Standard Bank Group Limited · JSE:SBK
Standard Bank — H1 2012 Earnings Presentation
23 slides from Standard Bank's earnings presentation, 2012
Slide 1: Financial results presentation: External structural and cyclical impacts on results
2012 Financial results presentation For the period ended 30 June 2012 External structural and cyclical impacts on results Macro factor Consequence Developing versus developed world SA and Africa relatively well positioned Lo interest rates generall Low generally Not good for net interest income Good
Slide 2: Group financial results: Headline earnings and returns
Group financial results Headline earnings and returns 16 000 30 14 000 25 12 000 20 10 000 8 000 7 046 15 6 962 6 988 5 294 6 000 6 311 5 949 10 4 000 5 2 000 4 869 6 165 7 104 5 407 5 989 6 637 7 384 0 0 Rm 06 07 08 09 10 11 12 % Headline earnings 1H Headline earnings 2H ROE Headline earnings surpa
Slide 3: Key metrics and Business unit view
Key metrics change 1H12 % 1H11 FY11 Headline earnings (Rm) 7 384 11 6 637 13 599 Headline dl EPS (HEPS) (cents) 464.1 11 418.4 856.9 Diluted HEPS (cents) 460.9 11 415.9 852.1 DPS (cents) 212 50 141 425 NAVPS (cents) 6 581 11 5 926 6 453 ROE (%) 14.5 14.5 14.3 Credit loss ratio (%) 0.98 0.81 0.87 Cos
Slide 4: PBB summarised income statement and product view
PBB summarised income statement 1H12 change 1H11 FY11 Rm % Rm Rm Net interest income 11 130 22 9 153 19 859 Non-interest revenue 8 870 11 8 016 17 081 Total income 20 000 16 17 169 36 940 Credit impairment charges 3 081 18 2 613 5 426 Operating expenses 12 412 11 11 230 23 162 Headline earnings 3 19
Slide 5: PBB SA view and CIB summarised income statement
PBB SA view 1H12 change 1H11 FY11 Rm % Rm Rm Net interest income 8 854 17 7 600 16 251 Non interest revenue Non-interest 7 627 9 6 970 14 987 Total income 16 481 13 14 570 31 238 Credit impairment charges 2 567 7 2 407 4 891 Operating expenses 9 379 7 8 761 17 752 Headline earnings 3 250 32 2 458 6
Slide 6: CIB product view and Liberty
CIB product view Total income Headline earnings 1H12 change 1H12 change Rm % Rm % Transactional Products and Services 3 947 36 1 024 58 Investment Banking 2 872 19 969 (18) Global Markets 5 037 (5) 649 (50) Real estate and Principal Investment Management 721 21 271 79 Curtailed operations and Troika
Slide 7: Group summarised income statement
Income statement analysis Group summarised income statement 1H12 change 1H11 2H11 Rm % Rm Rm Net interest income 15 794 18 13 414 15 613 Non-interest revenue 16 504 13 14 646 15 078 Total income 32 298 15 28 060 30 691 Credit impairment charges 3 945 35 2 914 3 522 Income from operations 28 353 13 2
Slide 8: Net interest income and margin; Non-interest revenue
Net interest income and margin Net interest income up 18% Margin analysis (15% on a constant currency basis) 18 000 440 16 000 420 6 (8) 14 000 400 17 12 000 (5) 17 10 000 380 8 000 360 6 000 340 4 000 320 2 000 13 414 15 613 15 794 381 408 0 300 Rm 1H11 2H11 1H12 bps 1H11 Loan FundingEndowment Mix
Slide 9: Non-interest revenue and credit impairment charges
A closer look at non-interest revenue Net fee and commission revenue and other Trading revenue up 15% revenue 4 500 1H12 change 1H11 Rm % Rm 4 000 Fee and commission 11 596 7 10 787 revenue 3 500 Account transaction fees 4 569 5 4 338 3 000 Electronic banking 1 005 14 882 Knowledge-based fees 943 (2
Slide 10: NPLs and coverage ratios; Home loans
NPLs and coverage ratios NPLs Coverage ratios 60 000 1H12 FY11 1H11 % % % 50 000 Personal & Business 32 30 29 Banking Mortgage loans 21 20 18 40 000 Instalment sale and finance 53 57 59 leases 30 000 Card debtors 68 73 75 Other loans and advances 72 66 68 20 000 Corporate & Investment 34 31 27 Banki
Slide 11: PBB unsecured lending; CIB specific credit impairment charges
PBB unsecured lending • Total unsecured lending is currently 19% of the gross PBB SA loan book (R78.5bn including credit card and business banking) • Loan book to customers who earn less than R8k per month currently R3.4bn - 85% of lending to existing customers - Average tenor of 18 months • Almost
Slide 12: Costs and revenues; total cost line dynamics
Costs and revenues Cost-to-income ratio Jaws analysis 35 000 65 20 30 000 59 6 59.6 59.1 15 60 58.0 25 000 10 55 20 000 5 15 000 50 12 5 0 15 17 11 13 0 10 000 -5 45 -5 5 000 0 40 - 10 Rm 1H11 2H11 1H12 % % FY10 FY11 1H12 1H12 constant Total income Operating expenses currency Cost-to-income ratio To
Slide 13: Staff costs and Other operating expenses
Staff costs 12 000 • Up 16% (12% on a constant currency basis) 10 000 • Fixed remuneration up due to annual salary increases and increased headcount from 8 000 network expansions in the Rest of Africa • Increased proportion of prior year’s deferred 6 000 compensation now amortised • Other staff cost
Slide 14: Outlook for costs
Outlook for costs • Assuming a USD/ZAR exchange rate of R8.50 for the 2H12 and that 1H12 ZAR costs are repeated at similar levels - We would reflect costs of R39.5bn for FY12 - Up p 14% on FY11 and up p 11% in constant currencyy • Continued focus is being applied to the group cost base - Continued c
Slide 15: Loans and advances to customers; Funding and liquidity
Loans and advances to customers 350 300 250 200 150 100 50 0 Rbn Mortgage loans Instalment sale Card debtors Other loans and Corporate Commercial and finance advances loans property leases finance 1H11 FY11 1H12 29 Funding and liquidity • Overall liquidity position remains strong • Basel 3 liquidity
Slide 16: Capital ratios and risk-weighted assets; Core equity Tier 1
Capital ratios and risk-weighted assets 12.9 1 400 12.4 12.0 11.9 11.8 12.0 12 12.0 11.0 1 200 11.5 11.3 10.2 11.1 11.0 11.0 10.3 10 1 000 9.5 65 8 800 40 6 600 400 4 200 2 592 600 621 620 654 711 758 798 0 0 Rbn 1H09 FY09 1H10 FY10 1H11 FY11 1H12* 1H12 pro % forma Basel 3 Risk-weighted assets Impac
Slide 17: Capital planning and Interim dividend
Capital planning • Robust capital position under Basel 2 • Basel 3 has a significant impact - Engaging with SARB to ensure that implementation of Basel 3 is fit for purpose - Ensuring that new business outcomes proactively recognise the impact of Basel 3 - Current pro forma Tier 1 ratio under Basel
Slide 18: Key focus areas; High level reflection
Key focus areas High level reflection • Good progress in refining the strategy and focus on Africa • Business model being aligned around structural industry changes whilst dealing with cyclical economic trends • SA franchise in good shape, shape generating good returns with positive momentum in the
Slide 19: Winning the war for customers in PBB SA
Winning the war for customers in PBB SA • Customer service scores at highest levels • Focus on gaining transactional customers during the period - Simple, value-for-money transactional banking products - Price reductions - Enhancements to our account opening processes - Enhancements to our switching
Slide 20: Difficult operating environment Outside Africa
Difficult operating environment Outside Africa • Legal entities Outside Africa operating at a loss (excluding Argentina) • SB Plc reflecting a headline loss of $34m - Revenues down 5% • Increased cost of liquidity due to liquid asset portfolio absorbed in net interest income • Difficult second quart
Slide 21: Rest of Africa gaining meaningful traction
Rest of Africa gaining meaningful traction • Rest of Africa franchise headline earnings up 84% • ROE of 10.6%, heading in the right direction - ROE excluding goodwill of 13.2% • Loans L and d advances d tto customers t up 41% • Deposits from customers up 32% • Total income up 38% - Exceeded R1bn eve
Slide 22: Conclusion: What our priorities were in March
Conclusion What our priorities were in March Concentrate on satisfying our existing customers and clients Grow the customer base Drive operational and systems excellence USD component of costs too Maintain cost discipline high given outlook for revenue Invest primarily in organic growth option
Slide 23: Moving forward
Moving forward • Core franchise is extremely healthy with a strong customer base • Staff engaged and focused on delivering a good performance • Co Co-operation operation with ICBC a vital building block • Market conditions remain fragile • Risk positioning remains key • Competing to win • Problems a