Standard Bank Group Limited · JSE:SBK
Standard Bank — H1 2005 Earnings Presentation
20 slides from Standard Bank's earnings presentation, 2005
Slide 1: 2005 Interim results presentation
2005 Interim results presentation Performance drivers Market drivers Performance drivers z Low interest rates z Retail loans and advances growth z Consumer spending z Margin pressure z Strong equity markets z Better than expected credit z Regulatory pressures experience z High levels of corporate z
Slide 2: Financial highlights
Financial highlights June 2005 June 2005 June 2004 Reported Normalised under IFRS Headline earnings growth (%) Ç 18% Ç 23% Ç 13% Headline eps (cents) 327.4 304.8 249.0 Headline eps growth (%) Ç 31% Ç 22% Ç 12% ROE (%) 26.7 23.7 22.7 NAV per share (cents) 2 536 2 646 2 225 Dividend cover (times) 2.5
Slide 3: Divisional review
Divisional review Headline Headline earnings ROE earnings contribution Rm % % Domestic Banking 3 043 77 30.5 Retail Banking 1 550 39 27.8 Corporate & Investment Banking 1 398 36 35.5 Other domestic operations 95 2 Africa 338 9 26.9 International 319 8 11.3 International USD 51 11.4 Stanlib 48 1 59.6
Slide 4: Retail Banking loans & advances
Retail Banking loans & advances June June Dec % 2005 2004 2004 Rbn Change Rbn Rbn Home loans 105 39 76 92 Card 10 47 7 8 Vehicle and asset finance 36 19 30 33 Other lending 23 27 18 20 Provisions (2) (2) (2) Net loans and advances 172 33 130 151 7 Domestic funding shift to wholesale Six Funding Fund
Slide 5: Retail Banking
Retail Banking Market share up in all retail categories z Home loans continue to perform - Continuing benefit from origination strategy - Comfortable with credit risk - Bolstering collections with Enterprise Wide Collection Strategy z Vehicle and asset finance getting the basics right - Revisited or
Slide 6: Africa
Africa z Margin income improved, but could still be better - exacerbated by low loan to deposit ratio z Higher credit provisioning off a low base z Excellent NIR growth, up 38% - Implementing a consistent approach to banking fees - Strong growth in treasury income z African market split into: - Simp
Slide 7: Corporate & Investment Banking
Corporate & Investment Banking z Good overall performance in all divisional businesses z Decline in net interest income due to margin compression, down 7% z Continued improvement in credit quality reflected in net credit recoveries z Good growth in transactional revenues z Strong growth in trading r
Slide 8: International
International z Significant revenue pressures z Reduced levels of risk positions z Recovery of previously impaired loans combined with absence of significant new impairments z Costs tightly controlled - continuing investment in infrastructure z Standard Bank Plc and Standard International Holdings a
Slide 9: Financial highlights: Factors influencing the numbers
Financial highlights Simon Ridley Factors influencing the numbers z IFRS conversion - Conversion audited - Apart from deemed treasury share issue, no major impact - Approx R1bn debit to ordinary shareholders funds, R951m relates to deemed treasury shares - No significant effect on interim headline e
Slide 10: IFRS – Deemed treasury shares for accounting purposes
IFRS – Deemed treasury shares for accounting purposes Standard Bank Group (SBK) Liberty Holdings (LBH) 52 million SBK shares held by LGL (R3.4bn) 2 million Liberty Group (LGL) LBH shares held by LGL (R0.4bn) Liberty policyholder funds Shares held on behalf of policyholders, not shareholders 19 IFRS
Slide 11: Group income statement review
Group income statement review June June Dec % 2005 2004 2004 Rm Change Rm Rm Net interest income 6 008 11 5 395 11 492 Impairment charges on L&As 638 (23) 830 1 050 Net interest income after provisions 5 370 18 4 565 10 442 Non-interest revenue 7 943 11 7 145 15 044 Operating expenses 7 953 13 7 050
Slide 12: Headline earnings per share
Headline earnings per share 600 Ç18% 309 * 500 Ç19% 249 Ç18% 400 Ç18% 215 300 Ç25% 182 305 * Ç27% 156 249 200 123 222 181 153 100 127 103 Ç20% Ç23% Ç20% Ç18% Ç23% Ç12% Ç22% 0 1999 2000 2001 2002 2003 2004 2005 cents Headline EPS 1st half Headline EPS 2nd half * 2004 and 2005 normalised 23 Dividends
Slide 13: Return on equity
Return on equity 3 000 27.0 24.2 * 23.7 * 22.4 22.9 20.9 20.3 2 500 20.1 2 646 * 22.0 2 464 * 2 000 2 154 17.0 1 939 1 957 1 500 12.0 1 397 1 000 1 139 7.0 500 2.0 Ç1% Ç23% Ç39% Ç1% Ç10% Ç8% Ç19% 0 -3.0 1999 2000 2001 2002 2003 2004 HY2005 Rm % NAV per share ROE * 2004 and 2005 normalised 25 Domesti
Slide 14: Credit loss trends
Credit loss trends 5.00 4.00 % of Advances 3.00 2.00 1.00 1.28 1.07 1.00 1.08 0.91 0.43 0.46 0.00 1999 2000 2001 2002 2003 2004 HY2005 Income statement charge Balance sheet provision NPLs 27 Credit provisioning June June June June Dec Dec 2005 2005 2004 2004 2004 2004 Percentage of advances NPL Char
Slide 15: Early arrears as a % of book
Early arrears as a % of book 4 3 % of Advances 2 1 0 March '03 May '03 July '03 September '03 November '03 March '04 May '04 July '04 September '04 November '04 March '05 May '05 January '03 January '04 January'05 Home Loans VAF Card Early arrears = special mention as defined in analysis of financia
Slide 16: Operating expenses
Operating expenses 30 64 61.8 25 62 20 60 58.8 57.9 15 57.4 57.3 58 57.0 56.2 10 56 5 54 0 52 % 1999 2000 2001 2002 2003 2004 HY2005 % growth ratio Income growth Cost growth Cost-to-income ratio 31 Cost vs revenue growth Cost-to- Revenue Cost income growth growth ratio % % % Domestic Banking 14 16 5
Slide 17: Capital adequacy of banking operations
Capital adequacy of banking operations June 2005 Dec 2004 16 350 % % 14 300 Group 12 250 Tier I 10.8 11.0 10 200 Tier II and III 4.2 4.0 8 150 6 Total 15.0 15.0 100 4 SBSA 2 50 Tier I 8.5 9.1 0 0 2000 2001 2002 2003 2004 HY2005 % Rbn Tier II and III 4.8 4.3 Tier I Tier II Tier III Risk-weighted asse
Slide 18: Looking forward
Looking forward z Foreign competition in domestic market z Regulatory environment - Increases costs - Raises barriers to entry z Credit expectations - Budgets reflect higher levels of credit provisioning z Costs - Separate productivity assessments in head office and regional centres - Balancing cost
Slide 19: Looking forward - divisions
Looking forward - divisions z Retail - Set to continue to benefit from lower inflation and interest rates z Africa - Group integration complete - Need to focus on increasing customer flows and selected acquisitions z CIB - Earnings growth off a high base z International - Competitive markets - Conti
Slide 20: Standard Bank
Standard Bank