| Wed 28 May 2008, 8:30 | | SBK - Standard Bank - Chief executive`s comments at the AGM 28 May 2008 and |
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SBK
SBK
SBK - Standard Bank - Chief executive`s comments at the AGM 28 May 2008 and
capital adequacy disclosure
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/017128/06)
South African Share Code: SBK
Namibian Share Code: SNB
ISIN: ZAE000109815
("Standard Bank" or "the group")
1. Chief executive`s comments at the Annual General Meeting 28 May 2008
At the annual general meeting to be held later today, chief executive Jacko
Maree will make the following comments regarding the group`s performance for the
first four months of 2008 in comparison with the same period for 2007:
"At the release of the group`s 2007 results on 5 March 2008, we cautioned that
the outlook for global economic growth had deteriorated and that growth rates in
the market in which we operate are expected to slow in 2008.
In South Africa, the impact of a further 50 basis point increase in interest
rates in April, electricity outages and fuel and food price inflation have
contributed to a more challenging operating environment than we had anticipated.
In the group`s international investment banking operations, the global credit
and liquidity crisis has significantly reduced revenue opportunities in its
credit related businesses.
The most significant shift from expectations is further increases in early
arrears and non-performing loans in our personal and business banking division
in South Africa. The level of consumers` disposable income available to cover
increasing debt instalments has been materially impacted by sharply increasing
inflation. The annualised group credit loss ratio for the first four months of
the year has exceeded our published objective. Although there is typically a
seasonal increase in arrears in the first quarter of the year, the April
interest rate increase and ongoing inflationary pressures are causing
persistence in arrears experience.
On the positive side, net interest income is benefiting from the additional
capital received from ICBC and from strong loan growth achieved in prior
periods. Fee and commission income retained momentum and trading revenues
enjoyed good volumes in foreign exchange and commodity trading. Cost efficiency
is receiving closer than usual attention and the positive gap between revenue
and cost growth has widened, improving the cost-to-income ratio for the period
under review.
Shareholders are referred to the Liberty Group market update on 14 May 2008
wherein it was stated that "the group`s return on embedded value for the first
three months of 2008 remains in line with market guidance of 14.5% to 15.5%.
Group indexed new business remained firm but growth levels were lower than those
enjoyed in the 2007 year."
Jacko Maree will also make the following comments on the outlook for the group
in 2008:
"Given the factors mentioned above, an uncertain outlook for the global banking
environment and a higher than anticipated inflation and interest rate
environment in South Africa, it is unlikely that the group will achieve its
objective of normalised headline earnings per share growth of inflation (CPIX)
plus 5 percentage points for 2008. The group nevertheless expects growth in
normalised headline earnings per share to exceed CPIX. "
2. Capital adequacy disclosure in terms of Basel 2
Standard Bank was required to comply with Basel 2 from 1 January 2008. In terms
of the Pillar 3 disclosure requirements under Basel 2, capital adequacy
information is required to be disclosed by the group on a quarterly basis. The
following is the consolidated regulatory capital position for the group at the
end of the first quarter of 2008.
March
2008
Rm
Total tier 1 capital 66 639
Total tier 2 capital 14 115
Total tier 3 capital 1 879
Total qualifying capital 82 633
Total capital requirement in terms of Basel 2 60 010
Primary (Tier I) capital adequacy ratio (%) 10.8
Total capital adequacy ratio (%) 13.4
This information has not been reviewed or reported on by the group`s external
auditors.
Johannesburg
28 May 2008
Sponsor
Standard Bank
Date: 28/05/2008 08:30:04 Produced by the JSE SENS Department.
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