Standard Bank produces satisfactory results
6 March 2014

Results at a glance

Headline earnings: R17 194 million, up 15%
Headline earnings per share (HEPS): 1 064.9 cents, up 14%
Dividends per ordinary share: 533 cents (2012: 455 cents), up 17%
Capital adequacy: tier I capital adequacy ratio of 13.2% (2012: 11.2%)
Cost-to-income ratio: 58.5% (2012: 58.9%)
Credit loss ratio: 1.04% (2012: 1.08%)Return on equity (ROE): 14.1% (2012: 14.0%)
Net asset value (NAV) per share: 8 127 cents (2012: 7 136 cents) up 14%
Standard Bank Group has produced a satisfactory performance in 2013, increasing headline earnings per share by 14% and net asset value per share by 14%. Group return on equity has increased to 14.1% from 14.0% in 2012.Standard Bank Group has produced a satisfactory performance in 2013, increasing headline earnings per share by 14% and net asset value per share by 14%. Group return on equity has increased to 14.1% from 14.0% in 2012.

Sim Tshabalala, Standard Bank Group Chief Executive says: "Underlying momentum in our business units was maintained during the year with particularly pleasing growth evident in our subsidiaries in the rest of Africa, where 44% growth in aggregate headline earnings was achieved. We made further substantial progress in group restructures and implementing our Africa-focused strategy. Our positioning in selected countries in Africa reflects our confidence in its economic prospects. We continue to use our South African scale, as well as our access to pools of capital around the world, to provide products and services that deliver value to our clients across the continent.

"Operating environment
Global economic activity and trade increased throughout 2013, particularly in the second half of the year, but risks remain. While the recovery in the United States and Japan appears to be gaining traction, economic conditions in the Eurozone remain fragile and doubts about the sustainability of China's economic expansion persist.

In South Africa, households continued to struggle despite the accommodative interest rate environment. South African consumer confidence remains low and disposable incomes have stagnated on the back of rising inflation and lower wage payments, partly because of strike activity in 2013.In spite of the exposure to faltering commodity prices, expansion in sub-Saharan Africa economies has remained resilient and has not been confined to resource-rich countries, reflecting the positive impact of better macroeconomic policies and institutions. Growth of around 5% for the region is expected by the IMF for 2013.

Business Units
Personal and Business Banking
PBB reported headline earnings of R8 358 million in 2013, an increase of 14% which was principally due to 18% growth in NII after accounting for credit impairments. PBB South Africa increased earnings by 15% to R8 538 million and PBB rest of Africa reported a loss of R361 million. PBB's ROE declined to 18.5% from 19.4% in 2012.

  • Transactional products grew total income by 8%.
  • Mortgages delivered a strong performance, lifting headline earnings to R1 516 million from R966 million in 2012.
  • Instalment sale and finance leases headline earnings fell to R181 million from R229 million in 2012. Card products increased headline earnings by 11% to R1 334 million.
  • Lending products headline earnings increased by 25% in 2013 to R785 million.
  • Bancassurance and wealth headline earnings grew 19% to R1 815 million.
Corporate and Investment Banking
CIB recorded headline earnings of R6 591 million, a 49% increase on the prior year. Moderate revenue growth of 9% (3% on a constant currency basis) masks the continued strong growth in the CIB rest of Africa franchise which now accounts for 39% of total revenues generated. Credit impairments were substantially lower than 2012. Total costs were up 4%, and down by 6% on a constant currency basis, due to restructuring initiatives undertaken in Standard Bank's outside Africa business in 2012. CIB's ROE improved to 14.3% from 9.6% in 2012 following improved earnings and intensive focus on capital utilisation during the year.
  • Transactional Products and Services recorded strong revenue growth of 19% and now contributes 31% of CIB's overall revenues.
  • Global Markets increased revenues by 16% on 2012. This growth was as a result of Standard Bank's strategic focus on the rest of Africa where revenues increased by over 50%. Headline earnings grew strongly to R2 403 million.
  • Investment Banking headline earnings declined 6% reflected a challenging year. Revenue of R6.1 billion was 7% below 2013 levels.
Liberty's headline earnings for the year increased by 11% to R4 076 million of which R2 211 million was attributable to the group. Liberty continues to provide a meaningful contribution to group results and its ROE of 24.7% enables substantial economic value accretion to all its shareholders.

The global economic outlook appears somewhat brighter in recent months due to the strengthening of US growth. However, the distribution of expected growth is unbalanced with the Eurozone struggling to lift economic activity. Robust economic growth of around 6% is expected generally across sub-Saharan Africa in 2014, but only a mild improvement to 2.2% growth is expected for South Africa assuming some negative impact from higher interest rates and subdued consumer demand.

Mr Tshabalala says: "We are confident of our positioning across Africa and of the quality and dedication of our people to serve and provide value for our clients. The considerable progress we have made in realigning our available resources and intensifying our focus on the expanding markets on the African continent has delivered an enviable franchise off which the group is able to drive sustainable growth. Competition is high in all the markets we serve and business operating environments remain challenging. However, the group's capital and liquidity strength, together with our firm commitment to our strategy, which includes the building of world-class information systems, provides substantial opportunity to elevate our ROE and deliver higher levels of economic value to our shareholders over the long term."

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