| Thu 28 May 2009, 8:00 | | SBK - Standard Bank Group Limited - Chief executive`s comments at the |
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SBK
SBK
SBK - Standard Bank Group Limited - Chief executive`s comments at the
AGM 28 May 2009 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")
Chief executive`s comments at the AGM 28 May 2009 and capital adequacy
disclosure
1. Chief executive`s comments at the Annual General Meeting
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 2009 in comparison with the
similar period for 2008:
At the time of releasing the group`s 2008 results on 5 March 2009, we
cautioned that we expected the extremely difficult operating conditions
to continue, posing significant challenges for our customers and our
industry. Since then, slowing economic growth has resulted in an even
tougher operating environment than anticipated and consequently our
focus remains on prudent risk management and preservation of liquidity
and capital.
For the four month period to 30 April 2009, normalised headline
earnings contributed by banking activities were down 6%, and, after
consolidating a net loss from Liberty Holdings (refer below), group
normalised headline earnings amounted to R4,1 billion reflecting a
reduction of 14%, and group normalised headline earnings per share were
18% lower. The dilution in normalised headline earnings per share is
largely as a result of the shares issued to the Industrial and
Commercial Bank of China on 3 March 2008 being included for the full
current reporting period.
A 72% increase in impairments off the relatively low base for the first
four months of 2008 is the principal reason for the 6% reduction in
headline earnings from banking activities. The recent reductions in
interest rates have not impacted significantly on credit impairments
although there was some slowing of the growth rate in non-performing
loans in April 2009.
Net interest margins remained relatively stable for the first three
months of the year, however some net interest margin compression
manifested itself in April 2009 as a result of the recent interest rate
reductions. Non-interest revenue is performing in line with
expectations and reflects an improvement over the comparative period.
Operating costs continue to be tightly controlled and the cost-to-
income ratio for the first four months remained below 50%.
With respect to the major business units, Personal & Business Banking
headline earnings to April 2009 were down 18% and Corporate &
Investment Banking headline earnings were up 4% - after recognising
significant increases in credit impairments in both business units.
Shareholders are referred to the Liberty Holdings market update on 15
May 2009 wherein, referring to the first quarter of 2009, it was stated
"Although operations continue to deliver earnings in line with
expectations, the operational earnings have been exceeded by the impact
of balance sheet management activities. The unrealised market risk loss
consists of interest rate and equity mark-to-market losses of an
estimated R250m and R500m respectively. This unrealised market risk
loss was offset by an estimated R350m of operating earnings from
subsidiaries, resulting in an overall loss of approximately R400m for
the quarter. Although the challenging economic environment experienced
in the first quarter of 2009 is expected to continue for the remainder
of the year, the group is expected to return to profitability for the
full year." Standard Bank effectively consolidates 53.7% of these
losses through our shareholding in Liberty Holdings.
As disclosed below, at 31 March 2009 the group had a total capital
adequacy ratio of 12.7% and a tier 1 capital adequacy ratio of 10.8%,
comfortably exceeding minimum regulatory requirements and the group`s
target ratios.
Jacko Maree will also make the following comments on the outlook for
the group in 2009:
In light of the deterioration in expectations for economic growth in
all markets in which the group operates and the pressure on net
interest income caused by the faster than anticipated reduction in
interest rates in South Africa, the group remains cautious on its
outlook for the 2009 year. In March 2009, the board considered that to
produce similar results in 2009 to those achieved in 2008 would be an
acceptable outcome. Given the trend established in the first four
months, it is unlikely that last year`s normalised headline earnings
per share will be achieved.
2. Basel II capital adequacy disclosure as at 31 March 2009
In terms of the Basel II requirements under Regulation 43(1)(e)(ii) of
regulations relating to banks, minimum disclosure on the capital
adequacy of the group is required on a quarterly basis. This
announcement meets the ongoing reporting requirement for quarterly
disclosure in terms of Pillar 3 of the Basel II capital accord.
March December
2009 2008
Rm Rm
Ordinary share capital and premium 17 046 16 997
Ordinary shareholders` reserves 65 412 64 612
Minority interest 5 621 5 616
Regulatory deductions against primary capital (15 292) (14 432)
Regulatory exclusions against primary
capital:
Foreign currency translation (5 242) (6 168)
reserves
Other (3 539) (4 394)
Preference share capital and premium 5 495 5 495
Primary capital 69 501 67 726
Subordinated debt 14 986 16 035
Secondary unimpaired reserve funds 1 134 1 401
Regulatory deductions against secondary (5 687) (5 958)
capital
Secondary capital 10 433 11 478
Tertiary capital - Subordinated debt 2 305 2 393
Total qualifying capital 82 239 81 597
Total minimum capital requirement 62 987 61 829
% %
Total capital adequacy ratio 12.7 12.9
Primary capital adequacy ratio 10.8 10.7
Note:
Ordinary shareholders` reserves include unappropriated profits.
The information contained in this announcement has not been reviewed by
or reported on by the group`s auditors.
Johannesburg
28 May 2009
Lead sponsor
Standard Bank
Independent sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 28/05/2009 08:00:05 Produced by the JSE SENS Department.
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