Standard Bank Group Limited · JSE:SBK
Standard Bank — H1 2001 Earnings Presentation
53 slides from Standard Bank's earnings presentation, 2001
Slide 1: Interim financial results for the six months to 30 June 2001
Interim financial results for the six months to 30 June 2001 1
Slide 2: Presentation structure
Presentation structure X Financial highlights Alan van Biljon X Retail Banking Peter Wharton-Hood X SCMB Myles Ruck X Commercial Banking X Private Banking X International Operations Jacko Maree X Stanbic Africa X Liberty Group X Conclusion 2
Slide 3: Key financial statistics
Key financial statistics Headline earnings per share 21% up June ‘01 % change June ‘00 Headline earnings Rm 2 020 24 1 632 Headline EPS cents 154 21 127 Cost-to-income ratio % 57.8 60.9 RoE % 21.2 21.4 NAV per share cents 1 503 22 1 229 Adjusted NAV per share cents 1 741 21 1 433 Total assets Rbn 31
Slide 4: Income statement highlights
Income statement highlights Headline earnings 24% up June ‘01 % change June ‘00 (Rm) (Rm) Total income 7 911 13 7 006 Provision for credit losses (747) 13 (661) Operating expenses (4 570) 7 (4 270) Operating profit 2 594 25 2 075 Taxation (806) 24 (652) Effective tax rate 31.1% 31.8% Net income afte
Slide 5: Headline earnings per business unit
Headline earnings per business unit Increased contribution from Retail Banking In t e rn a t io n a l O p e ra t io n s Lib e rt y S t a n b ic A f ric a 13 % 11% 9% ( 14 %) ( 12 %) ( 9 %) C o m m e rc ia l R e t a il B a n k in g B a n k in g 3 1% 13 % ( 2 9 %) ( 13 %) S CMB 23% ( 2 3 %) ( ) 30 Jun
Slide 6: Summarised balance sheet
Summarised balance sheet Total assets 18% higher June ‘01 % change June ‘00 (Rbn) (Rbn) Cash and short-term funds 34.8 7 32.6 Advances 136.7 15 119.2 Other assets 59.7 48 40.5 Total banking assets 231.2 20 192.3 Liberty 78.5 13 69.3 Total assets 309.7 18 261.6 Shareholders' funds 19.9 24 16.0 Minori
Slide 7: Net interest margin
Net interest margin Slight reduction in lending margins % Average funds margin 2000 3.71 Domestic operations (0.06) Endowment effect - Higher group resources 0.06 Higher branch deposits 0.11 Lending (0.15) Treasury activities (0.08) Stanbic Africa (0.08) International Operations (0.07) Centralised f
Slide 8: Net interest income
Net interest income Good growth despite adverse conditions, +12% X Domestic operations +8% X Low advances growth, 7% X Stable interest rates, pressure on funding costs X Competitive pressure on lending margins X Growth in savings X Stanbic Africa +3% X Solid lending growth, 18% X Zimbabwe X Internat
Slide 9: Non-interest income
Non-interest income 51% of total income X Fees and commissions +15% X Domestic operations +20% 3000 X New service charges X Transactional volume growth in new 2500 channels - Internet +82% 2000 X SCMB +31% X Stanbic Africa - volume growth and Rm 1500 repricing 1000 X International Operations - decli
Slide 10: Provision for credit losses
Provision for credit losses Improving domestic environment X Domestic operations +4% 0.02% X Aggressive provisioning in Commercial Banking - provisions +R54m 0.06% (0.09%) X Retail 2% lower 1.14% 1.13% X SCMB 10% lower X Stanbic Africa +R15m X Prudent provisioning X International Operations +R45m St
Slide 11: Non-performing loans
Non-performing loans Improving book June ’01 % Dec ’00 X Higher gross NPLs in (Rm) (Rm) Africa, London and in Gross NPLs 5 250 (1) 5 278 Commercial Property Less : Specific provision (1 679) (20) (2 100) loans : Security ( 3 456) 13 (3 062) Net NPLs 115 (1) 116 X R400m provisions written off against
Slide 12: Operating expenses
Operating expenses Costs under control, +7% X Domestic operations +8% 5,000 X Inflationary increases X Higher IT and processing spend 4,000 9% 2,206 X Partly offset by: 2,033 3,000 X Lower staff complement, 546 Rm 2,000 X Focus on sustainable cost 6% management 1,000 2,237 2,364 X Stanbic Africa +4%
Slide 13: Cost-to-income ratio
Cost-to-income ratio Consistent improvement 66 64.9 64 63.1 62.0 61.6 62 60 % 59.0 57.8 58 56 54 1996 1997 1998 1999 2000 HY2001 13
Slide 14: Capital adequacy
Capital adequacy Well capitalised 16 13.5* 13.8 14 12 2.9 2.7 X Surplus capital primarily in 10 hard currency 8 % X Higher capital requirement in 6 10.6 11.1 International Operations 4 2 X International acquisition 0 possibilities Dec '00 June '01 Primary capital Secondary capital Required capital *
Slide 15: Headline earnings
Headline earnings Strong domestic performance June '01 June ‘00 % change Rm Rm Domestic operations 1 377 25 1 100 Retail Banking 646 30 498 SCMB 490 25 391 Commercial Banking 273 25 219 Central services (32) - (8) Stanbic Africa 184 20 153 International Operations 276 13 244 Centralised funding (37)
Slide 16: Cost-to-income ratio
Cost-to-income ratio Focus on efficiencies June ‘01 June ‘00 Domestic operations 57.2% 59.3% Retail Banking 65.5% 67.9% SCMB 48.1% 49.1% Commercial Banking 38.4% 43.9% Stanbic Africa 54.2% 58.2% International Operations 62.4% 63.0% Stanbic group 57.8% 60.9% 16
Slide 17: Capital allocation and returns
Capital allocation and returns Creating value for shareholders June ‘01 Average June ‘00 equity RoE RoE Rm Domestic operations 10 440 26% 27% Retail Banking 5 036 26% 28% SCMB 3 100 32% 35% Commercial Banking 2 304 24% 19% Stanbic Africa 1 136 32% 32% International Operations 4 508 12% 14% Centralis
Slide 18: Retail Banking
Retail Banking 18
Slide 19: Retail Banking - results highlights
Retail Banking - results highlights Headline earnings up 30% X Transactional banking business X Strong revenue streams X New fee structures to influence customer behaviour X Home loans X New business showing stronger growth X Card business X Re-emerging as core capability X Cost efficiencies X Benef
Slide 20: Retail Banking: Bancassurance portfolio
Retail Banking Bancassurance portfolio showed mixed results X Simple products X Number of policies in force up 53% - Credit life policies 290 000 (+19%) - Funeral policies 260 000 (+125%) X Funeral penetration now 10.8% (from 4.5%) X Complex products X Business 7% up but below budget X Focus on sale
Slide 21: Retail Banking: E-plan and ABIL JV
Retail Banking E-plan and ABIL JV well positioned X Mass market number of transactions and average balances increase X Annual E-plan transactions per account up from 35 to 38 X Average balance up from R717 to R872 X African Bank JV X 20 000 accounts opened during first 6 months X Gross advances book
Slide 22: Retail Banking: Virtual banking demand
Retail Banking Sustained demand for virtual banking X Virtual banking development X Majority of home loans originated outside of branch infrastructure X Auto-E transactions increased by 19% X Internet banking customers up 43% to 186 000 X Internet transaction volumes up 82% X Internet fee based tran
Slide 23: Retail Banking - priorities
Retail Banking - priorities X Revenue growth X Establish optimal balance between near and long term portfolio X Improve under-performing businesses X Leverage revenues from partnerships - ABIL JV - FIHRST payroll intermediary with Alexander Forbes - SA Homeloans - Edgars initiative - E-plan expansio
Slide 24: Retail Banking - priorities continued
Retail Banking - priorities continued X Cost management X Best Bank Enhancement Programme X Roll out of Bank at Any Centre X Optimisation of channel, product and customer mix X Project execution disciplines extended to non-IT projects X End-to-end process management rules to extract efficiencies X C
Slide 25: Retail Banking: Rated by external groups
Retail Banking Rated by external groups X PricewaterhouseCoopers banking survey X Ranked first by peers in: - Retail Lending and Deposits - Internet Banking X Euromoney awards X Standard Bank rated Best Bank in South Africa X “…, the bank is a match for foreign entrants in retail banking technology
Slide 26: SCMB
SCMB 26
Slide 27: SCMB - results highlights
SCMB - results highlights All-round contribution X Headline earnings 25% higher X Costs well contained, +4% X Retained strong position in chosen markets X Attracted a number of high calibre people 27
Slide 28: SCMB: Rated by external groups
SCMB Rated by external groups X PricewaterhouseCoopers banking survey X SCMB ranked first by its peers in: - Corporate Banking - Foreign Exchange Trading - Capital Markets, Bonds and Derivatives - Money Markets 28
Slide 29: SCMB: Successful turnaround of under performers
SCMB Successful turnaround of under performers X Total NPBT contribution +R56m % change June 01/00 Revenue Electronic Banking 73 Custody 30 International Business Centres 35 29
Slide 30: SCMB: Diversified revenue stream
SCMB Diversified revenue stream 14% (14%) 20% (25%) 21% (20%) 12% (10%) 30% (28%) 3% (3%) Corporate and Investment Banking Structured Finance Asset Management Foreign Banking Treasury (Interest Rate, Gold, Equities) Other ( ) 30 June ‘00 30
Slide 31: SCMB - priorities
SCMB - priorities X Developing global product focus with Standard Bank London X Cost containment X Focus on e-Commerce X Private equity / Leveraged buy outs X Sustained improvement of equities broking business 31
Slide 32: Commercial Banking
Commercial Banking 32
Slide 33: Commercial Banking - results highlights
Commercial Banking - results highlights Headline earnings 25% up X Commercial Suites X More conservative provisioning X Lending flat, but improved asset quality X Deposit base growing X Stannic X Turnover growth in line with market growth X Declining bad debts X Costs X Restricted to 2% increase 33
Slide 34: Commercial Banking - priorities
Commercial Banking - priorities X Commercial Suites X Forecasting lower bad debts in the second half X Improvement in lending book boosted by lower interest rates X Continued focus on cross sell opportunities X Leverage off market leadership in electronic banking X Continued improvement in customer
Slide 35: Private Banking
Private Banking 35
Slide 36: Private Banking - introduction
Private Banking - introduction New business opportunity X Five cornerstones X International X Wealth management X Melville Douglas X Consolidated lending X Transactional banking 36
Slide 37: Private Banking: Integrated offering
Private Banking Integrated offering Standard Bank - Stanbic Africa Liberty Group Offshore Group Standard Standard Bank - Standard Private Equities Retail Bank Melville Douglas SCMB Third party suppliers 37
Slide 38: Private Banking - priorities
Private Banking - priorities X Integrated product offering X Pace of product roll-out and client acquisition X Systems roll-out X Achieving first class service levels X Co-ordinating offshore offering X Contain start-up losses 38
Slide 39: International Operations
International Operations 39
Slide 40: International Operations - results highlights
International Operations - results highlights Difficult market conditions X Headline earnings 13% up X Excellent client driven performance X Disappointing performance in fixed income activities X Strong unsettled dealing balance growth X Increased ability to hold margin assets on balance sheet 40
Slide 41: International Operations: Debt capital markets
International Operations Debt capital markets X Client business X Contribution up 74% X Key driver - sales X Strengthened management X Trading X Profits down X Continued uncertainty in emerging markets X Sell-off in US high yield market 41
Slide 42: International Operations: Resource banking
International Operations Resource banking X Earnings stable X Strong growth in precious metals (up 15%) offset by low activity in base metals and project finance X Core energy team, including electricity, now in place X Commodity trade finance contribution up 64% 42
Slide 43: International Operations: Private Banking
International Operations Private Banking X Strong growth in deposit business X Banking earnings increased 8% X Weaker stock broking/investment management/trust and advisory activity in line with the market 43
Slide 44: International Operations - priorities
International Operations - priorities X Weather the slowdown in major economies and uncertainty in emerging economies X Take advantage of widening spreads X Complete the integration of JF Bank X Selective acquisitions X Expand regional focus by adding to current teams and expanding business mix 44
Slide 45: Stanbic Africa
Stanbic Africa 45
Slide 46: Stanbic Africa - results highlights
Stanbic Africa - results highlights Challenging environment X Headline earnings up 20% X Modest asset growth X Higher provisions X Good non-funds income growth X Costs well managed, +4% X Zimbabwe, Kenya performing poorly 46
Slide 47: Stanbic Africa - priorities
Stanbic Africa - priorities X Selective acquisitions X Strategic relationships X New products 47
Slide 48: Liberty Group
Liberty Group 48
Slide 49: Liberty Group - results highlights
Liberty Group - results highlights Performed well over the period X Headline return on equity increased to 24%* X Headline earnings up 15%* X Embedded value up 13% since December X Total new business increased by 18% *On continuing operations 49
Slide 50: Stanbic
Stanbic 50
Slide 51: Stanbic - strategic imperatives
Stanbic - strategic imperatives X No change since last presentation X Move Retail Banking to a higher level X New head X Strong results X Develop Standard/Liberty axis further X Private Bank X Re-engineering Stanfin 51
Slide 52: Stanbic - conclusion
Stanbic X International RoE X Tough conditions - solid performance X Selective acquisitions will help X Capitalise on complementary capabilities of SCMB, International, Africa X Good progress X Global business lines X Attract, retain and deploy the right people 52
Slide 53: Slide 53