Standard Bank Group Limited · JSE:SBK
Standard Bank — Investor Presentation (October 2004)
102 slides from Standard Bank's investor presentation, Oct 6, 2004
Slide 1: Trends in Treasury: A Local and International Perspective
Trends in Treasury: A Local and International Perspective Wednesday, 6th October 2004
Slide 2: Standard Bank: Global Markets in Perspective
Standard Bank: Global Markets in Perspective Ben Kruger, Managing Director, Corporate & Investment Banking
Slide 3: Group structure
Group structure Standard Bank Group Domestic Banking International Africa Liberty Group Investment banking Retail, commercial and Value-added activities focused on investment banking financial and developing markets and services in 16 African associated non- natural resources through countries outsi
Slide 4: Global points of representation
Global points of representation
Slide 5: Group headline earnings analysis
Group headline earnings analysis June June 2004 % 2003 Rm change Rm Domestic Banking 2 560 22 2 101 Retail Banking 1 274 26 1 011 Corporate and Investment 1 201 13 1 065 Banking Other domestic operations 85 25 Africa 297 19 249 International 371 (26) 499 Stanlib 22 (29) 31 Central funding and elimin
Slide 6: Headline earnings mix
Headline earnings mix 13% (8%) 40% (41%) Retail Banking Liberty Africa Stanlib Corporate and Investment Banking 34% (35%) 4% (6%) International 1% (1%) 8% (9%) 2002 figures in brackets
Slide 7: Growing Contribution to Group Revenues
Growing Contribution to Group Revenues 2003 2002 2001 2000 1999 Headline Earnings (Rm) 2 150 1 814 985 755 588 ROE (%) 32 32 27 30 28 Cost to Income (%) 44 45 51 56 60 Headline Earnings 34 35 22 20 19 Contribution (%)
Slide 8: Business Model
Business Model ADVISORY / INVESTMENTS Corporate Finance Structured Debt Finance Private Equity TRADING PROCESSING LENDING Global Forex Custody Corporate Banking Global Markets Business Online Money Market Structured Finance Equities ITS’s Credit Project Finance Commodities International Interest Rat
Slide 9: Diversified Revenue Streams
Diversified Revenue Streams 100% 50% 0% 1999 2000 2001 2002 2003 HY 2004 Interest income Trading income Other income
Slide 10: Investment Banks and Trading Risks
Investment Banks and Trading Risks Trading revenues/group revenues, 2003 60% 50% 40% 30% 20% 10% 0% s C il L k an ro s tS h ve D n p e eu e iti S he G ma rns ch di y nc an D ag ss da rga ou W B JP ts c U dm n B Sa a M M dB ui r gr an Mo Le Ste A r r C r er ea h re B ol St •Certain US brokers – Bear
Slide 11: Investment Banks and Trading Risks
Investment Banks and Trading Risks Trading Revenues as % of Total Revenues 35% 30% 25% 20% 15% 10% 5% 0% 1997 1998 1999 2000 2001 2002 2003 Investment Banks Standard Bank •Trading appetite rising, however trading revenue contributes no more to total revenue than it did before •Derivatives revenue gr
Slide 12: Market Share
Market Share Statistics FX Deals Interbank (spot and fwd in •R80-90 billion per day and out ie turnover) •Around third of market Bond Turnover •R40 billion per month which is 12% share of the market Derivative Turnover •R140 billion per month which is 31% share of the market
Slide 13: The next member of the G7 is emerging!
The next member of the G7 is emerging! A tour through Standard Bank’s International Operations Brad Koen, Head of Global Markets
Slide 14: Standard Bank Group structure
Standard Bank Group structure Standard Bank Group Limited * 100% 100% 100% 100% 30% control The Standard Standard Standard Bank Bank of South Africa Stanbic International Offshore Liberty Life (SBSA) Holdings S.A. 100% STANLI Standard Bank Standard Bank Standard Standard Bank Standard Bank London As
Slide 15: Standard Bank Group overview
Standard Bank Group overview • Financial highlights as at 31 December 2003: – Total assets US$ 81.0bn – Total share capital and reserves US$ 4.3bn – Capital adequacy 14.8% – Attributable income (year to 31.12.03) US$ 841m – Market capitalisation (Oct 04) US$ 10bn Split of headline earnings for year
Slide 16: SIH overview
SIH overview • SIH is the holding company for the Standard Bank Group’s international investment banking activities • Two primary areas of focus: – Developing economies: debt, interest rate and currency products – Resource banking: precious metals, base metals and energy banking products • US$ 903m
Slide 17: SIH overview (cont'd)
SIH overview (cont’d) • Five key business units: – Resource Banking – Global Markets (Debt Capital Markets and Treasury) – Principal Trading – Banking – Asset Management & Private Client Services • Originate transactions in developing economies – distribute into major capital markets • Strong franch
Slide 18: Our Value proposition…
Our Value proposition… • Specialist in emerging markets, resource banking • On the ground presence – global reach • Understand EM risk • Solutions based / advisors in EM risk, resource banking • Partnership approach • Long term commitment
Slide 19: So what's the opportunity?
So what’s the opportunity? Standard Bank
Slide 20: Emerging Markets form important part of world wealth
Emerging Markets form important part of world wealth USA 10,500 China 6,800 Japan 4,000 USA India 3,200 China Japan Germany 2,500 India France 1,900 Germany France UK 1,850 UK Italy Italy 1,800 Brazil Brazil 1,500 Russia Canada Russia 1,400 Mexico Canada 1,000 Mexico 950 2003 GDP adjusted for varyin
Slide 21: Their economies dwarf South Africa's…
Their economies dwarf South Africa’s… Nominal and PPP GDP $bn 6449 2500 2000 1500 1000 500 0 South Africa Brazil China Russia Turkey S ourc e : Moodys
Slide 22: As do their debt markets…
As do their debt markets… Size of total govt debt $bn 500 400 300 200 100 0 South Africa Brazil China Russia Turkey S ourc e : Moodys
Slide 23: Take Brazil as an Example
Take Brazil as an Example LatAm LatAm New New Issues Issues (14 (14 Mar Mar 2002 2002 to to 23 23 January January 2004) 2004) 18,000 18,000 15,000 15,000 7,136 7,136 12,000 12,000 US$ Millions 9,000 9,000 400 400 8,380 8,380 8,085 8,085 6,000 6,000 3,000 3,000 2,325 2,325 1,084 1,084 342 342 500 500
Slide 24: 2003 was a bumper year of new issuance……
2003 was a bumper year of new issuance…… LatAm LatAm New New Issues Issues (14 (14 Mar Mar 2002 2002 to to 23 23 January January 2004) 2004) 8,000 8,000 1,420 1,420 5,810 5,810 7,000 7,000 2,648 2,648 1,748 1,748 6,000 6,000 3,132 3,132 3,884 3,884 US$ Millions 5,000 5,000 4,000 4,000 515 515 660 66
Slide 25: Selected Brazilian transactions in H1 2003
Selected Brazilian transactions in H1 2003 US$ 180,000,000.00 US$100,000.00 US$150,000,000.00 US$ 250,000,000.00 Senior Unsecured 6% Medium Term Notes 5.0% Notes 5% Notes Fixed Notes – 1 year Due June 2005 Due November 2004 Due July 2004 May May April June Lead Manager Joint Lead Managers Joint Lead
Slide 26: And we happen to be the number 1 book-runner!!…
And we happen to be the number 1 book-runner!!…
Slide 27: Deal flow analysis - Global Mortgage-backed Regional Comparison
Deal flow analysis - Global Mortgage-backed Regional Comparison Current Year Prior Year Amount Number of Amount Number of (US$ mn) Mkt. Share Issues (US$ mn) Mkt. Share Issues Americas 453,380.30 78.5 1424 650,786.30 86.5 2425 Europe 100,639.80 17.4 410 89,108.30 11.8 696 Central Asia/Asia-Pacific 1
Slide 28: Deal flow analysis - Global Convertibles Regional Comparison
Deal flow analysis - Global Convertibles Regional Comparison Current Year Prior Year Amount Number of Amount Number of (US$ mn) Mkt. Share Issues (US$ mn) Mkt. Share Issues Americas 34,505.17 38% 184 104,590.80 53% 445 Europe 14,557.18 16% 75 56,956.14 29% 105 Central Asia/Asia-Pacific 18,453.82 20%
Slide 29: Who participates in these markets…
Who participates in these markets… All Deals / Regions Asset Managers Banks / Central Banks Retail & Private Banking Hedge Funds Pension Funds Insurance Corps Agency Other All Deals > 5 yrs All Deals <= 5yrs Asset Managers Asset Managers Banks / Central Banks / Central Banks Banks Retail & Private R
Slide 30: Our focus countries are large exporters…
Our focus countries are large exporters… Exports - $bn 150 120 90 60 30 0 South Africa Brazil Philippines Russia Turkey Source: Moodys
Slide 31: Especially in commodities…
Especially in commodities… Commodity exports - % of total 60 40 20 0 South Africa Brazil Philippines Russia Turkey Source: Moodys
Slide 32: Consumer driven markets – with lots of consumers!
Consumer driven markets – with lots of consumers! • The size of the global precious metals market – The Middle East, Indian Sub-continent and East Asia account for 66% of global gold consumption* – 83% of global gold consumption is in the Jewellery industry* – The consumption of Platinum group catal
Slide 33: Trend of increasing gold production outside Africa
Trend of increasing gold production outside Africa Whilst SA gold production is still a dominant global force, production is falling whilst market share in Asia, Latin America and CIS combined has increased from 36% to 44% (Source: GFMS)
Slide 34: Specific international activities
Specific international activities Standard Bank has involvement in all of the global markets outside South Africa where production and consumption require commodity financial services • Precious Metals – In the UAE, Standard Bank arranges in excess of 50% of bullion imports, where 2003 saw approxima
Slide 35: Tombstones
Tombstones sual& US$60,000,000 STRUCTURED TERM LOAN FACILITY Mandated Arranger, Underwriter and Facility Agent Standard Bank London Ltd Co. ZAO Citibank ‘Commerzbank (Eurasia) SAO Passport Bank ZAO Standard Bank ‘Standard Bank London ‘peu 2000 CENTURION ENERGY INTERNATIONAL INC. Centurion Energy Int
Slide 36: The International Footprint…
The International Footprint…
Slide 37: SIH – Primary operating centres
SIH – Primary operating centres As at 31 December 2003 Total: 991 employees Moscow London New York Hong Kong Sao Paulo = Principal operating entities
Slide 38: Business origination centres…
Business origination centres… As at 31 December 2003 Total: 991 employees Prague (4) Bucharest (2) Milan (4) Istanbul (19) Tehran (5) Shanghai (4) Miami (43) Dubai (7) Mexico City (4) Kuala Lumpur (4) Singapore (25) Lima (8) Sydney (4) Buenos Aires (8) = Principal operating entities
Slide 39: Strategic approach
Strategic approach • Specialist focus: developing markets and commodities • Distribution, not balance-sheet, driven • Revenue streams and asset portfolio well diversified by product and by geography • Strong risk mitigation skills, embedded risk control mechanisms • Diversified funding base—independ
Slide 40: Ongoing strategic focus
Ongoing strategic focus • Footprint now substantially established • Depth in core products and markets • Grow banks in Hong Kong, Brazil and Russia • Extend client coverage • Ongoing focus on risk management • Extend operational and capital efficiencies
Slide 41: SIH—key financials statistics
SIH—key financials statistics 1999(1) 2000 2001 2002 2003 Operating income (£’m) 125 145 167 184 263 Pre-tax profit (£’m) 39 55 47 21 72 Attributable profits (£’m) 26 47 37 18 51 Total capital (£’m) 263 397 433 440 505 Total assets (£’m) 2,877 3,670 5,492 5,562 7,422 Risk weighted assets (£’m) 1,450
Slide 42: The business – just like any investment bank…
The business – just like any investment bank… Margin income Trading Assets Liabilities Advisory / (client & prop) Fees Global Currencies Bond portfolios Wholesale deposits Bond issuance Markets Interest rates Leveraged finance Repos Structured finance Credit trading Money market Term loans Equity de
Slide 43: Revenues by business division
Revenues by business division SIH 2003 operating income: US$ 433.0m (2002 : US$ 277.1m) Asset Mgmt & Own Funds Private Client & Other Services 7% Resource 5% Banking 34% Banking 8% Principal Trading 24% Global Markets 22%
Slide 44: Revenues by business division
Revenues by business division SIH 2004 operating income - budget: Asset Mgmt & Private Client Trade Finance & Services Banking 6% Resource Banking 10% 31% Principal Trading 18% Global Markets 35%
Slide 45: Proprietary driven?
Proprietary driven? Or Client driven?
Slide 46: 75% of total income from client facing businesses (2003)
75% of total income from client facing businesses (2003) Global Trading income as % of total income Markets 24% Resource Banking 34% Prop 23% Banking Wealth 9% 10%
Slide 47: Compared to 1999 when prop dominated…
Compared to 1999 when prop dominated… Trading income as % of total income Global Prop Markets 40% 26% Wealth Resource 5% Banking Banking 9% 20%
Slide 48: Daily distribution of earnings…
Daily distribution of earnings… Prop 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -3,000 -2,000 -1,000 -500 -250 -100 0 100 250 500 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Slide 49: “Tight and to the right”…
“Tight and to the right”… Global Markets 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -3,000 -2,000 -1,000 -500 -250 -100 0 100 250 500 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Slide 50: “Tight and to the right 2”…
“Tight and to the right 2”… Resource Banking 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 3,000 4,000 5,000 6,000 7,000 -3,000 -2,000 -1,000 -500 -250 -100 0 1,000 2,000 100 250 500
Slide 51: Risk management
Risk management • Best practice corporate governance • Sophisticated and integrated approach applied to risk management: country, credit, market, operational, liquidity • Market leading techniques to set limits and assess risk • Asset sell-down and liquidity emphasised and embedded in risk measures
Slide 52: Risk mitigation
Risk mitigation • Majority of developing market risk is mitigated through: – attachment to trade flow – collateral – margin calls – netting – PRI • Risks are highly diversified by country, obligor, business line and industry – not a single country / single region bank • Corporate exposures focused o
Slide 53: Solid capitalisation
Solid capitalisation • Regulatory capital Capital adequacy ratio (%) adequacy (31 December 2003): 25 21.8% – Weighted risk assets: 20 18.8% 16.4% 16.6% 16.9% US$ 5,529m 15 – Regulatory capital: US$ 944m 10 – Capital adequacy ratio: 5 16.9% 0 1999 2000 2001 2002 2003 Tier 1 Tier 2 Tier 3
Slide 54: And counterparty risk the greatest component…
And counterparty risk the greatest component… Composition of reg Capital rate FX Equity 20% 3% 3% Commodity 11% Counterparty 17% Banking 46%
Slide 55: Country risk by region
Country risk by region • Over 50% of credit exposures relate to developed markets: Middle East South America North Africa 4% 5% 1% Eastern Europe Western Europe 7% 37% Sub Saharan Africa 13% Asia 15% North America 18% (As at 31 December 2003 )
Slide 56: Credit risk by rating
Credit risk by rating • 73% of credit exposures relate to investment grade: CC and below 2% B CCC Group 6% 2% 12% BB- 12% AAA/AA 13% BB+/BB 5% AA-/A 13% BBB/BBB- 14% A A-/BBB+ 9% 12% (S&P equivalent, as at 31 December 2003)
Slide 57: Credit risk by industry sector
Credit risk by industry sector • 54% of credit exposures relate to banks and other financial institutions: Trading Group Other 2% 12% 6% TMT 2% Sovereign Banks 2% 43% Energy 3% Food 3% Manufacturing 3% Precious metals Other financial institutions Base metals 7% 11% 6% (As at 31 December 2003)
Slide 58: Liquidity and funding risk
Liquidity and funding risk Deposits by corporate customers: US$ • Independently funded 2.4bn US$ 1,305m 3 months or US$ 127m • Funding sources: US$ 8.1bn less, not on demand 3-12 months deposits, US$ 1.3bn repos US$ 980m Repayable on demand • Analysis of deposits: 30% corporate, 25% bank, 19% retail
Slide 59: vs Standard Chartered
vs Standard Chartered Standard Standard as a US$m Standard Bank Chartered % of StanChart Market capitalisation 10 100 17 973 56 2003 Earnings attributable to ord. S/H 830 1 018 82 ROE 22.8% 15.3% Presence countries 38 56
Slide 60: Summary
Summary • Established franchise in core businesses and regions • Emphasis on self-liquidating and/or tradable assets, with established philosophy of origination and sale • Income streams strongly diversified by product and geography • Sophisticated risk management • High level of liquidity. Diversif
Slide 61: Local Market Trends
Local Market Trends Marc van der Spuy, Head of Global Markets, South Africa
Slide 62: Introduction to Global Markets SA
Introduction to Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Su
Slide 63: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 64: Money Market Desk
Money Market Desk • The Money Market Division comprises the following desks: – Asset & Liability Management Unit – Funding Desk – Trading Desk
Slide 65: Money Market Desk
Money Market Desk • Asset & Liability Management Unit – Responsible for the interest rate and liquidity risk of SBSA’s balance sheet (R310bn asset base) – Interest rate risk management: • Analytical techniques (scenario and repricing gap analyses) are used to dynamically forecast growth and associat
Slide 66: Money Market Desk
Money Market Desk • Funding Desk – Raises deposits to fund SBSA assets – Currently biggest and fastest growing ZAR deposit base in SA – Telephone calls: 13,765 per month (+- 625 per day / 15 staff) – Number of actively marketed clients: 639 • Trading Desk – Market arbitrage – Proprietary trading
Slide 67: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 68: Interest Rate Trading Desk
Interest Rate Trading Desk • Trades bonds and interest rate derivatives • Bond Trading – Clients are mainly asset managers and financial institutions – Repo activity (interbank) – Average monthly Standard Bank Bond market* turnover is R40 billion (market share is approximately 12%). • Interest Rate
Slide 69: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 70: Credit Trading Desk
Credit Trading Desk • Trade – Corporate Bonds – Credit Derivatives • Credit Default Swaps • Credit Linked Notes • Typical clients would include – Asset Managers – Pension Funds
Slide 71: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 72: Equity Derivatives Desk
Equity Derivatives Desk • Trades – Warrants – OTC and SAFEX traded futures and options on • Single stocks • Portfolio / baskets of shares • Indices, for example TOPI40, INDI25 • Equity Sales and Structuring team focuses on – Typical clients would include: • Financial institutions • Corporate and Bla
Slide 73: Equity Derivatives Desk
Equity Derivatives Desk • On-line Share Trading – Focuses on the retail investors (Private Clients) - “man in the street” – Discount stock broking offering designed for the self directed investor • All information for clients to make their own informed trading decisions available online • Ability to
Slide 74: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 75: Commodities Desk
Commodities Desk Commodities Precious Metals Base Metals Energy Gold, Silver Crude oil, gasoil, gasoline, Copper, Aluminium, Platinum Group Metals jet fuel, fuel oil, coal (API 2 Nickel, Lead, Tin, Zinc and API 4) natural gas indexation and carbon credits. With the group's strong historical links wi
Slide 76: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 77: Sales and Structuring
Sales and Structuring • Sales and Structuring underpins all our trading activities • Sales activities are focused on vanilla products, such as: – Foreign Exchange – Bonds • Structuring focuses on bespoke solutions for clients, for example: – In primary market issues for capital raising purposes – He
Slide 78: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 79: Primary Markets
Primary Markets • Debt Origination • Securitisation • As at September 2004, Primary Markets has been involved in primary market issues to the value of R 11.63 billion… R' billion INCA 0.20 Eagle 0.43 Anglo Platinum 4.00 Standard Bank 3.00 SA Home Loans 2.50 Barloworld 1.50 Value of primary market is
Slide 80: Global Markets SA
Global Markets SA Function Business Unit Trading / Risk Taking - Money market funding - Interest rate trading - Credit trading - Equity derivatives trading - Commodity trading - (Foreign Exchange) Sales and Structuring Advisory - Primary Markets - Debt Origination - Securitisation Support - Financia
Slide 81: Support Areas
Support Areas • In order to support the technical requirements of the division, we have two division focusing on the technical and specialised needs of the room. These areas include: – Financial Markets Research – Quantitative Analysis
Slide 82: Local Market Trends
Local Market Trends Standard Bank
Slide 83: Inward Portfolio Investments Into Emerging Markets
Inward Portfolio Investments Into Emerging Markets 120 80 US$bn 40 0 (40) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Inw ard portfolio investment into emerging markets
Slide 84: Non-resident Net Purchases of SA Bonds & Equities
Non-resident Net Purchases of SA Bonds & Equities 60,000 40,000 20,000 Rm 0 (20,000) (40,000) 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Net purchases of bonds by non-residents (Rm ) Net purchases of equities by non-residents (Rm )
Slide 85: Bond Turnover and Non-resident Participation
Bond Turnover and Non-resident Participation 1,400,000 60,000 50,000 1,050,000 40,000 Number of transactions Rm 700,000 30,000 20,000 350,000 10,000 0 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Value of bonds traded (lhs ) Non-res ident participation in bond m arket (rhs ) Num ber of bond trans act
Slide 86: Equity Market Turnover and Non-resident Participation
Equity Market Turnover and Non-resident Participation 100,000 10000 75,000 Million Rm 50,000 5000 25,000 0 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Value of shares traded (lhs) Foreign participation (lhs) Number of share transactions (rhs)
Slide 87: Average Daily Spot FX Turnover
Average Daily Spot FX Turnover 3,400 2,550 US$m 1,700 850 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Non-resident fx spot transactions Total spot fx turnover
Slide 88: EMBI + 2003 Returns
EMBI + 2003 Returns 80 70 60 50 40 30 20 10 0 -10 nd la a ey il SA a o az si si ic e la rk us zu ay ex Br Po Tu R ne al M M Ve 2000 2001 2002 2003 EMBI+ return (% change from previous year)
Slide 89: FTSE / JSE All Share Comparative Returns
FTSE / JSE All Share Comparative Returns 150% 100% US$ terms 50% 0% (50%) 1999 2000 2001 2002 2003 2004 FTSE/JSE All SHR return Dow Jones INDUS Mexico Bolsa Brazil Bovespa
Slide 90: Warrants Turnover
Warrants Turnover 140,000 12,000 ACTUAL WARRANTS ALL SHARE 120,000 10,000 100,000 8,000 80,000 WARRANTS ALL SHARE 6,000 60,000 4,000 40,000 2,000 20,000 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1998 1999 2000 2001 2002 2003 2004 DATE (QUATERLY)
Slide 91: Warrants Volume vs. Overall Market
Warrants Volume vs. Overall Market WARRANTS DAILY AVERAGES WARRANTS AS A % OF OVERALL DEALS 14 12 2000 10 Warrants daily averages 1500 8 Percentages 1000 6 4 500 2 0 0 1998 1999 2000 2001 2002 2003 2004 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q1 Q1 Q1 Q1 Q1 Q1 Q1 YEAR
Slide 92: Standard Bank Market Share As a Percentage of Premium Turnover
Standard Bank Market Share As a Percentage of Premium Turnover 50% 45% 40% 35% percentage 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 Year Standard Bank Market Share as a Percentage of Premium
Slide 93: General Trends
General Trends • The strong SA financial markets turnover performance seen since 1994 has softened significantly since late 2001. • The declining trend was evident in the bond, equity and spot foreign exchange markets. • Various factors have contributed to this trend, for example global and domestic
Slide 94: The Emergence of the Rand
The Emergence of the Rand Willie Potgieter, Head of Global Foreign Exchange and International Banking Services
Slide 95: USD/ZAR Historical Movements
Historical Movements 13.4 22 June '96 Asian meltdown Manuel 1997 - 1998 Feb '02 Start 20 11.4 11 Sept of broad- releases Jul '95 Imposition of '01 based USD State of Emergency Airplane weakness attacks on 30 Apr '96 uncertainty 18 New York May over new SA 10 year bond yield 9.4 '03 constitution, cab
Slide 96: Rand Crosses
Rand Crosses 200 150 100 50 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- 99 99 00 00 01 01 02 02 03 03 04 04 USDZAR EURZAR GBPZAR
Slide 97: Rand and the Global FX market
Rand and the Global FX market 2100 9 1700 7 $bn $bn 1300 5 900 3 500 1 1989 1992 1995 1998 2001 2004 Daily average global forex turnover as reported by the BIS (LHS) Daily average rand turnover as reported by the SARB (RHS) Source: SARB, BIS Triennial Central Bank Survey, Preliminary Global Results,
Slide 98: Rand: A Prominent Emerging Markets Currency
Si n $bn So gap ut or h e 0 3.5 7 10.5 14 Af d ric olla M an r ex ra ic n an d Ko p re eso an Po wo lis n Br h Z az lo R ilia ty N us n ew sian rea Ta ro l iw ub an le In dol di l an ar C ze ru ch pe ko e ru In T n do ha a ne ib si an a h t Ph ilip rup pi i a h ne T u pe s rk o is FX turnover net of
Slide 99: Volatility
Volatility 30 15 25 12.5 20 10 % 15 7.5 10 5 5 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Implied volatility in 3-month atmf USD/ZAR options USD/ZAR Although still volatile by historical standards, the currency is no longer a one-way bet. Source: Bloomberg
Slide 100: Financial Engineering
Financial Engineering • Traditional – Spot and forward – Premium on stability and security – Fine in directional market – No flexibility • Emergence of Financial Engineering – Individually tailored solutions allowing flexibility to participate in favourable currency movements – Not a straight option
Slide 101: CLS- Continuous Linked Settlement
CLS- Continuous Linked Settlement Australia Dollar Canadian Dollar Danish Krone Euro GB Pound Japanese Yen Norwegian Krone Singapore Dollar Swedish Krone Swiss Franc US Dollar South African Rand
Slide 102: Sixty Minutes in the Life of a Foreign Exchange Dealer
Sixty Minutes in the Life of a Foreign Exchange Dealer Please proceed to Room 56, 5th Floor
Standard Bank Group — Investor Presentation (October 2004) on 6ix