE & dividends – consistently above pre-pandemic levels
ROE & dividends – consistently above pre-pandemic levels Return on equity and cost of equity Dividend per share 20 20.0 Payout 54% n/a1 50% 54% 54% 56% Ratio 18 1 000 16 15.1 15.3 15.4 900 14.3 14.5 +8% 13.9 15.0 800 14 700 12 600 10 10.0 500 8 400 6 300 5.0 4 200 2 100 16.2 8.5 12.9 15.7 18.9 18.5
Slide 33: Segmental performance
Segmental performance 2.4
Slide 34: SBG portfolio – well-diversified and resilient earnings
SBG portfolio – well-diversified and resilient earnings Business unit headline earnings1, Product headline earnings2, Legal entity headline earnings3, HOH change HOH change HOH change IAM Global Liberty2 +19% Markets CIB +29% -35% transactional Offshore +11% +6% 1.6 1.4 3.1 4.0 CIB 2.2 -1% PPB Inves
Slide 35: Business units – PPB and IAM drove franchise growth
Business units – PPB and IAM drove franchise growth; BCB and CIB flat on a high base 40 0 00 Headline earnings contribution by business unit 35 0 00 Positive SBG Franchise Negative 30 0 00 25 0 00 1 618 ( 376) 596 10 434 20 0 00 15 0 00 10 0 00 4 708 5 026 5 00 0 22 006 0 Rm PPB BCB CIB IAM Centre &
Slide 36: SBSA – steady franchise momentum
SBSA – steady franchise momentum, stringent cost control and improved credit SBSA SBSA Key stats Change 1H24 1H23 % Gross loans and advances to Deposits and funding Rbn Rbn customers Net interest income 28.6 26.1 10 1300 000 6% 1650 000 4% Non-interest revenue 18.7 19.5 (4) 1250 000 1600 000 1200 00
Slide 37: Africa Regions – strong underlying franchise growth
Africa Regions – strong underlying franchise growth and continued accretive returns Headline earnings 1H24 1H23 Change 2% ZAR Rbn Rbn % Africa Regions 9.0 9.3 (2) 27% CCY East Africa1 2.2 1.8 18 South & Central 4.2 4.2 0 Cote Nigeria Africa2 South D’IvoireGhana Sudan Ethiopia West Africa3 2.6 3.2 (1
Slide 38: Africa Regions – diversified portfolio, robust growth
Africa Regions – diversified portfolio that has delivered robust growth in ZAR earnings over time Headline earnings by region Headline earnings by country CAGR HOH % Other (1H14- change Namibia 1H23) South & Central 10 000 CAGR Zambia East Africa +17% -2% (1H14-1H24) Mozambique 10 000 West Africa Ke
Slide 39: Strategy and outlook
Strategy and outlook 3.0
Slide 40: Strategy – unchanged
Strategy – unchanged Our purpose: Why we exist Africa is our home, we drive her growth Our strategic priorities: What we need to Transform client Execute with Drive sustainable do to deliver our purpose experience excellence growth and value | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION
Slide 41: Outlook – key macroeconomic trends remain positive
Outlook – key macroeconomic trends across our portfolio remain positive Inflation, % Interest rates, % Real GDP, % 16.0 16.0 5.0 4.5 14.0 14.0 4.0 12.0 12.0 11.8 3.5 10.7 10.0 10.0 3.0 2.7 8.0 8.0 2.5 7.7 7.0 2.0 6.0 6.0 2.0 1.5 4.0 4.0 1.0 2.0 2.0 0.5 - - - SA Africa Offshore SBG 1 SA Africa Offsho
Slide 42: Outlook – 2024 guidance and 2025 targets reaffirmed
Outlook – 2024 guidance and 2025 targets reaffirmed Transform client experience Execute with excellence Drive sustainable growth and value Core metrics: unchanged Banking revenue growth Cost-to-income ratio Return on equity 2024 guidance: Up low single digits Flat to lower Inside the reaffirmed year
Slide 43: Outlook – fact-based optimism about Africa's prospects
Outlook – fact-based optimism about Africa’s prospects • Inflation slowing Global • Geopolitical tensions leading to a reconfiguration in the world economy, which creates new opportunities for Africa • Inflation and sovereign stress improving • Africa will become the fastest growing region in the wo
Slide 44: Leader of Africa's energy transition
AFRICA IS OUR HOME, WE DRIVE HER A leader in East Africa #1 Private Bank Leader of Africa’s • Africa’s fastest growing sub-region • Africa’s development path is rapidly energy transition expanding affluent segments • Increasingly integrated • Africa’s power and infrastructure deficit • Aspirational
Slide 45: | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024
| STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024 45
Slide 46: Q&A
Q&A | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024 46
Slide 47: Thank you
THANK YOU | STANDARD BANK GROUP 1H24 FINANCIAL RESULTS PRESENTATION | 15 AUGUST 2024 47
Slide 48: Appendix – Additional macro & guidance disclosures
Appendix – Additional macro & guidance i disclosures
Slide 49: Interest rates – 2023 and 1H24
Interest rates – 2023 and 1H24 South Africa, UK & USA, % Africa Regions, % 10 32 Change since Jan-23 SA Change since Jan-24 30 Angola 29.00 US Botswana UK 1H24: +0 bps 28 Ghana 1H23: +125 bps Kenya 26.25 8 26 Mauritius 24 Mozambique Namibia 22 Nigeria 20 Uganda 19.50 6 1H23: +75bps 1H24: +0 bps 18 1
Slide 50: Macroeconomic estimates – 2024 and 2025
Macroeconomic estimates – 2024 and 2025 Inflation, % Interest rates, avg % Real GDP growth, % Currency, % change 0 10 20 30 40 0 10 20 30 0 2 4 6 8 -150%-100% -50% 0% 50% 2024 2024 2024 2024 Impact: South Africa 2025 South Africa 2025 South Africa 2025 South Africa 2024 vs 2025 2025 UK UK UK UK Ango
Slide 51: SBG FY24 guidance
SBG FY24 guidance Core metrics FY24 guidance Key drivers NII and NIR revised due to change in methodology Banking total income Low single digits • NII – up mid-to-high single digits (from up low-to-mid single digits), subject to loan growth • NIR – down low-to-mid single digits (from up low single d
Slide 52: Appendix – Additional business disclosures
Appendix – Additional business ii disclosures
Slide 53: Personal & Private Banking – key highlights
Personal & Private Banking – key highlights Key drivers of performance 1H24 1H23 Change • Total income increased due to positive endowment in a higher Rbn Rbn % average interest rate environment, increase in the active client Net interest income 19.4 18.8 3 base, and higher transactional activity •
Slide 54: Personal & Private Banking – good franchise momentum
Personal & Private Banking – good franchise momentum South Africa Africa Regions NIR by geography, Rbn Active clients Active clients 6% 5% 5 4 1% 9.0 10% CCY 8.5 0.2 11% -29% 0.3 4 3 Private 11.2 11.7 4.3 4.3 Banking 2.5 +4% 3 2.4 m Jun-23 Jun-24 m Jun-23 Jun-24 Digital transactional volumes Digital
Slide 55: Business & Commercial Banking – key highlights
Business & Commercial Banking – key highlights Key drivers of performance 1H24 1H23 Change • Total income increase linked to balance sheet growth, higher Rbn Rbn % average interest rates, increase in transactional activity particularly in digital banking partially offset by elevated USD- Net interes
Slide 56: Business & Commercial Banking – Africa Regions
Business & Commercial Banking – Africa Regions trends dampened by currency weakness South Africa Africa Regions NIR by geography, Rbn Active clients Active clients 1% 550 500 450 1% 340 290 1% 6.2 6.1 8% CCY 400 350 240 0.2 0.1 -26% 300 190 250 200 522 517 140 150 297 301 100 90 2.1 2.0 -2% ‘000 Jun
Slide 57: Corporate & Investment Banking – key highlights
Corporate & Investment Banking – key highlights Key drivers of performance 1H24 1H23 Change • Total income decreased as softer trading revenue, was partially Rbn Rbn % offset by higher net interest income aligned to balance sheet growth. Income was impacted by the implementation of hedge accounting
Slide 58: Corporate & Investment Banking – client revenue
Corporate & Investment Banking – client revenue diversified by sector, product and region Client revenue by sector, -5% Total income by geography, -5%1 Real Estate IB Africa Regions Soverign & Public Sector 30000000 000 GM Africa Regions Telecommunications & Media TxB Africa Regions Diversified Indu
Slide 59: ICBC Standard Bank plc – declined off a high base
ICBC Standard Bank plc – declined off a high base in 1H23 ICBCS performance SBG’s share of earnings 155 1H24 1H23 ICBCS earnings, USDm 78 155 @ % stake 40% 40% 78 SBG attributable 31 62 earnings, USDm ZAR/USD1 19.1 18.5 SBG attributable 596 1 149 earnings, Rm USDm 1H23 1H24 1 ICBCS attributable earn
Slide 60: Disclaimer – Forward-looking statements
Disclaimer – Forward-looking statements The Group may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate t