Standard Bank Group FINANCIAL RESULTS …...STANDARD BANK GROUP FY18 FINANCIAL RESULTS PRESENTATION...
Transcript of Standard Bank Group FINANCIAL RESULTS …...STANDARD BANK GROUP FY18 FINANCIAL RESULTS PRESENTATION...
Standard Bank Group
FINANCIAL RESULTS PRESENTATION
FOR THE YEAR ENDED 31 DECEMBER 2018
standardbank.com
Notes
STANDARD BANK GROUPFY18 FINANCIAL RESULTS
PRESENTATION
We measure our progress using five strategic value drivers
Group Purposethe reason we exist
Group Visionwhat we aspire to be
Africa is our home, we drive her growth
To be the leading financial services organisation in, for and across Africa, delivering exceptional client experiences and superior value
In executing our group strategy our key focus areas are
Digitisation
Integration
Client centricity Do valuable things for clients
Digitise front to back
Seamlessly deliver relevant, holistic solutions
SEE = Social, economic and environmental
STANDARD BANK GROUPSTRATEGIC FOCUS IS UNCHANGED
2
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 1
Notes
FINANCIAL OUTCOME
13.015.6 15.3
17.118.0
10
12
14
16
18
20
FY14 FY15 FY16 FY17 FY18
RETURN ON EQUITY
15-18% TARGET RANGE
18-20% TARGET RANGE
DISCIPLINED EXECUTION OF STRATEGY DELIVERING ROE
We delight our clients through personalised
client journeys…
… and have a culture of caring and growing, and
of learning and innovation…
… and we do the right business the
right way…
… will result in increased
shareholder returns…
… and deliver shared value.
3
%
RESULTS PRESENTATION
2
Notes
GEOGRAPHY
South Africa Africa Regions International
PRODUCT
Transactional Banking Lending
Markets Insurance
OVERVIEW OF RESULTS STRENGTH AND BREADTH OF THE FRANCHISE
6Analysis reflects banking revenue
CLIENT
Retail BusinessCommercial Multinational corporateDomestic corporate HNW
87
56
FY17
FY18
bps
17.1
18.0
FY17
FY18
%
OVERVIEW OF RESULTSDELIVERING SUSTAINABLE EARNINGS GROWTH AND IMPROVING RETURNS
GROUP HEADLINE EARNINGS
FY18: R27.9bnFY17: R26.3bn
BANKING HEADLINE EARNINGS
FY18: R25.8bnFY17: R24.3bn
DIVIDEND PER SHARE
FY18: 970 centsFY17: 910 cents
CREDIT LOSS RATIOROE
+6% +7% +7%
111
(276)
FY17
FY18
bps
5
FY18
------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact
71 bps (108) bps
JAWS
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 3
Notes
0
5
10
15
20
25
%
SOUTH AND CENTRAL AFRICA
Botswana Mauritius NamibiaZambia Mozambique
2017 2H181H18
0
5
10
15
20
25
30
%
WEST AFRICA
Ghana Nigeria
17.0%14.0%
2017 1H18 2H180
2
4
6
8
10
12
14
%
EAST AFRICA
Kenya Uganda
10.0%9.0%
2H181H182017
INTEREST RATE TRENDS
8
0
2
4
6
8
%
SOUTH AFRICA
South Africa2H181H182017
6.75%
14.3%
9.8%6.8%
3.5%5.0%
70
80
90
100
110
120
130EAST AFRICA
ZAR/KES ZAR/UGX
80
100
120
140
160
180
200WEST AFRICA
ZAR/NGN ZAR/GHS ZAR/AOA
Avg:0.3
Avg:12.5
70
80
90
100
110
120SOUTH AFRICA
USD/ZAR
70
80
90
100
110
120
130SOUTH AND CENTRAL AFRICA
ZAR/MZN ZAR/ZMW
Avg:9.5
FOREIGN CURRENCY TRENDS
7
Avg:13.3
Avg:13.2
Avg:4.6
Avg:7.8
Avg:7.7
Avg:25.8
Avg:18.8
Avg:0.4
Avg:27.2
Note: Currency rebased at 1 January 2017, average exchange rate calculated as daily average over 12-month period and expressed relative to ZAR
Avg:10.5
Avg:4.8
2017 1H18 2H182017 1H18 2H18
2017 1H18 2H18 2017 1H18 2H18
Avg:272 Avg:282
RESULTS PRESENTATION
4
Notes
IFRS 9-RELATED ACCOUNTING IMPACT DAMPENED INCOME AND LOWERED CREDIT IMPAIRMENT CHARGES
10
FY18Rbn
IFRS 9-related IIS
impactRbn*
FY18 adjusted
Rbn
FY18 vs FY17
%
FY18 adjusted vs
FY17%
FY17Rbn
Net interest income 59.6 1.7 61.3 (1) 2 60.1
Non-interest revenue 45.7 45.7 7 7 42.6
Total income 105.3 1.7 107.0 3 4 102.7
Credit impairment charges (6.5) (1.7) (8.2) (31) (13) (9.4)
Operating expenses (60.1) (60.1) 5 5 (57.0)
SBG headline earnings 27.9 - 27.9 6 6 26.3
Credit loss ratio (bps) 56 71 87
Jaws (bps) (276) (108) 111
Cost-to-income ratio (%) 57.0 56.1 55.5
*IFRS 9-related accounting impact of R1 722m (PBB SA R1 617m, CIB SA R40m and CIB AR R65m)
INCOME STATEMENT
9
FY18Rbn
change%
change CCY%
FY17Rbn
Net interest income 59.6 (1) 1 60.1
Non-interest revenue 45.7 7 9 42.6
Total income 105.3 3 4 102.7
Credit impairment charges (6.5) (31) (32) (9.4)
Income before operating expenses 98.8 6 8 93.3
Operating expenses (60.1) 5 6 (57.0)
Banking activities headline earnings 25.8 7 8 24.3
Other banking interests 0.4 (26) - 0.6
Liberty attributable to the group 1.6 11 11 1.4
SBG headline earnings 27.9 6 8 26.3
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 5
Notes
REGIONAL PERFORMANCE
12
Headline earnings
FY18Rm
change%
change CCY
%FY17
RmSBSA 15 971 (1) (1) 16 078Africa Regions 8 025 19 26 6 751East 1 228 19 21 1 033South & Central 3 858 10 9 3 512West 2 939 33 60 2 206
* Determined based on various inputs,including growth, resilience and returns
Strong performance*
Moderate performance*
Focus to improve*
Single representation/development phase
The group increased its stake in Stanbic Holdings Plc (Kenya) from 60% to 68% in July 2018 and Stanbic IBTC PLC (Nigeria) from 53% to 65% in May 2018
ROEFY18
%FY17
%SBSA 16.7 16.6Africa Regions 24.0 23.8East 21.1 16.0South & Central 24.5 26.3West 30.4 26.0
FY18Rbn
change%
change CCY%
FY17Rbn
PBB 15.5 10 10 14.1South Africa 13.7 3 3 13.3
Africa Regions 0.8 >100 >100 0.2
International 1.0 60 56 0.6CIB 11.2 (2) 1 11.4Central & other (0.9) (28) (32) (1.2)
Banking activities 25.8 7 8 24.3
Other banking interests 0.4 (26) - 0.6
ICBCS (0.1) (>100) (>100) 0.2
ICBC Argentina 0.5 19 95 0.4
Liberty attributable to the group 1.6 11 11 1.4
SBG headline earnings 27.9 6 8 26.3
SEGMENTAL PERFORMANCE
11
RESULTS PRESENTATION
6
Notes
DRIVERS OF PERFORMANCE
SBSA
FY18Rbn
change%
FY17Rbn
Net interest income 39.8 (4) 41.5
Non-interest revenue 30.0 5 28.5
Total income 69.8 - 70.0
Credit impairment charges (5.6) (22) (7.1)
Income before operating expenses 63.5 2 62.1
Operating expenses (41.7) 3 (40.4)
SBSA headline earnings 16.0 (1) 16.1
Credit loss ratio (bps) 59 77
Jaws (bps) (345) 30
Cost-to-income ratio (%) 60.3 58.3
ROE (%) 16.7 16.6
535 314560 351
PBB CIB (incl HQLA)Rbn
GROSS LOANS TO CUSTOMERS +7%
FY17 FY18
13
+5%
+12%
77
59
FY17
FY18
bps
CREDIT LOSS RATIO
30
(345)
FY17
bpsJAWS
FY18
------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact of R1 657m
75 bps (108) bps
RESULTS PRESENTATION
7
Notes
513 594560 654
PBB CIBRbn
AVERAGE DEPOSITS FROM CUSTOMERS BY BUSINESS UNIT
FY17 FY18
817 123823 164
SA Africa RegionsRbn
AVERAGE GROSS LOANS TO CUSTOMERS BY REGION*
FY17 FY18
599 360626 375
PBB CIBRbn
AVERAGE GROSS LOANS TO CUSTOMERS BY BUSINESS UNIT*
FY17 FY18
BALANCE SHEETDEPOSIT GROWTH CONTINUED TO OUTPACE LOAN GROWTH
+5%
+4%
+10%
+9%
+1%
+33%
16* Average gross loans and advances by Business Unit exclude Centre and by region exclude International balances
`CET1 13.5%
DRIVING SHAREHOLDER VALUE
GROWTH
NII -1% Impairmentcharge -31%
Operatingexpenses +5%
OBI -26%
Liberty +11%Average interest-bearing liabilities +9%
NIM -16bps
Headline earnings +6%
Dividendper share
+7%
RETURNSNSFR 119%LCR 117%
RESILIENCE
NIR +7%
Average interest-earning assets +3%
15
÷ ROE 18%Averageequity
+1%
RESULTS PRESENTATION
8
Notes
• Net fee and commission revenue
– Digital transaction volumes and values driving growth in SA and Africa Regions
– Softer traditional account fee growth
• Trading revenue
– Impacted by subdued demand
– Equities provided support and FIC underperformed
• Other revenue supported by bancassurance
• Other gains and losses on financial instruments - driven
by IFRS 9
18
NON-INTEREST REVENUEGROWTH UNDERPINNED BY DIVERSIFIED REVENUE STREAMS
FY17 FY18Rbn
NON-INTEREST REVENUE +7%
Other gains and losses on financial instrumentsOther revenueTrading revenueNet fee and commission revenue
+6%
+4%
+11%
17
NET INTEREST INCOMENEGATIVE ENDOWMENT AND COMPETITIVE PRICING OFFSET BY FAVOURABLE MIX
474 471 458
7
8 137
2 3
FY17 Endow-ment
Client yieldon lending
book
Client yieldon funding
book
Treasury Mixand
other
FY18adjusted
IFRS 9-related
accountingimpact
FY18bps
NET INTEREST MARGIN -16BPS
60.1 61.3 59.6
0.9
1.0
1.7
0.9
0.30.4
1.5
FY17 Endow-ment
Client yieldon lending
book
Client yieldon funding
book
Treasury Mixand
other
Volumechanges
FY18adjusted
IFRS 9-related
accountingimpact
FY18Rbn
NET INTEREST INCOME -1%
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 9
Notes
20
15.321.0
23.8
7.2
14.112.9
22.4
35.036.7
31 Dec 17 1 Jan 18 31 Dec 18Rbn
LOANS AND ADVANCES PROVISIONS
Stage 1&2 Stage 3
IFRS 9IAS 39
0.74
1.81 1.74 1.61
0.48 0.62 0.44 0.43 0.69
1.36 1.27 1.16
31 Dec 17 1 Jan 18 30 Jun 18 31 Dec 18%
STAGE 1&2 COVERAGE
PBB CIB Group+96%
+37%
+13%
-8%
+56%+5%
41
50 51 50
60
68 66 67
44
53 54 54
31 Dec 17 1 Jan 18 30 Jun 18 31 Dec 18%
STAGE 3 COVERAGE
PBB CIB GroupIFRS 9IAS 39
IFRS 9IAS 39
LOANS AND ADVANCES PROVISIONS & COVERAGEADEQUATE COVERAGE MAINTAINED
21.8 22.4 35.0 36.7
10.24.8
6.9
0.9
9.0
9.6
1.7
5.6
Totalprovisions
31 Dec 2016
Netprovisions
raised
Write offs andother
Totalprovisions
31 Dec 2017
IIS gross up Additionalprovisions
Additional IISpreviouslyincluded inprovisions
Totalprovisions1 Jan 2018
Netprovisions
raisedadjusted for
IIS
IIS Write offs andother
Totalprovisions
31 Dec 2018
Rbn
LOANS AND ADVANCES PROVISIONSUPLIFT IN BALANCE SHEET PROVISIONS DRIVEN BY IFRS 9
19
IFRS 9IAS 39 TRANSITION
2017 credit impairmentsNet provisions raised R10.2bnLess recoveries on amounts written off R0.8bnEquals income statement charge of R9.4bn
2018 credit impairmentsNet provisions raised R9.0bnLess recoveries on amounts written off R1.0bnPlus financial investment charges R0.2bnEquals adjusted income statement charge of R8.2bn
RESULTS PRESENTATION
10
Notes
101 104 117 125
4169
116123
5035
8482
10
85
75 38
FY15 FY16 FY17 FY18$m
REVENUE
Flow Financing Other* Risk Aluminium recovery
22
ICBC STANDARD BANK PLC INTEGRATION REMAINS KEY TO UNLOCKING SUSTAINABLE PROFITABILITY
152
(74)FY17 FY18
Rm
HEADLINE EARNINGS (40% SHAREHOLDING)
• Continued revenue growth in underlying business
• Opportunities in risk limited due to difficult markets
• Ongoing review of operations and cost base
• Sustainable profitability subject to further integration with ICBC client base
*Other includes structured transactions net of credit impairments
Operating costs
Includes aluminum
recovery of R238m
FY18Rbn
change%
change CCY
%FY17Rbn
Staff costs 33.8 7 8 31.7
Fixed remuneration 23.5 8 10 21.7Variable remuneration 7.7 1 2 7.6Other staff cost 2.6 10 12 2.3
Other operating expenses 26.3 4 5 25.4
IT 6.4 5 5 6.1Premises 4.1 1 3 4.0Depreciation 2.5 3 4 2.5Amortisation of intangibles 2.4 3 3 2.4Marketing 2.0 (1) - 2.0Professional fees 2.0 23 22 1.6Other 6.9 1 3 6.8
Total operating expenses 60.1 5 6 57.0
21
OPERATING EXPENSESCOST GROWTH SLOWED IN 2H18
• Staff costs
– Net headcount down ~900 yoy
– Costs up due to strategic hires and upskilling of the PBB frontline
– IT separation costs
– Salary adjustments to take into account high inflation rates in Ghana and Angola
• Other operating expenses
– Sub-inflationary increases on the back of tight cost control and management actions in 2H18
– Professional fees related to specific projects focusing on customer experience and regulatory changes
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 11
Notes
LIBERTYEXECUTING TURNAROUND STRATEGY
24
FY18Rm
change %
FY17Rm
SA insurance operations 2 009 21 1 665
SA asset management – STANLIB 355 41 252
Africa Regions 8 14 7Other (366) (29) (512)
Normalised operating earnings 2 006 42 1 412
LibFin investments - SIP 250 (81) 1 307
Normalised headline earnings 2 256 (17) 2 719
IFRS adjustments 389 (27) 533IFRS headline earnings 2 645 (19) 3 252
SBG share of IFRS headline earnings 1 471 (18) 1 804
Treasury share adjustment 129 (>100) (369)
Headline earnings attributable to SBG 1 600 11 1 435
23
ICBC ARGENTINASTRONG PERFORMANCE IN VOLATILE MARKET
415 492
FY17 FY18Rm
ICBC ARGENTINA (20% SHAREHOLDING) • Strong growth in net interest income driven by margin expansion
• Non-interest revenue growth mainly due to increased volumes and fees in trading related revenue
• Challenging operating environment resulted in higher impairments
• Inflationary linked operating expenses
+19%+95% CCY
RESULTS PRESENTATION
12
Notes
MEASURING OUR FINANCIAL PROGRESS
Africa Regions contribution*
Cost-to-income ratio
Credit loss ratio**
LCR and NSFR
Dividend
ROE
MEDIUM TERM TARGETS FY18
GROWTH
RESILIENCE
RETURNS
CET 1 ratio
31%
57.0%
56 bps
> 100%
7%
18.0%
13.5%
> 30%
Approaching 50%
80 – 100bps
> 100%
Sustainable growth
18% - 20%
11.0% - 12.5%
* Contribution to banking headline earnings
26** Target ratio to be reviewed following the introduction of IFRS 9
Group HE growth 6%Sustainable growth
13.0
15.615.3
17.1
18.0
12.3
16.316.8
18.0
18.8
FY14 FY15 FY16 FY17 FY18%
ROE +85 bps
SBG Banking activities
25
RETURN ON EQUITY AND DIVIDENDS
598 674 780 910 970
55.3
48.5 54.2 55.5 55.5
FY14 FY15 FY16 FY17 FY18cents %
DIVIDENDS +7%
Dividend (LHS) Payout ratio (RHS)
CAGR+13%
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 13
Notes
44
20
FY17
FY18
bps
22.0
19.3
FY17
FY18
%
CIB HIGHLIGHTSMIXED RESULTS REFLECTING A TOUGH OPERATING ENVIRONMENT
28
CUSTOMER CREDIT LOSS RATIO COST-TO-INCOME RATIOROE
HEADLINE EARNINGS
FY18: R11.2bnFY17: R11.4bn -2%
TOTAL REVENUE
FY18: R37.0bnFY17: R36.8bn +1%
51.9
54.0
FY17
FY18
%
CLIENT REVENUE
+8%
CORPORATE AND INVESTMENT BANKING
RESULTS PRESENTATION
14
Notes
NBFI Banks CONS IND P&I M&M O&G TMT S&PS RealEstate
Other
CIB CLIENT REVENUESDIVERSIFIED AND SUSTAINABLE FRANCHISE
GM
TPS
IB
FY18 FY17
SA+5%
S&C+11%
CCY +10%
West Africa+8%
CCY +26%
East Africa+15%
CCY +17%
Sector
Client segment
Client revenue
+8%
Multi-NationalCorporates
(MNCs)
+8%
Domesticclients
+10%
Large domestic
+2%
MNCs Africa Regions
-2%
Other domestic
+23%
MNCs South Africa
+6%
MNCs International
+13%
-2%CCY -2%
RegionClient revenue
Total income
+12%CCY +12%
+17%CCY +19%
+13%CCY +19%
+13%CCY +17%
+5%CCY +11%
+6%CCY +20%
+43%CCY +40%
+11%CCY +14%
+12%CCY +16%
+4%CCY +5%
-2%CCY +0%
+1%CCY +6%
Product
Client revenue
Client revenue
-5%CCY -3%
30
CIB HIGHLIGHTS IN CONTEXTCOMMITTED TO EXECUTING OUR STRATEGY
29
Challenging operating
environment
Focusing on clients
Driving efficiencies
Modernising the bank
• Results impacted by a challenging and dynamic environment across our markets
– Strengthening of the Rand against other African currencies had a dilutive effect on revenue performance
– Recovery of commodity prices positively impacted some of our sectors
– Decreasing interest rate environment in key African markets
• Client revenue increase of 8% year-on-year with strong diversification through region, sector, client and product
• 13% growth in customer loans and advances
• Achieved our highest client satisfaction index (CSI) result of 8.0 out of 10, up from 7.8 in 2017
• Acquired notable clients and partnered our clients on landmark transactions
• Significant progress in improving and simplifying core processes – real-time account opening in South Africa for our existing clients
• Progress in transitioning to digital channels, with more than 20% increase in online channel usage in cash, trade and foreign exchange
Investing in our people
• Continuing with programmes to drive shifts in our culture
• Relooking at our skills for the future – established a CIB Digital team focused on creating new ventures and enhancing client experiences
• Doing the right business the right way evidenced by a customer credit loss ratio reduction to 20bps and no major market conduct issues
• Cost discipline and drive for productivity gains resulted in a 1% headcount reduction and a below weighted average inflation cost increase
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 15
Notes
CIB RESULTSSUMMARISED FINANCIAL PERFORMANCE
32
FY18Rbn
change%
change CCY%
FY17Rbn
Net interest income 19.2 (6) (2) 20.4Non-interest revenue 17.8 9 11 16.3Total income 37.0 1 3 36.7Credit impairment charges (1.0) (35) (35) (1.6)Income before operating expenses 36.0 2 5 35.1Operating expenses (20.0) 5 7 (19.1)
CIB headline earnings 11.2 (2) 1 11.4
Jaws (bps) (414) 456
Cost-to-income ratio (%) 54.0 51.9
ROE (%) 19.3 22.0
Gross loans and advance to customers 398.4 13 9 352.2
Deposits from customers 667.8 5 4 635.8
CIB – PARTNERING OUR CLIENTSFRANCHISE DEFINING DEALS
31
Vivo Energy Pan Africa
2018USD 745m
Initial Public Offering
Joint Bookrunner
2018ZAR3bn
Joint Global Coordinator / BookrunnerStabilisation Agent
Transaction Sponsor
Libstar
BEE structured deal: Sale of 25% of SA Taxi Finance
Holdings to SANTACO consortium
2018ZAR 1.7bn
Lead arranger & joint funder
Round 4 REIPPP
2018ZAR 7,59bn
Mandated lead arrangerHedge Provider
Co-MLA and underwriterAccount Bank and Agent
2018
USD115m
Term Loan & Overdraft FacilityFunding in USD & GHS
Sole Lender
AirtelTigoGhana
Acquisition Term Loan
2018USD 1.7bn
Exclusive mandated lead arranger UnderwriterBook Runner
RESULTS PRESENTATION
16
Notes
34
• We see opportunities for growth across the continent at the back of client activities
• We will continue to modernise our business in order to improve client and employee experiences
• Continued commitment to cost management has not changed
• Challenging trading conditions expected to continue with elections in key markets
• Momentum from Q4 2018 provides a solid base for improved performance into 2019
CIB OUTLOOKLOOKING FORWARD
CIB BUSINESS UNITSBUSINESS UNIT AND REGIONAL CONTRIBUTION
FY18Rbn
change%
changeCCY
%FY18Rbn
change%
changeCCY
%Total income Headline earnings
Investment Banking* 9.1 5 5 3.6 16 16
Transactional Products and Services
14.3 1 6 3.5 (5) 2
Global Markets 13.6 (2) - 4.1 (12) (10)
CIB 37.0 1 3 11.2 (2) 1
33
55% 51% 51% 49% 46%
45% 49%49% 51% 54%
FY14 FY15 FY16 FY17 FY18Rm
REGIONAL REVENUE TREND
South Africa Africa Regions* Includes Real Estate and PIM
CAGR+6%
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 17
Notes
120
81
FY17
FY18
bps
20.0
21.9
FY17
FY18
%
PBB HIGHLIGHTSSTRONG PORTFOLIO PERFORMANCE
PBB GROUP Headline Earnings
FY18: R15.5bnFY17: R14.1bn
SOUTH AFRICA Headline Earnings
FY18: R13.7bnFY17: R13.3bn
CREDIT LOSS RATIOROE
+10% +3%
100
(265)
FY17
bps
36
AFRICA REGIONSHeadline Earnings
FY18: R0.8bnFY17: R0.2bn
>100%INTERNATIONALHeadline Earnings
FY18: R1.0bnFY17: R0.6bn
+60%
------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact
105 bps (26) bps
JAWS
FY18
PERSONAL AND BUSINESS BANKING
RESULTS PRESENTATION
18
Notes
PBB RESULTS MOMENTUM DRIVING UNDERLYING OPERATIONAL PERFORMANCE
38
FY18Rbn
IFRS 9-related IIS
impactRbn
FY18 adjusted
Rbn
FY18 vs FY17
%
FY18 adjusted vs
FY17%
FY17Rbn
Net interest income 41.8 1.6 43.4 2 6 41.0
Non-interest revenue 28.0 28.0 5 5 26.7
Total income 69 8 1.6 71.4 3 5 67.7
Credit impairment charges (5.4) (1.6) (7.1) (30) (9) (7.8)
Operating expenses (42.3) (42.3) 6 6 (40.0)
PBB headline earnings 15.5 - 15.5 10 10 14.1
Credit loss ratio (bps) 81 105 120
Jaws (bps) (265) (26) 100
Cost-to-income ratio (%) 60.6 59.2 59.0
PBB HIGHLIGHTSCONTRIBUTION FROM ALL 3 REGIONS
634
380
431
14 103 15 548 12 000.00
12 500.00
13 000.00
13 500.00
14 000.00
14 500.00
15 000.00
15 500.00
16 000.00
FY17 AR WIN SA FY18Rm
+3%
>100%
+60%
+10%
37
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 19
Notes
PBB RETURNSSTRONG IMPROVEMENT WHILST REPLACING CORE SYSTEMS
40
298 330 352 369 382 396
2.8
3.0
3.2
3.5
3.7
3.9
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
3.8
4.0
200
250
300
350
400
450
500
550
FY13 FY14 FY15 FY16 FY17 FY18 %Rbn
RETURN ON RWA +20 bps
Average RWA (LHS) PBB return on RWA (RHS)
18.618.1 18.2
18.8
20.0
21.9
14
15
16
17
18
19
20
21
22
23
FY13 FY14 FY15 FY16 FY17 FY18%
RETURN ON EQUITY +191 bps
39
PBB SUMMARISED BALANCE SHEETPBB AR MAKING GOOD PROGRESS
17% and 19% CCY growth in Africa Regions
and Wealth International respectively
FY18Rbn
change%
change CCY
%FY17Rbn
Loans and advances to customers 650 7 6 605
Mortgage loans 362 4 4 346
Vehicle and asset finance 89 10 9 82
Card debtors 33 3 3 32
Other loans and advances 165 14 11 145
14% CCY growth in current
accounts in Africa Regions
FY18Rbn
change%
change CCY
%FY17Rbn
Deposits from customers 591 10 7 535
Current accounts 159 9 7 146
Savings and investments 432 11 8 389
RESULTS PRESENTATION
20
Notes
467
367
FY10 FY17 FY18‘000sqm
BRANCH SQR METERAGE
296 405
FY14 FY15 FY16 FY17 FY18Rbn
DEPOSITS FROM CUSTOMERS
PBB SOUTH AFRICAGAINING MOMENTUM, SUPPORTED BY NEW CLIENT-CENTRIC MODEL
42
FY16/17 FY17/18
+13 +4
DigitalFace-to-Face
+26%-13%
-13%
NET PROMOTER SCORE, YOY CHANGE
TRANSACTION VOLUMES, YOY CHANGE
-21%
705 640 629
FY10 FY17 FY18
NUMBER OF BRANCHES
-11%
CAGR+8%
RetailLending
VAF HomeLoans
BusinessLending
Rbn
DISBURSEMENTS1Q182Q183Q184Q18
41
PBB PRODUCTSALL PRODUCTS DELIVERED HEADLINE EARNINGS GROWTH
FY18Rbn
change%
change CCY
%FY18Rbn
change%
change CCY
%
Total income Headline earnings
Transactional products 30.1 4 5 4.3 2 2
Mortgage lending 8.3 (2) (2) 3.6 8 8
Card products 6.8 - 1 1.7 11 11
Lending products 12.1 - - 2.3 16 16
Vehicle and asset finance 3.6 (4) (4) 0.5 2 1
Wealth (including bancassurance) 8.9 16 17 3.1 24 24
PBB 69.8 3 4 15.5 10 10
30%
23%18%
14%
11%4% 28%
23%20%
15%
11%3%
CONTRIBUTION TO HEADLINE EARNINGS BY PRODUCT
Transactional products Mortgage lending
Wealth (including bancassurance) Lending products
Card products Vehicle and asset finance
FY18
FY17
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 21
Notes
PBB AFRICA REGIONSSTRATEGY DELIVERING ACCELERATED GROWTH
44
FY16/17 FY17/18
+1 +9
+34%
-13%
DigitalFace-to-Face
+34%-12%
NET PROMOTER SCORE, YOY CHANGE TRANSACTION VOLUMES, YOY CHANGE
59 74
FY17 FY18Rbn
LOANS AND ADVANCES TO CUSTOMERS
76 92
FY17 FY18Rbn
DEPOSITS FROM CUSTOMERS
21%CCY 11%
454 570 572 571
FY10 FY16 FY17 FY18
NUMBER OF BRANCHES
4.6 5.1
FY17 FY18millions
NUMBER OF ACTIVE CUSTOMERS
+11%
26%CCY 17%
WHAT WE HAVE DELIVERED:• VAF dealer integration• Launch of SBG Mobile Network Operator• Significant reduction in Ombudsman complaints• Reduction in digital fraud losses for clients and bank• Strong growth of Instant Money volumes• Acceleration of digitisation
43
PBB SOUTH AFRICA TRANSITION YEARRE-ORIENTATE BANK AROUND THE CUSTOMER – MUTLI DISCIPLINARY TEAMS
Service clients in their local context
Deliver fully integrated financial services
Increase speed of execution and customer experience
RESULTS PRESENTATION
22
Notes
PBB WEALTH INTERNATIONAL ROBUST, GROWING FRANCHISE
70 86 92 122
33
39
45
50
FY15 FY16 FY17 FY18 `000s£'m
# CLIENT AND REVENUE
Revenue (LHS) Client numbers (RHS)
CAGR+20%
23.6 27.9 36.8 57.0
14.7 15.016.5
20.8
FY15 FY16 FY17 FY18 %£'m
HEADLINE EARNINGS AND ROE
Headline earnings (LHS) ROE (RHS)
CAGR+34%
3 711 4 325 4 949 5 148
FY15 FY16 FY17 FY18£'m
DEPOSITS FROM CUSTOMERS +4%
Deposits
CAGR+12%
46
PBB AFRICA REGIONSSTRATEGY REMAINS UNCHANGED, ACCELERATED EXECUTION
45
-365
104 182 342 183 817
FY13 FY14 FY15 FY16 FY17 FY18
Rm
HEADLINE EARNINGS
Business Banking Ecosystem led
Enterprise Banking
Self funded
Sustainable revenue growth
11% growth in active customers
Improvement in NPS
Loan to deposit ratio of 80%
NIR increased across all fee lines
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 23
Notes
LOOKING FORWARD
ACCELERATION OF EXECUTION IN THE FOLLOWING KEY FOCUS AREAS
• Client Journeys and Personalisation
• Proactive customer relationship management for mass-affluent market and small enterprises
• Africa China Banking
• Sharpening our local market-facing capabilities to grow the franchise
• Banking the ecosystem
• Judicious cost management
• Building and acquiring skills required to win in the 4th industrial revolution era
PBB OUTLOOKSTRATEGY REMAINS THE SAME, FOCUS IS ON EXECUTION
47
RESULTS PRESENTATION
24
Notes
STANDARD BANK GROUPLIVING OUR PURPOSE
50
127.1 120.6
6.5
33.8
47.2
11.7
15.1
12.8
Total income Impairments Remuneration Suppliers andoperational
charges
Taxation Distributed asdividends
ReinvestedRbn
Reinvested for growth
Generating savings and supporting
retired people
Used to generate
public goods and services
Supporting the
economy
Rewarding our
employees
Bad debts
Value provided to
our customers
Income after
impairments
We measure our progress using five strategic value drivers
Group Purposethe reason we exist
Group Visionwhat we aspire to be
Africa is our home, we drive her growth
To be the leading financial services organisation in, for and across Africa, delivering exceptional client experiences and superior value
In executing our group strategy our key focus areas are
Digitisation
Integration
Client centricity Do valuable things for clients
Digitise front to back
Seamlessly deliver relevant, holistic solutions
SEE = Social, economic and environmental
STANDARD BANK GROUPOUR STRATEGIC PROGRESS
49
Standard Bank Group Analysis of financial results for the year ended 31 December 2018 25
Notes
• Continue to make progress against our medium-term financial targets
• Continue to reduce cost growth and increase efficiency; permanently reshape the group’s cost structure
• Continue to accelerate digitisation to meet our clients’ needs and enhance competitiveness and efficiency; reconfigure distribution capabilities
• Continue to improve client experience
• Pursue growth opportunities, including
– PBB: VAF, client journeys, ecosystems
– CIB: good AR opportunities, SA gradual recovery
• Continue to support Liberty’s recovery and expand our relationship
• Find lasting solutions for Other Banking Interests
STANDARD BANK GROUPTOP PRIORITIES FOR 2019
52
STANDARD BANK GROUPDELIVERING SEE
Deliver shared value
FINANCIAL INCLUSIONA home provides shelter & dignity & an opportunity to build wealthIn 2018, we registered R20.5 billion in home loans for previously disadvantaged customers, 16% up on 2017
ENTERPRISE DEVELOPMENT & ENTREPRENEURSHIPSmall businesses are key drivers of growth & job creationIn 2018, we worked with more than 12 000 SMEs to grow and develop, through finance, access to value chains and business development support
INFRASTRUCTURE DEVELOPMENTReliable infrastructure is crucial to grow trade and export capacityDuring 2018, in Ghana, we financed the first phase of Tema Port Development, and provided finance for Nacala railway and port corridor which crosses Mozambique and Malawi
AFRICA TRADE AND INVESTMENTFacilitating trade and investment flows drives growth
In 2018, we celebrated the 10-year anniversary of our strategic partnership with ICBC. The partnership has provided US$10 billion in financing support to over 40 projects, leveraging investment of around US$30 billion
EDUCATION & SKILLS DEVELOPMENT
Africa’s growth depends on quality educationIn 2017 we launched crowdfunding platform Feenix enabling
individuals and companies to donate money directly to universities on behalf of a student. To date over R22 million
has been raised and 800 students have been fully funded
EMPLOYEE DEVELOPMENT & TRAININGWe encourage continuous learning to ensure our people are future-ready
We have launched the careers of 1 800 university graduates since 1997 through our graduate programmes across the continent
51
RESULTS PRESENTATION
26