Standard Bank Group Limited · JSE:SBK
Standard Bank — FY2011 Earnings Presentation
28 slides from Standard Bank's earnings presentation, March 2012
Slide 1: Standard Bank Group Financial results presentation
Standard Bank Group Financial results presentation for the year ended 31 December 2011
Slide 2: Standard Bank
W Standard Bank www.standardbank.com
Slide 3: Financial highlights
2011 Financial results presentation For the year ended 31 December 2011 Notes Financial highlights change FY11 % FY10 Headline earnings (Rm) 13 599 21 11 283 Headline EPS (HEPS) (cents) 856.9 20 715.9 Diluted HEPS (cents) 852.1 20 709.6 DPS (cents) 425 10 386 NAVPS (cents) 6 453 13 5 726 ROE (%) 14.
Slide 4: Income statement highlights
Income statement highlights FY11 change FY10 Rm % Rm Net interest income 29 027 7 27 028 Non-interest revenue 29 724 3 28 720 Total income 58 751 5 55 748 Credit impairment charges 6 436 (13) 7 394 Operating expenses 34 725 0 34 579 Banking activities headline earnings 12 171 23 9 890 Liberty – shar
Slide 5: Segmental diversification of headline earnings
Segmental diversification of headline earnings FY10 FY11 PBB PBB CIB CIB Liberty Liberty Central and other Central and other Each business unit contributed positively to headline earnings growth 5 Notes Net interest income 35 000 3.3 3.2 30 000 3.1 25 000 3.0 20 000 2.9 15 000 2.8 2.7 10 000 2.6 5 0
Slide 6: Non-interest revenue
Non-interest revenue 35 000 30 000 2 479 2 047 2 382 2 805 25 000 3 020 7 895 20 000 10 032 8 032 2 488 9 046 15 000 1 788 7 098 4 829 3 721 10 000 5 000 10 107 11 827 14 083 16 896 17 395 17 883 19 782 0 Rm FY05 FY06 FY07 FY08 FY09 FY10 FY11 Net fees and commission revenue Trading revenue Other rev
Slide 7: Costs and revenues
Costs and revenues 70 000 65 61.4 60 000 58.8 60 50 000 55.2 55 40 000 52.4 51.9 51.0 30 000 48.4 50 20 000 45 10 000 0 40 Rm FY05 FY06 FY07 FY08 FY09 FY10 FY11 % Total revenue Operating expenses Cost-to-income ratio Cost-to-income ratio improving 9 Notes Capital adequacy 14 900 800 12 700 10 600 8
Slide 8: Group capital
Group capital • 2011 - Risk-weighted assets increased by 15% while Tier 1 capital grew by 11% - Resulted in Tier 1 ratio declining marginally from 12.9% to 12.0% • Troika and Argentina - Disposal of Troika completed and initial proceeds of $372m received - Argentina still subject to regulatory appro
Slide 9: Liberty
Liberty* change FY11 % FY10 Normalised headline earnings (Rm) 2 663 3 2 597 Adjusted core operating earnings (Rm) 2 636 15 2 283 Embedded value of long-term insurance 410 57 261 new business (Rbn) Normalised group equity value (embedded value) per share (R) 100.15 10 91.01 Normalised ROE (%) 19.6 21
Slide 10: Personal & Business Banking headline earnings growth of 40%
Strong Personal & Business Banking headline earnings growth of 40% change FY11 % FY10 South Africa 6 263 36 4 610 Rest of Africa (282) 20 (346) Outside Africa 111 11 100 Personal & Business Banking 6 092 40 4 364 • Revenue growth greater than cost growth • Good new account acquisition • Well priced
Slide 11: Key indicators continue to improve
Key indicators continue to improve FY11 change FY10 PBB SA Rm % Rm Net interest income 16 251 4 15 638 Non-interest revenue 14 799 10 13 487 Total income 31 050 7 29 125 Credit impairment charges 4 891 (23) 6 322 Operating expenses 17 262 5 16 434 Headline earnings 6 263 36 4 610 ROE (%) 26.9 21.3 C
Slide 12: Healthy balance sheet growth
Healthy balance sheet growth 70 +8% 60 50 +13% 40 +10% +11% 30 +19% 20 +18% 10 0 Rbn Cash management Savings accounts Term deposits Call deposits Money market call Current accounts deposits FY10 FY11 60 +5% 300 +11% +15% 50 250 40 200 30 150 +5% 20 100 10 50 0 0 Rbn Card debtors Instalment sale and
Slide 13: Personal Markets
NPLs declined by 25% (R8bn) 40 000 10 8 30 000 6 20 000 4 10 000 2 0 0 Rm FY07 FY08 FY09 FY10 FY11 % Mortage loans Instalment sale and finance leases Credit card Other loans and advances NPL ratio 21 Notes Personal Markets • Strategy of main bank transactional led acquisition with strong cross-sell
Slide 14: Inclusive Banking
Improved pricing and reduced origination commissions take account of increased liquidity cost 6.0 2.5 5.0 2 4.0 1.5 Registrations Concessions 3.0 1 2.0 0.5 1.0 0 0.0 -0.5 Rbn FY08 FY09 FY10 FY11 % Registrations value New business concession Mortgage origination commission 23 Notes Inclusive Banking
Slide 15: Business Banking
Business Banking • Good loan growth achieved - Instalment sale and finance leases up 11% - Business lending up 7% - Margin improvement across lending business • Merchant acquiring business volume growth of 18% • Numerous new Public Sector banking services Deposits Loans and advances Operating income
Slide 16: Progress in migration to electronic channels
Progress in migration to electronic channels +12% Number of value transactions 0% Traditional/branch Electronic/self service FY10 FY11 27 Notes Core banking replacement • Well supported IT strategy to deliver business objectives • South African core banking systems migrating to SAP - Journey started
Slide 17: The way forward
The way forward • We have a pervasive traditional and non-traditional distribution network • Internal surveys reflect we have engaged and committed staff • Our focus on a liability gathering strategy remains compelling • We are lending responsibly and pricing for anticipated term liquidity costs • O
Slide 18: Robust performance from Corporate & Investment Banking
Robust performance from Corporate & Investment Banking FY11 change FY10 Rm % Rm Net interest income 8 820 6 8 292 Net fees and commissions 5 177 23 4 222 Trading revenue 7 840 0 7 813 Other income 701 (45) 1 264 Total income 22 538 4 21 591 Credit impairments 1 020 85 550 Operating expenses 13 649 (
Slide 19: Strong growth in our client franchise
Strong growth in our client franchise • In excess of two thirds of our revenue generated in Africa • TPS revenues across Africa increased 8% - Critical successes achieved in winning new client mandates and defending existing base - Development of a Pan African host–to–host platform - Trade and cash
Slide 20: Significant mandates in corporate banking
Significant mandates in corporate banking KrisEnergy Holding Company Ltd Singapore KrisEnergy Holding Company Ltd Goodyear Masstores (Pty) Ltd 2011 University of South Africa USD 115 million 2011 High Yield Bond and Revolving Credit Facility 2011 Co-Manager, (Bond) 2011 Full Transaction MLA, Facilit
Slide 21: Major deals in natural resources
Major deals in natural resources 2011 2011 2011 2011 Botswana Mongolian Mining Corporation Ophir Energy PLC Boseto Project Konkola Copper Mines plc USD 400 million USD 412.5 million USD180M Project Loan Facility & USD 500 million USD25M Cost Over Run Sole Arranger and Facility Agent Admission to LSE
Slide 22: Driving ROE higher
Driving ROE higher • Focus on generating quality revenues in Africa and natural resources - Disciplined use of capital and liquidity in every client transaction - Short-term pressure on income as we shed off-strategy assets - Higher quality risk-based decisions • Continue efforts to reduce complexit
Slide 23: CIB's much tighter strategic focus
CIB’s much tighter strategic focus • Good momentum in the business evidenced by recent client wins and deal pipeline • Global environment for banks ironically leads to intensified competition in Africa • Success will be determined by - Intensive focus on our control environment - Disciplined use of
Slide 24: Africa is the core of our franchise
Africa is the core of our franchise • We were early at establishing a small but widespread Sub-Saharan presence • We are well positioned with a universal bank offering in 16 countries in the Rest of Africa representing - 58% of Africa’s population - 52% of Africa’s GDP • We are now broadening and de
Slide 25: Our franchise in the Rest of Africa continues to show encouraging results
Our franchise in the Rest of Africa continues to show encouraging results • Licence to open a bank branch in South Sudan approved • 65 branches commissioned in 2011 - Nigeria opened 33 branches and grew its customer base more than 50% - First branches opened in Angola • New Finacle core banking syst
Slide 26: Legal entities Outside Africa
Legal entities Outside Africa • Currently legal entities operating at a small loss • Costs down 14% (SB plc down 29%) in Rand • Have actioned a substantial portion of $75m expense reduction referred to at interim • Reducing balance sheet, costs and capital utilisation will now be a gradual process •
Slide 27: In retrospect
In retrospect • Following many years of growth and expansion, headline earnings declined by 20% from the 2008 peak • What did we do? - Maintained the dividend - Took action on costs - Refocused and restructured our CIB business - Continued investing for growth in the franchise in the Rest of Africa
Slide 28: Moving forward
Moving forward • Concentrate on satisfying our existing customers and clients • Grow the customer base • Drive operational and systems excellence • Maintain cost discipline • Invest primarily in organic growth options • Manage the levers of ROE aggressively but sensibly 51 Notes 26 Standard Bank Gro