Standard Bank Group (SBG) Financial results presentation • Indications of recovery in...

1Standard Bank Group (SBG) financial results presentation 31 December 2009

Standard Bank Group (SBG)

Financial results presentationFor the year ended 31 December 2009

Financial highlights

FY09 h FY08FY09 change

%

FY08

Headline earnings (Rm) 11 718 (17) 14 150

Headline EPS (HEPS) (cents) 756.9 (20) 942.6

Diluted HEPS (cents) 750.6 (20) 935.6

DPS (cents) 386 386

NAVPS (cents) 5 612 5 633

ROE (%) 13.6 18.2

Credit loss ratio (%) 1.60 1.55

Cost�to�income ratio (%) 52.4 49.2

2

Tier I capital adequacy ratio (%) 11.8 11.0

Notes

2 Standard Bank Group (SBG) financial results presentation 31 December 2009

Income statement highlights

1H09 2H09 FY09

yoy

h1H09

Rm

2H09

Rm

FY09

Rm

change

%

Net interest income 16 610 14 883 31 493 (2)

Non�interest revenue 15 282 15 935 31 217 6

Total income 31 892 30 818 62 710 2

Credit impairment charges 7 115 4 982 12 097 7

Operating expenses 15 962 16 865 32 827 8

Banking activities – headline earnings 6 054 5 592 11 646 (14)

Liberty – headline (loss)/earnings (647) 719 72 (89)

SBG headline earnings 5 407 6 311 11 718 (17)

3

Business unit view

Headline earnings mixH dli i

FY09

R

change

%

33%

2% 1%

Headline earnings mixHeadline earnings Rm %

Personal & Business Banking 3 835 (19)

Corporate & Investment Banking 7 507 (6)

Central and other 304 (63)

Banking activities 11 646 (14)

FY09 FY08 64%

Banking activities 11 646 (14)

Liberty 72 (89)

SBG 11 718 (17)

ROE % %

Personal & Business Banking 15.8 19.7

Corporate & Investment Banking 18.3 22.1

Banking activities 14.5 18.6

Libert 1 2 12 8

Personal & Business Banking (FY08: 33%)

Corporate & Investment Banking (FY08: 56%)

4

Liberty 1.2 12.8

SBG 13.6 18.2

Central and other (FY08: 6%)

Liberty (FY08: 5%)

Notes


Geographic view

H dli

Headline

i

Headline

iHeadline

earnings

FY09

Rm

earnings

change

FY09

%

earnings

mix

FY09

%

ROE

FY09

%

ROE

FY08

%

South Africa (Banking activities) 8 657 (9) 74 25.5 29.6

South Africa (Liberty) 72 (89) 1 1.2 12.8

Central and other 304 (63) 2

South Africa & Central and other 9 033 (17) 77 16.5 22.0

Rest of Africa 1 206 (35) 10 10.0 16.0

Outside Africa 1 479 7 13 7.6 8.4

Outside South Africa 2 685 (17) 23 8.5 11.5

5

SBG 11 718 (17) 100 13.6 18.2

Business unit abridged income statement and key ratios

Personal & Business Banking Corporate & Investment Banking

FY09 Rm

change

% Rm

change

%

Net interest income 19 639 (2) 10 660 1

Non�interest revenue 14 463 7 17 041 9Non interest revenue 14 463 7 17 041 9

Total income 34 102 2 27 701 6

Credit impairment charges 9 890 8 2 709 64

Operating expenses 18 379 6 14 592 9Operating expenses 18 379 6 14 592 9

Headline earnings 3 835 (19) 7 507 (6)

ROE (%) 15.8 18.3

Credit loss ratio (%) 2 56 0 73

6

Credit loss ratio (%) 2.56 0.73

Cost�to�income ratio (%) 54.2 52.3

Notes


Balance sheet

Loans and advances

FY09 h FY08FY09

Rbn

change

%

FY08

Rbn

Personal & Business Banking 382 (2) 390

Mortgage loans 256 2 251

Instalment sale and finance leases 53 (15) 63

Card debtors 22 (4) 23

Other loans and advances 51 (4) 53

Corporate & Investment Banking 362 (12) 411

Banks 122 (6) 129

Customers 240 (15) 282

Central and other (2) 3

Gross loans and advances 742 (8) 804

South Africa 554 (1) 558

8

Rest of Africa 43 (20) 55

Outside Africa 145 (24) 191

Notes


Deposit and current accounts

FY09 h FY08FY09

Rbn

change

%

FY08

Rbn

Personal & Business Banking 363 (2) 372

Retail priced 172 (1) 174

Wholesale priced 191 (4) 198

Money market 40 40

Securitisation 16 (13) 18

Intragroup from CIB 135 (4) 140

Corporate & Investment Banking 419 (13) 480

Central and other (13) (8)

Deposit and current accounts 769 (9) 844

South Africa 572 (6) 607

Rest of Africa 72 1 72

9

Outside Africa 125 (25) 165

Group return on equity

306 000

22.924.2

25.4 25.4 24.8

18.2 20

25

4 000

5 000

13.614.8

13.412.0

12.613.4

15.2

14.6

10

15

2 000

3 000

2 154 2 453 2 809 3 548 4 255 5 633 5 6120

5

0

1 000

FY03 FY04 FY05 FY06 FY07 FY08 FY09cents %

10

NAV per share ROE Average cost of equity

Notes


Income statement

4.035 000

Banking activities NII and NIM

3.45

3.092.97

2.782.95

3.323.21

2.89 2.812.70 2.5

3.0

3.5

25 000

30 000

2.33 2.372.15

1.97

1 0

1.5

2.0

10 000

15 000

20 000

11 390 11 619 13 357 17 001 22 896 32 117 31 4930.0

0.5

1.0

0

5 000

FY03 FY04 FY05 FY06 FY07 FY08 FY09Rbn %

NII NIM before impairment charges NIM after impairment charges

12

Notes


Margin analysis

40 000(0 27%)%

(1 957)

(4 124)

1 374

2 151

799

36 000

38 000

4.98%

0.11%

(0.27%)0.30%

(0.58%)

1.66%

32 117

35 480

34 513

31 493

(3 020)

3 363

790

32 000

34 000

4.45%(0.09%) (1.24%)

3.21%

3.32%

28 000

30 000

FY08 Net non�interest earning

Interest earning assets

Volume changes

Loan pricing Loan funding cost

IAS 39 discount unwind

Endowment Other Interest earning assets

Net non�interest earning

FY09

Rm

13

earning assets

assets unwind assets earning assets

Rm

% = net interest margin

Non-interest revenue

35 000

9 46310 621

3 020

2 3782 488

25 000

30 000

11 825

14 511

17 607 18 108

3 7503 721

4 852

7 216

1 3201 433

1 788

2 488

15 000

20 000

7 3278 913

10 10711 8253 740

0

5 000

10 000

FY03 FY04 FY05 FY06 FY07 FY08 FY09

Fee and commission revenue Trading revenue Other revenue

Rm

14

Notes


Non-interest revenue

FY09 h FY08FY09

Rm

change

%

FY08

Rm

Net fee and commission revenue 18 108 3 17 607

Account transaction fees 7 967 13 7 054

Electronic banking fees 1 657 5 1 575

Knowledge�based fees 2 666 (24) 3 531

Other fee and commission 5 818 7 5 447

Trading revenue 10 621 12 9 463

Other revenue 2 488 5 2 378

Total non-interest revenue 31 217 6 29 448

15

Credit loss ratio and NPLs

FY08: 1.55 FY09: 1.60FY07: 0.80

1.86 1.84

35

40

45

50

1.6

2.0

0.780.84

1.31 1.31

15

20

25

30

0.8

1.2

0

5

10

0.0

0.4

1H07 2H07 1H08 2H08 1H09 2H09% Rbn

16

Credit loss ratio NPLs Net movement in NPLs for the period

Notes


Cost-to-income ratio

60

55.7 56.955.2

52.5 51.649.2

52.4

40

50

30.832.5 32.1

30.2 30.227.4 28.5

20

30


0

10

%

17

Cost�to�income ratio Staff cost�to�income ratio

Liquidity and capital

Notes


Liquidity management and focus

• During 2H09 availability of term funding improved gradually• During 2H09, availability of term funding improved gradually

• Loan and debt capital markets selectively accessed to raise new term funding

• Group long-term funding ratio 25.2% (FY08: 22.9%)

• Liquidity premium levels since the global financial crisis• Liquidity premium levels since the global financial crisis

- South African premiums remained at elevated levels

- International markets have seen a significant improvement in availability and pricing of

term liquidityterm liquidity

• Unencumbered surplus liquidity R118.6bn (1H09: R136.2bn; FY08: R96.8bn)

- Aligned with international best practice, surplus liquidity holdings are informed by stress

test outcomes

- Surplus liquidity holdings gradually being reduced since peak in June 2009

19

Net asset value movements

Change on g

opening balance

% Rm

Opening balance – 1 January 2009 85 902

Transactions with shareholders (3.0) (2 572)

Equity�settled share�based payments 0 7 565Equity settled share based payments 0.7 565

Dividends paid (3.7) (3 137)

Additional shareholder value 4.8 4 124

Headline earnings 13.6 11 718

Currency translation movements incl hedging activities (8 7) (7 509)Currency translation movements incl hedging activities (8.7) (7 509)

Net available�for�sale and other cash flow

hedging movements0.1 85

Other (0.2) (170)

Closing balance – 31 December 2009 1.8 87 454

20

Notes


Capital adequacy

0 30.215

Tier I Total

10.510.1

11.1 10.80.9

0.9

0.9 1.0

2.4 1.9

2.1 2.90.4

0.4

0.3

12

FY09Tier I

%

Total

%

SBSA

Capital adequacy ratio 10.6 14.1

6

9Regulatory minimum 7.0 9.75

Internal target 9.0 11 � 12

SBG

0

3

%

Capital adequacy ratio 11.8 14.9

Regulatory minimum 7.0 9.75

Internal target 9.0 11 � 12

21

1H08 FY08 1H09 FY09

Tier I � equity Tier I � pref shares Tier II Tier III

%

Distributions per share

400

267

320

386 386 386

320

151

232

267

160

240

0

80


22

FY03 FY04 FY05 FY06 FY07 FY08 FY09cents

Notes


Personal & Business BankingPeter Wharton HoodPeter Wharton-Hood

Operating environment

• Severe global economic downturn• Severe global economic downturn

• Household debt-to-disposable income ratio remained elevated at 80%

• Sustained decrease in customer spending and demand for credit

• Locally steep decline in interest rates• Locally, steep decline in interest rates

- Exposure to endowment risk

- No immediate relief to the consumer

• Increased levels of job losses• Increased levels of job losses

- Increased default rates

• Strengthening of the Rand against African currencies

• Indications of recovery in 4Q09• Indications of recovery in 4Q09

24

Notes


Personal & Business Banking approach to operating environment

• Excellent consistent customer service• Excellent consistent customer service

• Transactional account base growth

• Modest asset growth

infl enced b risk appetite and demand- influenced by risk appetite and demand

• Reduced reliance on wholesale funding

• Engaged and connected people

no retrenchments- no retrenchments

• Proactive credit management with emphasis on collections

• Continued investment in IT, infrastructure and branch network

• Embedding business processes• Embedding business processes

25

Personal & Business Banking performance

FY09Rm

change

%FY08

Rm

Net interest income 19 639 (2) 19 956

Non�interest revenue 14 463 7 13 560

Total income 34 102 2 33 516Total income 34 102 2 33 516

Credit impairment charges 9 890 8 9 196

Operating expenses 18 379 6 17 311

Headline earnings 3 835 (19) 4 739

26

Notes


Personal & Business Banking South Africa

• 68:32 Personal:Business total income split (FY08: 70:30)• 68:32 Personal:Business total income split (FY08: 70:30)

• Dedicated Business Banking focus now clear in the organisation

• Customer service initiatives proving invaluable

5% gro th to 7 8m primar c stomers- 5% growth to 7.8m primary customers

- Independently voted best bank for service*

- Internal service measure (CEBS) moved to all time high

Increased ATM distrib tion and a ailabilit ith 566 ne ATMs- Increased ATM distribution and availability with 566 new ATMs

- 13% increase in active internet users

27*Ask Afrika Orange Index

Personal & Business Banking South Africa

• Transactional account base grew in line with strategy• Transactional account base grew in line with strategy

- 11% increase in number of current accounts

- Retail:Wholesale deposits ratio improved

• Focus on efficiencies and effectiveness• Focus on efficiencies and effectiveness

- Staff costs up 3%, headcount down 2%

- Operational risk losses down 19%

Consolidation of processing centres from 15 to 4- Consolidation of processing centres from 15 to 4

• Continued investment in and focus on rehabilitations and recoveries

28

Notes


Personal & Business Banking Rest of Africa

• Sustained marketing campaigns and branch network expansionSustained marketing campaigns and branch network expansion

• Products further embedded in-country with increased availability

• Rand strengthened against African currencies

- Dampened headline earnings by R44m

L d d d 6% i R d t- Loans and advances down 6% in Rand terms

• The majority of African countries showed growth in local currency terms

• Ongoing investment in infrastructure

- Staff costs up 15%, 5% increase in headcount to 8 015 employees

%- 19% increase in IT expenditure

- Branches increased by 16 to 348

• Branch expansion in Ghana, Kenya and Mozambique

- ATMs increased by 150 to 770

ATM f i i d i Ni i d U d• ATM footprint increased in Nigeria and Uganda

- 8% growth in customer base to 2.4m customers

29

Early arrears as a % of book in PBB South Africa

5

3.5 3.6

4.2

3

4

1.71.8

2.0

2.4

2.2

1.6

2.1

1 4

2

3

1.21.4

0

1

1H07 FY07 1H08 FY08 1H09 FY09%

30

Mortgage loans Instalment sale and finance leases Card debtors Other loans and advances

Notes


NPLs as a % of book in PBB South Africa

12

6 57

10.31

8.46

7.288

10

6.57

4.12

6.72

2 29

4.25

3.293.92

4

6

2.25

1.58

2.29

0

2

1H07 FY07 1H08 FY08 1H09 FY09

l l l d f l

%

31

Mortgage loans Instalment sale and finance leases

Card debtors Card debtors before methodology change

Other loans and advances

Proactive credit management was a top priority in 2009

• Personal Banking book• Personal Banking book

- Collections focus with successful set-off and rehabilitation campaigns

• Mainly in mortgage lending

Restr ct res an appropriate tool for managing cons mer affordabilit- Restructures an appropriate tool for managing consumer affordability

• Restructured mortgage portfolio increased further during the year

- Internal debt review operational environment streamlined

S b t ti l i i l i J 2007• Substantial increase in volumes since June 2007

• Business Banking book

- Focus on appropriate levels of provisions

Re ie of collections’ strategies- Review of collections’ strategies

32

Notes


Contribution from product areas

Total income Headline earnings

FY09

Rm

change

%

FY09

Rm

change

%

Mortgage lending 4 478 33 (490) 45

Instalment sale and finance leases 2 947 5 (464) (66)Instalment sale and finance leases 2 947 5 (464) (66)

Card products 4 682 (7) 657 98

Transactional and lending products 19 871 (2) 3 417 (30)

Bancassurance 2 124 3 715 0Bancassurance 2 124 3 715 0

Personal & Business Banking 34 102 2 3 835 (19)

33

Mortgage lending

• Book increased by 2%Book increased by 2%

- Prepayment levels reduced from 9.2% to 4.9%

- Purchase of mortgages from SA Home Loans of R3.7bn

• Headline loss nearly halved to R490m

Proacti e margin management in So th Africa- Proactive margin management in South Africa

- Growth in Rest of Africa

• Slow growth in new business in South Africa

- Positive risk appetite revision in 3Q09

f- Mortgage origination strategy revisited with favourable outcomes

• Further book maturation; 69% ≥ 2years (FY08: 42%)

• NPLs up 59%; likely to peak 1H10

• Portfolio well provided; 18.1% gross impairment coverage

• Stable market share domestically

34

Notes


Card products

• Card debtors decreased by 4%• Card debtors decreased by 4%

- Reduced consumer spending

- Positive revisions in card risk appetite in 3Q09

• 98% growth in headline earnings• 98% growth in headline earnings

- Credit impairment charge down 44%

• IAS39 methodology change to account for post write-off recoveries

C dit l ti t 5 53% (FY08 9 53%)• Credit loss ratio at 5.53% (FY08: 9.53%)

- Revenue growth in the Rest of Africa following successful marketing campaigns

- Increased margins within Argentina

35

Instalment sale and finance leases

• Book contracted by 15%• Book contracted by 15%

- Significantly reduced consumer demand; loan applications down 27% in South Africa

- Stricter lending criteria implemented for passenger vehicles in 2H08

B siness portfolio negati el impacted b do nt rn in econom- Business portfolio negatively impacted by downturn in economy

- Partially offset by 20% growth in the Rest of Africa book

• Benefited from motor dealer and branch network strategy

• Credit impairment charge increased by 24% to R2 1bn• Credit impairment charge increased by 24% to R2.1bn

• Increased lending margins in Argentina

36

Notes


Lending products

• Book contracted by 4%• Book contracted by 4%

- Reduced appetite for credit utilisation

- Decrease in personal term loans and import and export financing Outside Africa

• Term advances margins showed improvement• Term advances margins showed improvement

• Increase in credit impairment charge by 40% to R2.6bn

• Increased stress evident in SME market and top end of business banking

37

Transactional and investment products

• Acquisition of deposits and transactional customers in South Africa• Acquisition of deposits and transactional customers in South Africa

- Record number of current accounts opened in FY09

• 11% increase in number of current accounts

Strong prod ct sales in lo er end of the market- Strong product sales in lower end of the market

• Deposit margins impacted by negative endowment effect

- Compounded by a shift in product mix to lower yielding products

• Reduced income within the Rest of Africa• Reduced income within the Rest of Africa

- Lower transactional volumes and bases

- Negative endowment impact

38

Notes


Bancassurance

• Headline earnings up marginally to R715m• Headline earnings up marginally to R715m

- Increased penetration in South Africa

• Home Loan protection at 28%

V hi l L t ti t 28%• Vehicle Loan protection at 28%

• Credit Card protection at 26%

• Funeral cover stable at 29%

A erage premi ms per polic p 2 5%- Average premiums per policy up 2.5%

- Partially offset by a reduction in complex product embedded value profits

• Solid performance from the Rest of Africa off small base

• Liberty co operation steadily improving• Liberty co-operation steadily improving

39

Outlook

• Domestic retail environment starting to look positive• Domestic retail environment starting to look positive

• Rest of Africa retail environments present good transactional and deposit gathering

opportunities

• Service and internal efficiencies drive has left the bank well positionedService and internal efficiencies drive has left the bank well positioned

• Build on solid foundation to gather more customers in profitable markets/segments

• Continued focus on rehabilitations, recoveries and debt review

• Cautiously increase focus on good quality asset growthCautiously increase focus on good quality asset growth

• Continued investment in IT and infrastructure

• Extraction of growth from operations outside of South Africa

40

Notes


Corporate & Investment BankingRob LeithRob Leith

Operating environment

• Markets rebounded with government support measures but remain fragile• Markets rebounded with government support measures but remain fragile

• Emerging markets, including South Africa, slipped into recession

- Corporate defaults increased

• Distribution markets remain limited• Distribution markets remain limited

• Increased government and regulatory intervention

- Higher levels of uncertainty

Increased capital and liq idit req irements- Increased capital and liquidity requirements

- Compensation challenges

- Fiscal responses

42

Notes


Corporate & Investment Banking approach to the environment

• Cautious on risk capital and liquidity management• Cautious on risk, capital and liquidity management

• Intensive attention to credit exposures

• Retained strategic focus on geographies, clients and products

• Continued investment spend on people and platforms• Continued investment spend on people and platforms

• Extended integrated Corporate & Investment Banking operating model

43

Corporate & Investment Banking performance

Total income Headline earningsTotal income Headline earnings

FY09Rm

change%

FY09Rm

change%

Global markets 12 834 11 4 413 26

Investment banking 9 145 6 1 711 (36)

Transactional products and services 5 722 (5) 1 383 (21)

Corporate & Investment Banking 27 701 6 7 507 (6)

• Resilient performance

- Headline earnings 6% below all time high levels in 2008

• Diversified income across products and geographies

44

Notes


Strong performance from Global markets

• Reflects performance across footprint• Reflects performance across footprint

- All geographies and major product lines performed well

• Strong contribution from foreign exchange, interest rates and credit trading

• Business benefitting from combination of domestic and cross border capabilities• Business benefitting from combination of domestic and cross border capabilities

• Strength of client franchise reflected in result

• Prudent market risk levels maintained

• Investment in key people and platform continuing• Investment in key people and platform continuing

45

4 500

Trading revenue – strong performance and well diversified

3 000

3 500

4 000

1 500

2 000

2 500

(500)

0

500

1 000

(500)

Forex Interest rate Commodities Credit Equities Other

FY08 FY09

Rm

46

Notes


Volatility increased in 2009 but risk was well contained

300

Income of trading units and VaR

150

200

250

300

0

50

100

(150)

(100)

(50)

Jan 2009 Dec 2009Rm

47

Income of trading units 95% VaR (including diversification benefits)

120

Distribution of daily trading profit and loss remains positively skewed

80

100

120

40

60

0

20

< �30 �30 to 0 0 to 30 30 to 60 60 to 90 > 90

day

s

FY08 FY09

48

Daily trading revenue in Rm

Notes


Investment banking – better second half

• 1H09 held back by impairments and restriction of new business pipeline• 1H09 held back by impairments and restriction of new business pipeline

• Over 75% of total headline earnings delivered in 2H09

• Good performances from project finance and structured products

• Overall performance reflects• Overall performance reflects

- Improved net interest income levels in 2H09 as pipeline reopened

- Net fees and commissions down on FY08 due to lower client activity

Credit impairment charges increased b R1bn as a res lt of the contin ing economic- Credit impairment charges increased by R1bn as a result of the continuing economic

market conditions

- Fair value gains on unlisted equity portfolios

• Strong rebound in client activity levels across product spectrumStrong rebound in client activity levels across product spectrum

49

Impairments rose in line with deteriorating economic conditions

Gross loans and advances (Rbn) Credit loss ratio (%)

411.6

361 60.46

0.73

• Credit impairment charge up 64%

361.6

FY08 FY09 FY08 FY09

- Charge for performing loans fell overall

- Charge for NPLs up significantly, lower in 2H09

• NPLs as a % of loan book increased to 3.0% (FY08: 1.3%)

Lower level of loans and advances- Lower level of loans and advances

- More recent NPLs highly collateralised

50

Notes


Resilient performance in Transactional products and services

• Solid income performance although down on 2008• Solid income performance although down on 2008

- Margin income down due to the negative endowment effect and lower

account balances

- Fees upFees up

• higher transaction volumes in Rest of Africa

• Important component of Corporate & Investment Banking

- Key to long term client relationshipsKey to long term client relationships

- Stability and diversity of revenues

• Significant investment in platform and people

- Retain market leadership in South AfricaRetain market leadership in South Africa

- Capitalise on growth opportunity in Africa

51

Maintained investment in Corporate & Investment Banking platform

• Total expenses up 9%• Total expenses up 9%

- Driven by investment in people and technology

- Seeking to capitalise on strong relative position in the market

Staff costs increased 9%- Staff costs increased 9%

• Headcount growth notably across Rest of Africa

- Other operating costs up 10%

I t t i i d IT i f t t• Investment in premises and IT infrastructure

• Cost-to-income ratio moved to 52.3% from 50.6%

52

Notes


Strategic partnerships

• ICBC• ICBC

- Strategic partnership bearing fruit

- Related revenues totalling $78m generated from the relationship

ICBC led $1bn 5 ear term facilit for Standard Bank from a consorti m of Chinese banks- ICBC led $1bn 5-year term facility for Standard Bank from a consortium of Chinese banks

• Troika Dialog

- Strong partnership with a market leader in Russia

Opport nit to establish a s bstantial domestic and cross border franchise- Opportunity to establish a substantial domestic and cross border franchise

- Earnings equity accounted from 2010

53

Outlook

• Operating environment remains uncertain• Operating environment remains uncertain

- Further regulatory changes likely

- Government responses unclear

Market ner o sness contin es- Market nervousness continues

• Corporate & Investment Banking well positioned

- Maintain improving trend in impairments

Manage operating costs hile contin ing to in est- Manage operating costs while continuing to invest

- Geographic footprint and product capabilities

- Opportunity to grow revenues and client franchise

54

Notes


LibertyJacko MareeJacko Maree

Financial results summary

• BEE normalised headline earnings R135m for the full year• BEE normalised headline earnings R135m for the full year

- marked recovery from 1H09 loss of R1.2bn

• Capital adequacy level increased to 2.8 times coverp q y

• Cash distribution maintained

• Embedded value down 11% to R24bn

• Cash flows net positive

• No further lapse assumption adjustments required on major product lines

• Solid financial performance by STANLIB, Africa, Health and Properties

56

Notes


2H09 earnings significantly improved offsetting the 1H09 loss

2H091H09

1 342

1 000

1 500

( 500)

0

500

(1 207)(1 500)

(1 000)

Insurance LibFin � shareholder asset base Rm

57

Asset management Growth initiatives

Other BEE normalised headline (loss)/earnings

Rm

Headline earnings – business unit view

1H09 2H09 FY09yoy

hFY08

Rm Rm Rmchange

%Rm

Retail insurance (75) 246 171 1 255

Liberty Corporate 36 (43) (7) 152

LibFin (1 299) 1 051 (248) (67)LibFin (1 299) 1 051 (248) (67)

STANLIB 159 201 360 395

Liberty Properties 34 46 80 64

Liberty Africa 14 15 29 (1)

Liberty Health (9) (56) (65)Liberty Health (9) (56) (65) �

Other (67) (118) (185) (225)

Headline earnings (1 207) 1 342 135 (91) 1 573

SBG i t h h ldi f

58

SBG approximate shareholding for

the period (%)54 54 54 40

(647) 719 72 (89) 641

Note: FY08 Liberty Group adjusted comparative

Notes


Strategic issues

• Retail insurance• Retail insurance

- Persistency strategy confirmed

- Retention initiatives gaining traction

- New business reasonable given economic conditions

• Liberty Corporate

- Economic conditions impacted new business

- Retrenchments in SA resulted in decrease in total fund membership

• LibFinLibFin

- Convinced that balance sheet, capital and risk management strategy is correct

• STANLIB

- New appointments

- Investment performance acceptable

• Poor performance limited to certain equity funds

59

Strategic issues

• Liberty Properties• Liberty Properties

- Continued good performance

- Mandated to manage and develop properties in Africa on behalf of third parties

• Liberty Africay

- Contributed positively to earnings

- Assets under management up 22%

- Key growth area going forward

• Liberty Health

- Acquisition strategy delivering exponential growth

- Lives under administration in SA 327 000 and in Africa 244 000

- Profitability expected by end 2010Profitability expected by end 2010

60

Notes


Outlook

• Difficult first half return to profit in second half• Difficult first half, return to profit in second half

• Action taken to address

- Persistency

Balance sheet management- Balance sheet management

- Investment performance

• Growth strategy delivering results

61

ConclusionJacko MareeJacko Maree

Notes


Strategy

• Vision and strategy remain unchanged• Vision and strategy remain unchanged

• Resilience in the face of severe challenges of the past two years

- confirms group is well positioned

• Emerging markets accounted for two thirds of global growth in 2009• Emerging markets accounted for two-thirds of global growth in 2009

• Africa’s growing ties to other emerging markets bodes well for growth

• Innovation increasingly being encouraged

63

Nigeria

• Difficult operating environment in Nigeria• Difficult operating environment in Nigeria

- 2008 was an extraordinary year characterised by capital raising

- 2009 witnessed a significant decline in advisory, margin lending business and closure of

forex marketsforex markets

• Looking at acquisitions as part of government recapitalisation process

• Existing organic growth strategy is viable

• Franchise well positioned in 2010 to capitalise on market opportunitiesFranchise well positioned in 2010 to capitalise on market opportunities

64

Notes


External pressures

• Political pressures• Political pressures

- Compensation

• Regulatory pressures

C rrentl e al ating capital and liq idit req irements- Currently evaluating capital and liquidity requirements

• Proposed by the Basel Committee on Banking Supervision

65

Risk appetite

• Tightening during 2008 affected asset growth in 2009• Tightening during 2008 affected asset growth in 2009

• Extensively reviewed throughout 2009

• Committed to writing good quality business and supporting economic recovery

• Staying close to customers so we are ready to lend responsibly when demand arises• Staying close to customers so we are ready to lend responsibly when demand arises

66

Notes


Outlook

• Recovery in normalised headline earnings from 2009 base• Recovery in normalised headline earnings from 2009 base

• Aim to restore earnings to 2008 levels

• Strong capital base and client franchise position us well

67

Notes

Standard Bank Group (SBG) Financial results presentation • Indications of recovery in...

Documents

Transcript of Standard Bank Group (SBG) Financial results presentation • Indications of recovery in...