Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Presentation (November 2001)
46 slides from Standard Bank's investor presentation, November 2001
Slide 1: Presentation to Investors November 2001
Presentation to Investors November 2001 1
Slide 2: Key financial statistics
Key financial statistics Headline earnings per share 21% up for the half year June ‘01 % change June ‘00 Headline earnings Rm 2 020 24 1 632 Effective tax rate % 31.1 31.8 Adjusted effective tax rate* % 25.7 25.2 Headline EPS cents 154 21 127 Cost-to-income ratio % 57.8 60.9 NAV per share cents 1 50
Slide 3: Headline earnings per business unit
Headline earnings per business unit Diversified revenue stream Inte rna tio na l Libe rty Ope ra tio ns 11% S ta nbic A fric a 13 % 9% C o m m e rc ia l R e ta il B a nking B a nking 3 1% 13 % S CMB 23% 3
Slide 4: Cost-to-income ratio
Cost-to-income ratio Consistent improvement 300 283 66 65 250 227 64 200 156 63 165 178 cents 124 62 150 136 % 92 61 93 100 74 60 154 59 127 50 86 103 62 72 58 0 57 1996 1997 1998 1999 2000 HY2001 Headline EPS First Half Headline EPS Second half Cost-to-income ratio 4
Slide 5: 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% 5
Slide 6: Net interest margin
Net interest margin Growth despite reduction in lending margins 5 4 % 3 2 1994 1995 1996 1997 1998 1999 2000 HY2001 Net interest margin 6
Slide 7: Interest vs non-interest revenue
Interest vs non-interest revenue Non-interest income accounts for 51% of income 60 50 % 40 30 20 1996 1997 1998 1999 2000 HY2001 Net Interest income Non-interest income 7
Slide 8: Operating expenses
Operating expenses Better control of costs 5,000 25 4,000 9% 20 2,033 2,206 3,000 15 %y-o-y Rm 2,000 10 6% 1,000 2,237 2,364 5 0 0 1995 1996 1997 1998 1999 2000 1H2001 June '00 June '01 Staff Other Operating expenses 8
Slide 9: Capital adequacy
Capital adequacy Well capitalised 16 13.5* 13.8 14 12 2.9 2.7 u Surplus capital primarily in 10 hard currency 8 % u Higher capital requirement in 6 10.6 11.1 International Operations 4 2 u International acquisition 0 possibilities Dec '00 June '01 u R2bn secondary capital issued in October 2001 Prim
Slide 10: Capital allocation and returns
Capital allocation and returns Creating value for shareholders Dec ‘00 Average equity RoE Rm Domestic operations 8,873 27.7% Stanbic Africa 1,023 30.4% International Operations 3,839 14.8% Adjusted International Operations* 3,839 29.3% Centralised funding & Liberty 2,701 12.4% Stanbic group 16,434 2
Slide 11: Translation effect
Translation effect International RoE including translation gain Dec’00 Rm Headline earnings as reported 567 Translation gain 559 Headline earnings 1,126 Average equity 3,839 RoE 29.3% 11
Slide 12: Retail Banking
Retail Banking
Slide 13: Retail Banking: Transactional and lending products
Retail Banking Transactional and lending products group u Improve profitability within low interest rate environment Through: u Migration to direct channels (customer self-service) u New sources of lending products origination u Lending to mass market segment u Developing new growth businesses that
Slide 14: Retail Banking: Home loans
Retail Banking Home loans u Increase market share without sacrificing margin Through: u New strategies... u Varied origination strategy u Promote utilisation of available Access bond facilities u Lending to new market segments u Product range to cater for mass market customer needs u Operational eff
Slide 15: Retail Banking: Card products
Retail Banking Card products u Increase volumes, reduce processing costs Through: u New strategies... u Co-branded and partnership deals u Migration to EMV and smartcards u Installation of fraud prevention neural network u New market segments u Cross-sell opportunities u Operational efficiencies and
Slide 16: Retail Banking: Physical network
Retail Banking Physical network u Protecting the most valuable asset Through: u Demographic forecasting and planning u Improved service ratings and culture u Centralisation of non value transactions u Appropriate migration of relevant transactions to direct channels 16
Slide 17: Retail Banking: Wealth products
Retail Banking Wealth products u Sustaining an integrated wealth business model Through: u Further leverage off Liberty relationship u Improved customer penetration through CRM and “sales credit system” u Broader product offering u Invigorated sales force 17
Slide 18: Retail Banking: Customer, Service and IT
Retail Banking Customer, Service and IT u Focus on “lifetime” value of customer Through: u Single view of bank and customer u Appropriate service for appropriate customer segments u Group brand strategy u Establish world class banking systems and processes u Alignment of business and IT architecture
Slide 19: Making banking Simpler. Better. Faster.
No one ever looked back and said "! wish I'd spent more time at the bank”. That’s why we're trying to make banking Simpler. Better. Faster.
Slide 20: International Operations
International Operations
Slide 21: International Operations: Three themes
International Operations Three themes Resource Banking DEVELOPING ECONOMIES Debt Capital Markets NATURAL RESOURCES Trade and Commodity Finance Forfaiting Corporate Banking Project Finance Africa Corporate Finance Mining Corporate Finance Asset Management Treasury FUNDING Private Client Banking 21
Slide 22: International Operations
International Operations London Stockholm 524 2 Moscow New York Prague C.I. 5 11 Shanghai 61 Miami 305 Milan Istanbul 2 Taipei Tehran 36 4 7 3 18 Bogota Dubai Hong Kong 4 6 114 Lima Singapore 5 Sao Paulo 25 Sydney Buenos Aires 17 2 8 22
Slide 23: Resource banking
International Operations Resource banking u Provide advisory, project and trade financing, hedging and trading services to the mining, metals and energy related sectors Junior Producers Merchant Smelters Consumers Fund Developers Traders Fabricators Managers Refiners Venture Structuring Precious Met
Slide 24: Debt capital markets
International Operations Debt capital markets u Source, structure, distribute and trade emerging market risk u Focus on emerging market debt securities u Divided between u Client servicing (64% of revenues, H1 2001) u Proprietary trading (36% of revenues, H1 2001) u Client servicing u Origination u
Slide 25: Private client banking
International Operations Private client banking u Services to predominantly UK offshore and South Africa offshore clients u Significant growth business globally u Low capital usage, high returns u Attracts high market rating u “Liability” focus è key part of SBL funding u SBOG provides a solid platf
Slide 26: Examples - Resource banking
International Operations Examples - Resource banking 26
Slide 27: Examples - Debt capital markets
International Operations Examples - Debt capital markets 27
Slide 28: Risk management
International Operations Risk management u Portfolio management u Diversified globally u Well structured country risk limits u Liquidity rewarded in limit system u Collateral used extensively as a risk mitigant u In country presence provides added input u Continuous revaluation of risk and stress te
Slide 29: International Operations: Key strategies
International Operations Key strategies u Consolidate position as a leading specialist emerging markets bank u Further improve mix and quality of earnings u Develop and grow domestic, on-the-ground investment banking activities in key emerging markets u Grow private banking and asset management capa
Slide 30: 30
30
Slide 31: SCMB: Diversified revenue stream
SCMB Diversified revenue stream 14% 20% 21% 12% 30% 3% Corporate and Investment Banking Structured Finance Asset Management Foreign Banking Treasury (Interest Rate, Gold, Equities) Other 31
Slide 32: SCMB: Key strategies
SCMB Key strategies u Developing global product focus with International Operations u Continue to build market leadership in chosen areas u Cost containment u Focus on e-Commerce u Private equity / Leveraged buy outs / Economic Empowerment u Continue to attract and retain high calibre staff u Privat
Slide 33: SCMB: Rated by external groups
SCMB Rated by external groups u PricewaterhouseCoopers banking survey u SCMB ranked first by its peers in: - Corporate Banking - Foreign Exchange Trading - Capital Markets, Bonds and Derivatives - Money Markets u Risk Magazine u SCMB ranked first in eight categories 33
Slide 34: Commercial Banking
Commercial Banking Well positioned for upturn in local economy u Increase market share in asset finance u Emphasis on lowering bad debts u Continued focus on cross-sell opportunities u Leverage off market leadership in electronic banking 34
Slide 35: Stanbic Africa
Stanbic Africa
Slide 36: Stanbic Africa - where we are
Stanbic Africa - where we are African roots, global reach 36
Slide 37: Stanbic Africa: Characteristics
Stanbic Africa Characteristics u Wide margins u Non-complex banking u Low levels of competition u Difficult operational environment 37
Slide 38: Stanbic Africa: Key strategies
Stanbic Africa Key strategies u Replicate relevant businesses of Standard Bank into Africa u Selective acquisitions u Micro-lending u Bancassurance potential u Functional relationships more important than geography u Manage capital and returns in volatile, soft currencies u Very high growth potentia
Slide 39: Liberty Group
Liberty Group
Slide 40: Liberty Group
Liberty Group u South Africa’s third largest life assurer u Bancassurance partner u Simple product co-operation u Complex products u Headline RoE 24%* *On continuing operations 40
Slide 41: 41
41
Slide 42: Group issues
Group issues u Building a wealth business - Become a serious player in the wealth business u Pool the components we have in Retail, SCMB, London, Private Banking and Liberty (already a wealth business) u A purely South African model is insufficient as the target market is limited - has to form part
Slide 43: Stanbic: De-emphasising geography
Stanbic De-emphasising geography • Interest rate derivatives • Credit derivatives International SCMB • Foreign exchange (domestic) • Project and structured finance • Private banking • Structured trade finance • Resource banking • Asset Management Africa 43
Slide 44: Why Stanbic?
Why Stanbic? u Multiple revenue streams u Well positioned in high growth markets u New team, new culture u Inclusion in the MSCI emerging market banks index u Our work is far from done 44
Slide 45: Slide 45
Slide 46: Forward-looking statements
This presentation contains certain forward-looking statements relating to Stanbic’s earnings, efficiencies and expense savings, and return on equity amongst others. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those set out in t
Standard Bank Group — Investor Presentation (November 2001) on 6ix