Standard Bank Group Limited · JSE:SBK
Standard Bank — Standard Bank Investment — FY2001 Earnings Presentation
44 slides from Standard Bank's earnings presentation, April 2002
Slide 1: Standard Bank Investment Corporation, April 2002
Standard Bank Investment Corporation April 2002
Slide 2: Highlights of 2001 annual results
Highlights of 2001 annual results • Headline earnings 21% up • Headline earnings per share 19% up • Net asset value per share 41% higher • Headline return on assets 2.5% • Headline return on equity 20.0% • Translation gain of R4bn • Total return on equity 38.5% • Cost-to-income ratio 57.3% 2
Slide 3: Financial overview
Financial overview ZAR (m) USD (m) Market capitalisation 41 338 3 445 Total assets 395 813 32 984 Adjusted shareholders’ funds 28 330 2 361 Headline earnings 4 438 370 Price to adjusted book 1.5 1.5 Turnover in shares traded (%) 38.6 3
Slide 4: Headline earnings
Headline earnings Compound growth 24% 5,000 4,500 4,000 3,500 3,000 Rm 2,500 2,000 1,500 1,000 500 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Headline earnings CAGR (1991 - 2001) = 24% 4
Slide 5: Real growth in earnings
Real growth in earnings Adding shareholder value 30 25 20 % 15 10 5 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 HEPS growth rate Average headline inflation Average CPIX 5
Slide 6: 10-year performance
10-year performance Sustained track record CAGR • Headline EPS 20% • Dividend per share 20% • Shareholders’ funds 25% • Total assets 23% • Total banking assets 20% • Loans and advances 14% 6
Slide 7: Headline earnings per business unit
Headline earnings per business unit South African Banking’s contribution, 69% Liberty Stanbic Africa 7% Property 10% 3% International Retail Banking Operations 34% 14% SCMB 22% Commercial Banking 10% 7 ( ) 31 December ‘00
Slide 8: Cost-to-income ratio
Cost-to-income ratio Continued improvement 30 64 63 25 62 61 20 60 % 15 59 % 58 10 57 56 5 55 0 54 1997 1998 1999 2000 2001 Total income growth Cost growth Cost-to-income 8
Slide 9: Translation gain
Translation gain • Decline in the Rand resulted in significant translation gains for the Group • Gain arises from balance sheet conversion of non-South African subsidiaries • No translation gains in headline earnings • R4bn recognised as a direct transfer to reserves • Negatively affects ROE and ROA
Slide 10: Return on average equity
Return on average equity Translation gain; investment surpluses 35 45 40 30 35 25 30 20 25 Rbn % 15 20 15 10 10 5 5 0 0 1997 1998 1999 2000 2001 Shareholders' funds Headline ROE Total ROE 10
Slide 11: Business unit performance
Business unit performance ROE Cost-to- income Domestic operations 27.1% 56.0% Retail Banking 27.6% 63.9% SCMB 27.1% 50.7% Commercial Banking 28.5% 39.0% Property 20.7% 27.8% International Operations (Sterling) 12.7% 63.8% Stanbic Africa 21.4% 58.2% Central funding & Liberty 12.0% - Standard Bank Gro
Slide 12: The South African economy
The South African economy • Inflation – 2002 target will be missed - currency depreciation – Reasonable probability of reaching 2003 target – Structural reform, inflation targeting and increased market competitiveness limits medium- to long-term inflation risk • Interest rates – Increase expected in
Slide 13: The South African economy
The South African economy • NOFP to be expunged by year end • Accelerated privatisation drive this year • Economic growth – Macroeconomic stability achieved – Expected global economic recovery bodes well for domestic commodity exports – Overall growth outlook mildly positive 13
Slide 14: The financial sector
The financial sector Current issues • Difficulties faced by smaller banks • The Myburgh commission • Foreign competition 14
Slide 15: Corporate governance
Corporate governance Taken very seriously • Follow the principles of the King Code • Board of Directors - majority independent non-executive directors • Roles of chairman and chief executive separate • Board committees: – Governance and Nominations – Remuneration – Audit – Risk Management – Credit –
Slide 16: Leadership changes over 2½ years
Leadership changes over 2½ years The best of the old and the best of the new • Chairman • Deputy Chairmen • Chief Executive • Deputy Chief Executive Head SCMB Head Retail Banking Head Commercial Banking Head Stanbic Africa Head Operations Head Retail Credit Head HR Head Group Finance • A third of to
Slide 17: Standard Bank Group
Standard Bank Group Much more than a commercial bank 100% 30% 65% 100% Retail & Life Wealth Merchant & Commercial Investment Assurer Banking Banking • South Africa STANLIB SCMB International • Africa Africa 17
Slide 18: Retail Banking
i oe Retail Banking
Slide 19: Retail Banking
Retail Banking • Brand - most admired and trusted financial services brand • Market shares: – Card debtors 20.9% – Overdrafts 16.1% – Mortgages 18.6% 19
Slide 20: Retail Banking: Smarter approach
Retail Banking Smarter approach • Executive management team restructured • Cost cutting 2nd phase - systems and operations review • Bank-wide focus on service ethic - moved from # 4 to # 2 in 2001 independent service survey • Product innovation with focus on profitability 20
Slide 21: Retail Banking: Focus areas in the year ahead
Retail Banking Focus areas in the year ahead • Further improvement in service • Re-engineer cash and cheque processes • Balance quality of loans, risk pricing and market share • Selectively progress Retail Banking into Africa 21
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Slide 23: SCMB: Strategy paying off
SCMB Strategy paying off • Strategy was revisited on entry of foreign banks • Developed into diversified corporate and investment bank • Focused on – Foreign customers – Corporate and Investment Banking – Treasury – Project and structured finance 23
Slide 24: SCMB: Recognised externally
SCMB Recognised externally • Rated by external groups – PricewaterhouseCoopers banking survey, SCMB ranked first by its peers in: • Corporate Banking • Foreign Exchange Trading • Capital Markets, Bonds and Derivatives • Money Markets – Risk Magazine, SCMB ranked first in eight categories 24
Slide 25: SCMB: Focus areas in the year ahead
SCMB Focus areas in the year ahead • Develop integrated global treasury business • Further develop securitisation business • Play an active role in the first Africa infrastructure debt fund • Retain and consolidate position as lead player in primary bond market • Privatisation 25
Slide 26: Commercial Banking
4k = Com ercial Banking
Slide 27: Commercial Banking: Strong market position
Commercial Banking Strong market position • Medium sized corporate market - 34% market share • Asset based financing - 24% market share • Best electronic banking offering • New management team in place 27
Slide 28: Commercial Banking: Focus areas in the year ahead
Commercial Banking Focus areas in the year ahead • Focus on growth in lending book, maintaining quality • Increase cross-selling • Continue to leverage off market leadership in direct channels • Stannic widening product range to increase market share • Maintain prudent risk management 28
Slide 29: Stanbic Africa
Stanbic Africa a
Slide 30: Stanbic Africa
Stanbic Africa 30
Slide 31: Stanbic Africa: Why we want to be in Africa
Stanbic Africa Why we want to be in Africa • High margins • Risks lower than perceived • Untapped market despite competition • Higher growth rates in developing countries • Efficiencies to be unlocked 31
Slide 32: Stanbic Africa: Focus areas in the year ahead
Stanbic Africa Focus areas in the year ahead • Diversified portfolio • Strengthening management • Integrate new acquisitions • Enhance technology • Greater focus on retail banking 32
Slide 33: International Operations
international Operations a
Slide 34: International Operations
International Operations London Stockholm Moscow Prague New York Channel Islands Milan Istanbul Shanghai Miami Tehran Taipei Dubai Hong Kong Bogota Singapore Lima Sao Paulo Sydney Buenos Aires 34
Slide 35: International Operations: Reasons for international strategy
International Operations Reasons for international strategy • Limited domestic opportunities given our size • Opportunities arose from our core competencies in South Africa • Niche business - focused on emerging markets • We possess transferable skills 35
Slide 36: International Operations: Emerging markets investment bank
International Operations Emerging markets investment bank • An international investment bank, specialising in: – integrated range of services to mining, metals and energy sectors – sourcing and structuring of capital markets and trade transactions out of emerging markets for distribution into major
Slide 37: International Operations: Focus areas in the year ahead
International Operations Focus areas in the year ahead • Grow customer-focused businesses • Grow Private Banking and Asset Management • Energy and power trading, financing and advisory activities • Increase on the ground activities in Brazil, China, Russia and Turkey 37
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Slide 39: Liberty
Liberty Life assurance and non-banking financial services • Third largest in South Africa • Key strength agency, franchise and broker marketing force • Top investment performance over 3 years • Strong insurance cash flow • Market share increasing • Value of new business written up 16% • Headline ROE
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Slide 41: STANLIB: A focused wealth manager
STANLIB A focused wealth manager Stanbic Liberty 50% 50% STANLIB 100% 100% STANLIB STANLIB Asset Management Wealth Management “Product / marketing / “The factory” 41 distribution arm”
Slide 42: STANLIB and Bancassurance
STANLIB and Bancassurance Pooling critical skills • Powerful and far reaching distribution • Power of two blue chip brands • Combines asset management, banking and actuarial skills for product development • Economies of scale • Liberty to manage the complex product sales force within Standard Bank 4
Slide 43: Retail & Commercial Banking
100% 30% 65% 100% Retail & Life Wealth Merchant & Commercial Investment Assurer Banking Banking • South Africa STANLIB SCMB International • Africa Africa 43
Slide 44: 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
Standard Bank Investment — FY2001 Earnings Presentation on 6ix