| Wed 13 Aug 2008, 8:00 | | SBK/SNB/SBKP/SBPP - Standard Bank - Unaudited Results And Dividend Announcement |
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SBK/SNB/SBKP/SBPP - Standard Bank - Unaudited Results And Dividend Announcement
For The Six Months Ended 30 June 2008
Standard Bank Group Limited
("Standard Bank")
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
JSE share code: SBK ZAE000109815
NSX share code: SNB ZAE000109815
SBKP ZAE000038881 (First preference shares)
SBPP ZAE000056339 (Second preference shares)
Unaudited Results And Dividend Announcement For The Six Months Ended 30 June
2008
Key financial highlights
Normalised IFRS
Return on equity (%) 19,8 21,4
Headline earnings growth (%) 15 22
Headline earnings per share (cents) 481,8 529,2
Headline earnings per share growth (%) 7 10
Cost-to-income ratio (%) 48,7 48,9
Credit loss ratio (%) 1,27 1,28
Dividends per share (cents) 193,0 193,0
Net asset value per share growth (%) 40 44
Overview of financial results
Standard Bank achieved satisfactory results in the first half of 2008,
reflecting the diversification and resilience of our businesses amidst continued
global financial market turmoil. Our strongly capitalised group and healthy
liquidity profile has put us in a position to take advantage of business
opportunities that are unfolding in our chosen growth markets.
The period was characterised by turbulence in financial markets worldwide and
cyclically higher inflation and interest rates in South Africa. Against this
backdrop, the group grew headline earnings per share by 10% to 529,2 cents per
share, increased net asset value per share by 44% and achieved a return on
equity of 21,4% on an International Financial Reporting Standards (IFRS) basis.
On a normalised basis headline earnings per share grew 7%, net asset value per
share increased 40% and a return on equity of 19,8% was achieved.
Whereas the results are prepared on an IFRS basis, normalised results make
adjustments for two accounting anomalies that have distorted the results from an
economic perspective since 2004. These adjustments are explained later in this
announcement. The commentary that follows is based on the normalised results.
In the first half of the year further effects of the sub-prime and resulting
credit crises spread through developed economies. Liquidity continued to
evaporate, credit spreads widened and fears of a global recession mounted. In
developing economies, inflation increased on the back of escalating energy and
food prices.
In South Africa, consumers continued to come under pressure from rising
inflation, falling asset values and tighter borrowing conditions. The South
African Reserve Bank has raised interest rates on ten occasions since June 2006,
taking the prime lending rate 500 basis points higher to 15,5% at June 2008.
Household spending lost momentum and activity in the residential property and
passenger car markets slowed significantly. However, strong investment spending
continued to buoy growth in the corporate sector.
Our strategy to grow businesses in other emerging markets continued to deliver
value in the period. Including Liberty Life, headline earnings from South Africa
grew 1%. Our businesses in the rest of Africa lifted their contribution by 55%
and those outside of Africa by 11%. This meant that our operations outside South
Africa grew headline earnings by 30% which enabled the group to achieve growth
in headline earnings of 15% in very difficult trading conditions.
Our breadth of business by product line also showed results. While Personal &
Business Banking was not able to grow headline earnings and Liberty Life`s
contribution fell 46%, Corporate & Investment Banking grew headline earnings by
a commendable 20%. Liberty Life`s earnings are strongly correlated to South
African investment market performance and the first half of 2008 saw markets
significantly underperform. This compares to the strong market performance in
the first half of 2007.
Key factors impacting the results
- Higher inflation and interest rates in South Africa
Spiralling energy and food prices, together with the 100 basis point
increase in the prime lending rate over the six-month period, placed
further strain on local consumers, eroding their ability to repay debt,
resulting in a marked increase in arrears in Personal & Business Banking
lending units. These economic impacts, combined with management actions
taken to constrain growth in lending, resulted in a slowdown in asset
growth in the six months under review.
- Subscription for shares by the Industrial and Commercial Bank of China
Limited (ICBC)
On 3 March 2008, ICBC subscribed for 152,5 million newly issued ordinary
shares for an aggregate consideration of R15,9 billion. This new equity
capital resulted in additional income that boosted earnings growth. The
short-term effect of introducing this capital has been slightly accretive
to earnings per share but dilutive to return on equity (ROE). R4,3 billion
of this capital has been used in the acquisition of minority interests in
Liberty Holdings in July 2008. Some capital has been used to fund organic
business growth and the remainder is earmarked for acquisition activity in
emerging markets. The business co-operation with ICBC, though still gaining
traction, is progressing well, with numerous business opportunities having
been identified.
- Recent acquisitions
Standard Bank acquired controlling interests in BankBoston Argentina on 1
April 2007 and in IBTC Chartered Bank Plc in Nigeria on 24 September 2007.
The results from both these operations are included for the full period
adding an incremental R150 million and R234 million respectively to group
headline earnings. A 60% interest in CfC Bank (now renamed CfC Stanbic
Holdings) in Kenya was acquired effective 1 June 2008 and had no material
effect on earnings. The integration of this operation into the group is
progressing well.
Banking activities income statement analysis
Net interest income - up 40%
Net interest income grew strongly in Personal & Business Banking and in
Corporate & Investment Banking, by 34% and 49% respectively. Central funding
posted 66% growth, reflecting the income earned on the ICBC capital not yet
deployed.
Net interest income growth was achieved through strong balance growth,
particularly in the corporate customer loan book and a widening net interest
margin which increased by 25 basis points to 3,16%, mainly as a result of the
endowment impact of higher interest rates on shareholders` funds and
transactional deposits. This benefit was offset to some extent by the higher
cost of term funding as the domestic bank continued to increase its long-term
funding ratio.
Non-interest revenue - up 25%
Net fee and commission revenue grew by 21%. Within Personal & Business Banking
account transaction fees grew 11% following price increases that were lower than
inflation, coupled with a 7% growth in the number of accounts in South Africa
and strong volume growth in the expanded branch networks of our operations in
the rest of Africa. Card-based fees rose 19%, helped by our recent acquisition
in Argentina and increased merchant turnover in South Africa. The outcome of the
Competition Commission enquiry into bank charges is expected to have some impact
on Personal & Business Banking fees earned in South Africa, although this cannot
be quantified as yet. Corporate & Investment Banking lifted advisory fees by 48%
on the back of increased underwriting fees in Nigeria and higher corporate and
structured finance advisory deal volumes.
Trading revenue increased by 42%. Excellent growth of 90% was achieved in our
operations in the rest of Africa with the inclusion of IBTC Nigeria. In this
market, foreign exchange and debt securities trading benefited from higher
client volumes. Trading revenue outside Africa grew 19% underpinned by robust
activity in commodity markets and a strong performance from debt securities, as
credit spreads widened. Trading revenue in South Africa was up 24%, with good
performances from commodities and foreign exchange trading due to higher
volatility, which was somewhat offset by a slowdown in debt securities trading.
Other non-interest revenue was 7% lower. Other revenue was reduced by
unfavourable fair value movements in the group`s listed property investments
particularly when compared to the high base set in the comparative period.
Income from insurance-related activities benefited from increased bancassurance
commissions and the inclusion of the insurance operations of CfC Stanbic
Holdings for the first time. Capital profit on the partial realisation of Visa
shares amounted to R123 million but is excluded from headline earnings.
Credit impairment charges doubled
Credit impairment charges increased significantly by 113% and the credit loss
ratio deteriorated from 0,78% to 1,27%.
The above-mentioned financial pressure on South African consumers brought about
by interest rate hikes and declining disposable income impacted Personal &
Business Banking acutely. These factors combined to drive up impaired loans
(previously referred to as non-performing loans) by 122% since June 2007 and by
75% on December 2007, increasing the charge for impaired loans by 137% and
resulting in a total credit loss ratio for Personal & Business Banking of 2,18%
(June 2007: 1,31%).
Mortgage loan customers felt the effects of the rising rate cycle and began
experiencing difficulty in meeting their full contractual repayments towards the
end of last year. This effect has been exacerbated by some contraction in house
prices, affecting the expected realisation values of security. The credit loss
ratio for mortgages therefore rose from 0,61% to 1,30%. The component of this
provision attributable to the discounting of expected recoveries increased from
25 basis points at June 2007 to 78 basis points.
The credit loss ratio of 2,00% (June 2007: 1,38%) in instalment sale and finance
leases reflected the unremitting pressure on the recovery value of used
passenger vehicles in a market that became increasingly saturated due to the
extent of delinquencies and higher fuel prices. The credit loss ratio in card
debtors increased from 6,34% to 9,44%.
In Corporate & Investment Banking the credit loss ratio increased from 0,16% to
0,29%, with the increase mostly arising in the rest of Africa.
Management continue to monitor the group`s credit risk actively and closely.
Credit extension has been tightened by increasing scorecard cut-offs across a
number of portfolios over the last year and capacity has been strengthened in
customer debt management by enhancing systems and increasing the number of
staff.
Operating expenses - up 24%
The group improved the cost-to-income ratio to 48,7% (from 51,8% at June 2007),
as a result of the strong income growth achieved. If the impact of recent
acquisitions is excluded, operating expenses grew by 17%.
Staff costs were 21% higher following a 10% increase in headcount and
inflationary increases. Excluding the impact of acquisitions, headcount rose 5%
and staff costs 14%. Overall headcount in South Africa increased 3% since June
2007 and was marginally down since December.
Other operating expenses increased 29% (or 21% excluding recent acquisitions). A
13% growth in IT costs was attributable to systems developments and
enhancements, greater levels of business activity and higher maintenance costs.
Premises costs continued to escalate in line with the group`s expansion in its
chosen markets. In South Africa, other operating expense growth was limited to
11%.
Balance sheet analysis
Banking assets grew by 30%, and by 26% excluding the effect of recent
acquisitions.
Loans and advances growth
Growth
Growth December 2007
June 2007 to June 2008
to June 2008 (Annualised)
% %
Personal & Business Banking 20 16
Mortgage loans 21 15
Instalment sale and finance leases 14 2
Card debtors 13 9
Other loans 27 50
Corporate & Investment Banking 31 42
Banks 26 19
Customers 32 53
Gross loans and advances 25 28
Gross loans and advances increased by 25% from June 2007 with a marked slowdown
in new business in personal banking in the period under review.
Mortgage loans were up 21% on June 2007 mainly due to readvances on existing
mortgages and reduced prepayments. New bond values fell by 8% and new bond
registration volumes were down 14%, dampening balance growth since December to
15%. Instalment sale and finance leases grew 14% on June 2007, but were only up
2% from December, mainly due to an increase in the non-motor book. Card debtors
increased 13% due to higher average balances, partly offset by a 2% reduction in
the number of accounts. Recent strong growth in other lending relates mainly to
a buoyant South African agriculture sector and increased commercial lending in
other countries, mainly on the African continent.
In Corporate & Investment Banking strong growth was achieved in all regions:
South Africa by 31%; the rest of Africa by 44%, excluding new acquisitions; and
outside Africa by 22%. Loans to customers gained momentum primarily due to an
increase in specialised term finance and demand for medium-term financing. Loans
and advances to banks reflect placement of surplus liquidity.
Liquidity
Liquidity constraints in international money markets and debt capital markets
have eased somewhat during 2008, although ongoing and prolonged risk aversion of
investors and depositors remains evident. Prudent liquidity management practices
continue to be rigorously applied within the bank`s liquidity management
framework. The structural liquidity mismatch was managed within best-practice
banking guidelines. Surplus liquidity buffers, comprising unencumbered and
readily available marketable and liquid assets, amounted to R75 billion as at 30
June 2008.
Capital and Basel II
The group implemented Basel II on 1 January 2008. Over the last year we have
enhanced our internal economic capital and stress testing methodologies
significantly, and have improved and formalised our capital assessment process.
As previously reported, the conversion to Basel II led to increased risk-
weighted exposures and lower qualifying capital, resulting in lower capital
adequacy ratios. Lower risk-weighted exposures in Personal & Business Banking
were more than offset by higher risk-weighted exposures in Corporate &
Investment Banking portfolios and the addition of operational risk which was not
measured under Basel I.
Capital levels were significantly bolstered by the conclusion of the ICBC
transaction in March 2008, which added R15,9 billion to group capital. Capital
adequacy ratios for the group at June 2008 were 13,9% and 11,2% for total and
tier one ratios respectively.
Dividends
It is currently group policy to declare both interim and year-end dividends at a
cover ratio of 2,5 times normalised headline earnings. This policy remained
unchanged and an interim dividend of 193 cents per share was declared, an
increase of 7% on the 2007 interim distribution of 181 cents per share.
Financial Sector Charter
We continue to support the harmonisation process undertaken by the financial
sector and other stakeholders to achieve the alignment of the Financial Sector
Charter (FSC) to the Broad-based Black Economic Empowerment Codes of Good
Practice legislated in 2007. The bank maintained an A rating in the overall FSC
Scorecard with an improvement in the area of employment equity. Black managers
comprised more than 50% of the bank`s management in South Africa at June 2008,
of which 53% are female.
Transaction with Liberty Holdings minorities
The group`s offer to acquire the issued ordinary shares of Liberty Holdings
Limited that the group did not already own closed on 18 July 2008, at which time
97,08% of minority shareholders had accepted the offer. Including Liberty
Holdings shares bought directly by Standard Bank, the total investment amounted
to R4,3 billion. These transactions increased Standard Bank Group`s interest in
Liberty Holdings from 63,5% at June 2008 to 98,9% and its effective share of
Liberty Life from 35,0% to 53,2%.
We are pleased to have achieved our objective of increasing our effective
economic interest in Liberty as part of a rebalancing of our portfolio of
financial services subsidiaries and to align our economic exposure with our
strategic and commercial contribution to Liberty.
Liberty is considering the merits of implementing a holding company structure
and Standard Bank has been approached by Liberty to consider facilitating this
structure by allowing Liberty Holdings to become such a listed holding company.
Standard Bank, Liberty Holdings, Liberty and their advisers are considering this
proposal as well as other alternatives in relation to Liberty Holdings.
Zimbabwe
Conditions in Zimbabwe have further deteriorated at both an economic and social
level. Stanbic Bank Zimbabwe remains solvent and profitable when measured in
local currency. Despite the recent signing of a memorandum of understanding,
political risk in this environment remains high. The group adopts a conservative
approach in recognising earnings from this subsidiary and no amounts have been
included in these results.
Prospects
The global economy has experienced a period of rapid deterioration and the
outlook remains uncertain. South Africa`s growth potential for 2008 is being
restrained by the potential slowdown in global economic activity. However,
strong investment spending, particularly by the South African government and
public sector entities, is expected to support economic growth and should ease
the impact of the slowdown. Reduced disposable income following sharply
increased food, transport and borrowing costs, a weaker residential property
market and low recovery values of vehicles are compounding the strain on
households` ability to service debt which is likely to increase default
experience in South Africa.
The group publishes its financial objectives annually in March. The principal
financial objectives for 2008 published at that stage were normalised headline
earnings per share growth of CPIX plus 5% and a return on equity of 21,0%.
Following the significant increase in early arrears and non-performing loans,
which exceeded our expectations, we moderated our outlook at our May annual
general meeting and advised that growth in normalised headline earnings per
share was only expected to exceed CPIX. The default experience in our Personal &
Business Banking loan book has worsened further since May and growth in
normalised earnings per share, while positive, was below CPIX for the period
under review.
Given our recent experience of South African consumer credit performance and the
potential effects of volatility in international markets, we are currently not
in a position to provide reliable guidance on results for the financial year. In
the circumstances, we intend issuing a voluntary trading update and results
guidance in late October, following the next trading quarter.
While the current environment presents challenging trading conditions, our
capital position and growing franchise remain healthy and we will maintain our
focus on risk mitigation and cost-saving strategies to protect and grow
shareholder wealth. We continually identify and pursue growth opportunities in
our chosen markets to enhance the group`s long-term growth prospects.
Jacko Maree Derek Cooper
Chief executive Chairman
Johannesburg
12 August 2008
Normalised results
With effect from 2004, we have adjusted the group`s results reported under
International Financial Reporting Standards (IFRS) for two required accounting
conventions that do not reflect the underlying economic substance of
transactions. Consistent with prior years, to arrive at the normalised results
the IFRS results have been adjusted for the following items:
- preference share funding for the group`s Black Economic Empowerment
Ownership initiative (Tutuwa) transaction that is deducted from equity and
reduces the shares in issue in terms of IFRS; and
- group companies` shares held for the benefit of Liberty Life policyholders
that result in a reduction of the number of shares in issue and the
exclusion of fair value adjustments and dividends on these shares. The IFRS
requirement causes an accounting mismatch between income from investments
and changes in policyholders` liabilities.
Two recent transactions reduced the extent of the normalised adjustments
relating to Tutuwa:
- In December 2007 the group externalised R1 billion of preference share
financing provided in terms of the Tutuwa initiative, resulting in the
release of 24,7 million ordinary shares previously deemed by IFRS to be
"treasury shares"; and
- In March 2008 Tutuwa participants sold 11,1% of their shares to ICBC,
partly using the proceeds for the repayment of their preference share
liability, thereby releasing a further 11,0 million ordinary shares
previously deemed by IFRS to be "treasury shares".
The result of these adjustments is shown in the table below:
Normalised financial statistics
for the six months ended 30 June 2008
% June June December
change 2008 2007 2007
Standard Bank Group
Cents per ordinary
share
Headline earnings 7 481,8 451,1 960,6
Diluted headline
earnings 7 477,7 444,5 947,5
Total dividends 7 193,0 181,0 386,0
Basic earnings 2 492,3 481,7 1 028,5
Diluted earnings 3 488,2 474,7 1 014,5
Net asset value 40 5 451 3 904 4 255
Financial
performance(%)
ROE 19,8 24,4 24,8
Net interest margin 3,16 2,91 2,97
Credit loss ratio 1,27 0,78 0,78
Cost-to-income ratio 48,7 51,8 51,6
Number of ordinary
shares in issue (000`s)
- end of period 11 1 527 810 1 370 740 1 372 597
- weighted average 8 1 474 519 1 366 720 1 369 223
- diluted weighted
average 7 1 486 991 1 386 926 1 388 217
Normalised headline earnings contribution by business unit
for the six months ended 30 June 2008
% June June December
Rm change 2008 2007 2007
Personal & Business Banking (3) 2 538 2 623 5 658
Corporate & Investment Banking 20 3 726 3 099 6 732
Central and other 561 (71) (210)
Central and other - IFRS 466 (237) (536)
Tutuwa adjustments 95 166 326
Banking activities 21 6 825 5 651 12 180
Liberty Life (46) 279 514 973
Liberty Life - IFRS 511 448 867
Policyholders` deemed treasury
shares and Tutuwa adjustment (232) 66 106
Standard Bank Group 15 7 104 6 165 13 153
Normalised headline earnings
for the six months
ended 30 June 2008 Weighted
Average Growth on
number of Headline 30 June
shares earnings 2007
`000 Rm %
Disclosed on an IFRS basis 1 368 386 7 241 22
Tutuwa initiative 67 293 112
- Initial transaction 99 190
- External financing (24 691)
- Disposal of shares to ICBC (7 206)
Group shares held for the
benefit of Liberty Life
policyholders 38 840 (249)
Normalised 1 474 519 7 104 15
Unaudited results prepared in accordance with IFRS
Consolidated income statement
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Income from banking
activities 33 28 816 21 695 47 296
Net interest income 41 14 390 10 193 22 549
Non-interest revenue 25 14 426 11 502 24 747
Income from investment
management and life insurance
activities (52) 13 486 28 086 49 834
Total income (15) 42 302 49 781 97 130
Credit impairment charges 113 4 497 2 109 4 590
Benefits due to policyholders
(67) 7 273 21 795 37 153
Income after credit
impairment charges and
policyholders` benefits 18 30 532 25 877 55 387
Operating expenses in banking
activities 24 14 167 11 423 24 706
Operating expenses in
investment management and
life insurance activities 11 3 916 3 528 7 423
Net income before goodwill 14 12 449 10 926 23 258
Goodwill impairment/(gain) 2 (390) (376)
Net income before associates
and joint ventures
10 12 447 11 316 23 634
Share of profit from
associates and joint ventures
(19) 187 230 355
Net income before indirect
taxation 9 12 634 11 546 23 989
Indirect taxation 26 647 515 1 185
Profit before direct taxation
9 11 987 11 031 22 804
Direct taxation (17) 2 804 3 386 6 232
Profit for the period 20 9 183 7 645 16 572
Attributable to minorities 43 1 531 1 074 2 471
Attributable to preference
shareholders 17 256 219 450
Attributable to ordinary
shareholders 16 7 396 6 352 13 651
Basic earnings per share
(cents) 5 540,5 517,0 1 109,0
Diluted earnings per share
(cents) 7 521,2 486,4 1 044,1
Headline earnings
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Group profit attributable
to ordinary shareholders 16 7 396 6 352 13 651
Headline earnings
adjustable items added back
or reversed(1) (184) (424) (966)
Goodwill impairment/(gain)
- IFRS 3 2 (390) (376)
Profit on sale of
properties and equipment -
IAS 16 (6) (7) (61)
Impairment of properties
and equipment - IAS 16 28 - 10
Gains on disposal of
businesses and divisions -
IAS 27 (17) - (6)
Impairment of intangibles -
IAS 38 - 27 26
Gains on disposal of
available-for-sale assets -
IAS 39 (191) (54) (559)
Taxation on headline
earnings adjustable items 29 5 32
Minority share of headline
earnings adjustable items - - 4
Headline earnings 22 7 241 5 933 12 721
(1)These headline earnings adjustable items have been included in the
calculation of normalised headline earnings disclosed previously.
Segment report
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Revenue contribution by
business unit
Personal & Business Banking 28 15 879 12 395 27 075
Corporate & Investment
Banking 32 12 047 9 124 19 750
Central and other >100 997 349 818
Banking activities 32 28 923 21 868 47 643
Liberty Life (55) 12 869 28 380 50 320
Standard Bank Group -
Normalised (17) 41 792 50 248 97 963
Adjustments for IFRS 510 (467) (833)
Standard Bank Group - IFRS (15) 42 302 49 781 97 130
Profit and loss attributable
to ordinary shareholders
Personal & Business Banking (3) 2 571 2 644 5 707
Corporate & Investment
Banking 21 3 739 3 102 6 772
Central and other >100 670 324 629
Banking activities 15 6 980 6 070 13 108
Liberty Life (46) 279 514 975
Standard Bank Group -
Normalised 10 7 259 6 584 14 083
Adjustments for IFRS 137 (232) (432)
Standard Bank Group - IFRS 16 7 396 6 352 13 651
Consolidated balance sheet
as at 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Assets
Cash and balances with
central banks 45 23 296 16 096 20 618
Financial investments,
trading and pledged assets
15 361 574 315 602 331 596
Loans and advances 25 735 576 589 773 646 781
Loans and advances to
banks 25 107 203 85 585 98 631
Loans and advances to
customers 25 628 373 504 188 548 150
Investment property 14 15 405 13 506 14 937
Derivative and other
assets 42 189 323 133 267 141 968
Interest in associates and
joint ventures 15 12 435 10 859 12 293
Goodwill and other
intangible assets >100 9 220 2 885 6 666
Property and equipment 29 7 618 5 921 7 216
Total assets 25 1 354 447 1 087 909 1 182 075
Equity and liabilities
Equity 62 97 063 59 770 68 436
Equity attributable to
ordinary shareholders 67 79 921 47 871 53 671
Preference share capital
and premium 5 503 5 503 5 503
Minority interest 82 11 639 6 396 9 262
Liabilities 22 1 257 384 1 028 139 1 113 639
Deposit and current
accounts 23 779 740 636 405 705 843
Deposits from banks 35 87 231 64 836 72 372
Deposits from customers 21 692 509 571 569 633 471
Derivative, trading and
other liabilities 43 274 665 192 083 200 691
Policyholders` liabilities
(1) 180 493 182 817 186 137
Subordinated debt 34 22 486 16 834 20 968
Total equity and
liabilities 25 1 354 447 1 087 909 1 182 075
Contingent liabilities and capital commitments
as at 30 June 2008
June June December
2008 2007 2007
Rm Unaudited Unaudited Audited
Letters of credit 16 219 10 998 14 299
Guarantees 28 122 26 272 31 916
Irrevocable unutilised facilities
57 677 53 096 47 172
102 018 90 366 93 387
Capital commitments
Contracted capital expenditure 847 285 161
Capital expenditure authorised
but not yet contracted 4 861 1 653 4 156
5 708 1 938 4 317
Consolidated cash flow information
for the six months ended 30 June 2008
June June December
2008 2007 2007
Rm Unaudited Unaudited Audited
Net cash from operating
activities 15 592 16 775 32 694
Net cash used in operating funds
(24 177) (5 719) (14 956)
Net cash used in investing
activities (2 212) (7 279) (14 001)
Net cash from/(used in) financing
activities 12 791 (2 616) (1 115)
Statement of changes in equity
for the six months ended 30 June 2008
Preference
Ordinary share
shareholders` capital and Minority Total
Rm funds premium interest equity
Balance at
1 January 2007 42 916 5 503 6 289 54 708
Total recognised
income and expenses 14 293 450 3 896 18 639
Profit for the year 13 651 450 2 471 16 572
Items accounted for
directly in
reserves 642 1 425 2 067
Currency
translation
movement and
hedging 155 (52) 103
Cash flow hedging
and available-for-
sale revaluations (423) - (423)
Change in
shareholding of
subsidiaries 665 1 384 2 049
Other reserve
movements 245 93 338
Issue of share
capital and premium 300 73 373
Share buy-backs - - -
Net decrease in
treasury shares 626 (455) 171
Net distributions
paid (4 464) (450) (541) (5 455)
Balance at
31 December 2007 53 671 5 503 9 262 68 436
Balance at
1 January 2008 53 671 5 503 9 262 68 436
Total recognised
income and expenses 12 202 256 2 404 14 862
Profit for the
period 7 396 256 1 531 9 183
Items accounted for
directly in
reserves 4 806 873 5 679
Currency
translation
movement and
hedging 2 998 562 3 560
Cash flow hedging
and available-for-
sale revaluations 1 393 - 1 393
Change in
shareholding of
subsidiaries 232 351 583
Other reserve
movements 183 (40) 143
Issue of share
capital and premium 16 061 - 16 061
Share buy-backs (128) - (128)
Net decrease in
treasury shares 1 075 368 1 443
Net dividends paid (2 960) (256) (395) (3 611)
Balance at 30 June
2008 79 921 5 503 11 639 97 063
Major business acquisition
Rm CfC Bank
Date of acquisition 1 June 2008
Percentage of voting equity
instruments acquired (%) 60
Carrying Fair value
amount
The details of the fair value of the
assets and liabilities acquired and
goodwill arising are as follows(2):
Cash and balances with central banks 329 329
Trading assets and financial
investments 1 859 1 851
Loans and advances 2 470 2 464
Property, equipment, intangibles and
other assets 996 1 367
Deposit and current accounts (3 145) (3 145)
Derivatives and other liabilities (1 928) (2 008)
Net asset value 581 858
Less: minority interest (402)
Goodwill(2) 872
Cost of acquisition 1 328
Less: fair value of 36,3% of
subsidiary effectively
disposed to minorities(3) (603)
Cash consideration paid 725
(2)Goodwill represents the premium paid for control of an acquisition. The
allocation between goodwill and intangible assets has been based on preliminary
calculations.
(3)Fair value of the equity instruments of the subsidiary was determined with
reference to the listed share price of CfC Bank. Stanbic Africa Holdings
Limited, a wholly-owned subsidiary of the group, was allotted 113,3 million new
CfC shares in exchange for Stanbic Bank Kenya, representing 41,4% of the
combined entity.
Private equity associates and joint ventures(4)
June December
2008 2007
Rm Unaudited Audited
Cost 236 198
Carrying value 389 317
Fair value 397 383
Loans to associates and joint ventures 818 442
Equity accounted income 34 144
Other income from associates and joint
ventures - -
Profit or loss on disposal of associates and
joint ventures 7 -
(4) These associates and joint ventures are accounted for using the equity
method and are subject to the headline earnings exemption for listed banks,
effective for periods ending on or after 31 August 2007.
Financial statistics
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Standard Bank Group
Number of ordinary shares
in issue (000`s)
- end of period 16 1 425 474 1 232 409 1 256 916
- weighted average 11 1 368 386 1 228 666 1 230 961
- diluted weighted
average 9 1 419 137 1 305 874 1 307 414
Cents per ordinary share
Headline earnings 10 529,2 482,9 1 033,4
Diluted headline earnings
12 510,2 454,3 973,0
Total dividends 7 193,0 181,0 386,0
Basic earnings 5 540,5 517,0 1 109,0
Diluted earnings 7 521,2 486,4 1 044,1
Net asset value 44 5 607 3 884 4 270
Financial performance (%)
ROE 21,4 26,4 26,7
Net interest margin 3,15 2,88 2,94
Credit loss ratio 1,28 0,79 0,79
Cost-to-income ratio 48,9 52,2 51,9
Capital adequacy (%)
Capital ratio
- tier I capital 11,2 10,3(5) 8,5
- total capital 13,9 13,7(5) 11,3
(5) Based on Basel I.
Declaration of dividends
Notice is hereby given that the following interim dividends have been declared:
- Ordinary dividend No. 78 of 193 cents per ordinary share (share codes: SBK
and SNB, ISIN: ZAE000109815), payable on Monday, 22 September 2008, to
ordinary shareholders recorded in the books of the company at the close
of business on the record date, Friday, 19 September 2008. The last day
to trade to participate in the dividend is Friday, 12 September 2008.
Ordinary shares will commence trading ex-dividend from Monday, 15 September
2008;
- 6,5% first cumulative preference shares (first preference shares) dividend
No. 78 of 3,25 cents per first preference share (share code: SBKP, ISIN:
ZAE000038881), payable on Monday, 15 September 2008, to holders of first
preference shares recorded in the books of the company at the close of
business on the record date, Friday, 12 September 2008. The last day to
trade to participate in the dividend is Friday, 5 September 2008.
First preference shares will commence trading ex-dividend from Monday, 8
September 2008; and
- Non-redeemable, non-cumulative, non-participating preference shares
(second preference shares) dividend No. 8 of 515,58 cents per second
preference share (share code: SBPP, ISIN: ZAE000056339), payable on
Monday, 15 September 2008, to holders of second preference shares
recorded in the books of the company at the close of business on the
record date, Friday, 12 September 2008. The last day to trade to
participate in the dividend is Friday, 5 September 2008. Second
preference shares will commence trading ex-dividend from Monday, 8
September 2008.
The relevant dates for the payment of dividends are as follows:
Non-redeemable,
non-cumulative,
6,5% non-
cumulative participating
preference preference
shares shares
(First (Second
Ordinary preference preference
shares shares) shares)
JSE Limited (JSE)
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock
Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 78 78 8
Dividend per share
(cents) 193 3,25 515,58
Dividend payment dates
Friday Friday Friday
Last day to trade 12 September 5 September 5 September
"CUM" dividend 2008 2008 2008
Monday Monday Monday
Shares trade 15 September 8 September 8 September
"EX" dividend 2008 2008 2008
Friday Friday Friday
19 September 12 September 12 September
Record date 2008 2008 2008
Monday Monday Monday
22 September 15 September 15 September
Payment date 2008 2008 2008
Ordinary share certificates may not be dematerialised or rematerialised between
Monday, 15 September 2008 and Friday, 19 September 2008, both days inclusive.
Preference share certificates (first and second) may not be dematerialised or
rematerialised between Monday, 8 September 2008 and Friday, 12 September 2008,
both days inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders` bank accounts on the payment date.
In the absence of specific mandates, dividend cheques will be posted to
shareholders. Preference shareholders (first and second) who have dematerialised
their share certificates will have their accounts at their CSDP or broker
credited on Monday, 15 September 2008. Ordinary shareholders who have
dematerialised their share certificates will have their accounts at their CSDP
or broker credited on Monday, 22 September 2008.
On behalf of the board
Loren Wulfsohn
Group secretary
Accounting policies
Basis of preparation
The consolidated financial results are prepared in accordance with, and comply
with, International Financial Reporting Standards (IFRS) and the South African
Companies Act (61 of 1973). The consolidated financial statements are prepared
in accordance with the going concern principle under the historical cost basis
as modified by the fair value accounting of assets and liabilities where
required in terms of IFRS. The interim results are prepared in accordance with
IAS 34 - Interim Financial Reporting and have not been audited.
Changes in accounting policies
The accounting policies are consistent with those adopted in the previous year.
The following new accounting interpretations became effective on 1 January 2008:
- IFRIC 12 - Service Concession Arrangements; and
- IFRIC 14 - IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction.
The adoption of these standards and interpretations has had no material effect
on the results, nor has it required any restatements of the results.
Reclassifications
Reclassifications to the 2007 interim results relate to adjustments to amounts
previously disclosed on adoption of IFRS 7 identified during the finalisation of
the 2007 year end results. These adjustments relate to the reclassification of:
- fee and commission expenses relating to financial instruments and included
within other operating expenses to fee and commission expense;
- loans and advances to customers reclassified to loans and advances to
banks;
- deposits from customers to deposits from banks; and
- financial instruments previously disclosed as pledged assets to trading
assets and financial investments.
The reclassifications did not impact equity attributable to ordinary
shareholders or profit for the period attributable to ordinary shareholders.
Directors:
DE Cooper (Chairman), Kaisheng Yang** (Deputy chairman),
SJ Macozoma (Deputy chairman), JH Maree* (Chief executive),
DDB Band, E Bradley, TS Gcabashe, SE Jonah KBE##, Sir Paul Judge#,
KP Kalyan, Yagan Liu**, RP Menell, Adv KD Moroka, AC Nissen,
MC Ramaphosa, MJD Ruck, MJ Shaw, Lord Smith of Kelvin, Kt#,
EM Woods
*Executive director **Chinese #British ##Ghanaian
Group secretary:
L Wulfsohn
Registered office:
9th floor, Standard Bank Centre,5 Simmonds Street, Johannesburg 2001
PO Box 7725, Johannesburg 2000
Share transfer secretaries in:
South Africa Namibia
Computershare Investor Services Transfer Secretaries
(Proprietary) Limited (Proprietary) Limited
70 Marshall Street, Shop 8, Kaiserkrone Centre,
Johannesburg 2001 Post Street Mall,
Windhoek
PO Box 61051, Marshalltown 2107 PO Box 2401, Windhoek
Sponsor:
Standard Bank
www.standardbank.co.za
Date: 13/08/2008 08:00:03 Produced by the JSE SENS Department.
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