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SBK - Standard Bank Group Limited - Standard Bank Group unaudited results and
dividend announcement for the six months ended 30 June 2010
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
JSE share code: SBK
NSX share code: SNB
ISIN: ZAE000109815
NSX share code: SNB ZAE000109815
SBKP ZAE000038881 (First preference shares)
SBPP ZAE000056339 (Second preference shares)
Standard Bank Group unaudited results and dividend announcement for the six
months ended 30 June 2010
Headline earnings
- normalised R5 989 million, up 11% on 1H09
- IFRS R5 868 million, up 16% on 1H09
Headline earnings per ordinary share (HEPS)
- normalised 381,9 cents, up 9% on 1H09
- IFRS 396,0 cents, up 12% on 1H09
Return on equity (ROE)
- normalised 13,5% (1H09: 12,6%)
- IFRS 13,9% (1H09: 12,4%)
Tier I capital adequacy ratio of 11,8% (1H09: 12,0%)
Dividend per ordinary share of 141 cents (1H09: 141 cents)
Net asset value (NAV) per share
- normalised 5 792 cents (1H09: 5 452 cents)
- IFRS 5 876 cents (1H09: 5 531 cents)
Cost-to-income ratio
- normalised 58,1% (1H09: 49,9%)
- IFRS 58,2% (1H09: 50,0%)
Credit loss ratio
- normalised and IFRS 1,04% (1H09: 1,84%)
The unaudited results discussed in the commentary below have been prepared on
a normalised basis. Results are normalised to reflect the legal and economic
substance of the group`s black ownership initiative; and deemed treasury
shares held for the benefit of Liberty policyholders and to facilitate client
trading activities (described fully below).
Overview of financial results
"In a period characterised by continued low interest rates and increasing
uncertainty about the global outlook, banking revenues were constrained. This
was balanced by a steady improvement in customers` debt profiles, allowing
impairment charges to almost halve. Liberty earnings alleviated some of the
pressure felt in the banking operations, helping the group to achieve growth
in headline earnings. Notwithstanding lingering uncertainties about the
condition of world markets, we remain committed to the long-term growth of our
emerging markets franchise."
- Jacko Maree, group chief executive
Global operating environment
Financial markets are generally stabilising across the globe. Investor
appetite is gradually returning, main stock market indices have trended
towards pre-crisis highs and, after widening significantly, credit default
swaps have declined to pre-September 2008 levels. Unprecedented government
intervention in advanced economies and some key emerging markets has pulled
the world economy out of crisis mode. Many developed nations are being forced
to implement severe austerity measures to bring their fiscal balances to
order, during a period where the economic recovery had barely commenced. The
banking sector has not benefited from the early stages of the global economic
recovery. Liquidity concerns remain and corporate and consumer appetite for
credit has generally remained subdued. Continued risk aversion in the
aftermath of efforts to strengthen the banking sector and the threat of
increased regulation have continued to affect banks into 2010.
The global economy is showing a two-track recovery profile: emerging markets
are growing, while mature economies slowly regain lost ground. Led by the BRIC
economies, emerging markets are continuing to move to the centre of global
economic focus. Nearly half of the world`s GDP growth in 2010 will come from
the BRIC economies. An axis of developing nations, including Latin America and
Africa, are supporting the ongoing structural shift to the south and east.
Africa is reaping the rewards of reform, better macroeconomic management,
investments in infrastructure and more constructive trade partnerships.
Nevertheless, from a cyclical perspective, Africa`s economic momentum was held
back in 2010 by the impact of falling commodity prices, export volumes and
external financial flows in 2009. Africa`s prospects remain contingent on the
gradual recovery of the world economy.
Domestic operating environment
Real GDP growth in South Africa of 4,6% in the first quarter of 2010 compared
to a decline of 1,8% in 2009, has been driven primarily by external demand for
commodities and manufactured products. The strong rand has led to low
inflation: CPI averaged 5,1% for the first half of 2010 compared to 7,1% in
2009; which in turn has led to the lowest interest rates in 28 years: the
prime rate averaged 10,23% for the first half of 2010 compared to 11,88% in
2009; and should be supportive of asset growth going forward.
Asset prices, including house prices and equities, have improved from last
year. The Johannesburg stock exchange has advanced by 19%, while house prices,
up 7,3% in July, are staging a gradual recovery since emerging from the
downswing early this year. The year-on-year growth reported in July represents
the first reported real growth in house prices since mid-2007. A recovery in
the asset base of households should support consumer spending in due course.
The ratio of household debt to disposable income declined to 78,4% in the
first quarter of 2010 from 79,9% in the last quarter of 2009. However, the
ratio is still historically high, explaining the reluctance of consumers to
take on more debt and suggesting that consumers will continue to focus on
paying off existing debt.
Extensive job losses are weighing heavily on the economy from both an economic
and social perspective. With more than one million jobs lost over the last
five quarters, it is clear that household demand will suffer and pressure on
public finances will escalate.
Overview of results
Headline earnings by business unit
% 1H10 1H09
change Rm Rm
Personal & Business Banking 2 1 988 1 952
Corporate & Investment Banking (6) 3 237 3 451
Central and other (66) 224 651
Banking operations (10) 5 449 6 054
Liberty >100 540 (647)
Total 11 5 989 5 407
Personal & Business Banking benefited from reduced credit impairments although
this was offset by lower net interest income due to muted asset growth and low
interest rates. Excluding the impact of a stronger average rand exchange rate,
headline earnings for Corporate & Investment Banking were flat compared to the
same period the year before, with lower credit impairment charges mitigating
reduced income following lower levels of client activity. After reporting a
loss for the first six months of last year, Liberty returned to profitability.
Central and other reported a more normal result compared to 2009 which
included a release of a R500 million portfolio provision for credit
impairments.
Headline earnings by geography
% 1H10 1H09
change Rm Rm
South Africa banking 8 4 739 4 405
Liberty >100 540 (647)
South Africa 40 5 279 3 758
Rest of Africa (25) 509 682
Outside Africa (64) 230 640
Central funding (>100) (29) 327
Total 11 5 989 5 407
Banking operations in South Africa showed some resilience with revenues down
only 4%. As the credit environment continued to improve in South Africa,
credit impairments reduced and headline earnings grew by 8%. Operations across
the rest of the African continent experienced tighter interest margins,
particularly in Personal & Business Banking where total revenues were down 5%.
Corporate & Investment Banking in the rest of Africa experienced good
investment banking revenues and total revenues were up 2%. Investments in
staff and systems continued in the rest of Africa as we extend our branch
presence to build the franchise. Operations outside Africa experienced a sharp
decline in customer activity compared with a buoyant first half in 2009.
Volatility and general customer apathy to transact in an uncertain environment
dampened revenues while costs continued to be incurred in anticipation of
increased economic activity, particularly in emerging markets.
Balance sheet analysis
Banking assets of R1 100 billion were flat on the prior period and marginally
up on December 2009.
Loans to customers declined 3% from June 2009 with the major asset classes of
mortgages up 4%, instalment sale and finance leases down 13%, card debtors
flat, overdrafts and other demand loans down 7% and term lending, mainly to
corporates, down 7%. Overall, loans and advances grew 1% with loans to banks
increasing 26%. This reflected the excess liquidity being placed in the
interbank market as client demand for lending products waned.
Deposit and current accounts grew 1% with pleasing growth in current accounts
of 12%, in line with our strategy of growing transactional banking
relationships. Call deposits decreased 10% as a result of lower average
balances and lengthening the term deposit book. The ratio of advances to
deposits remained conservative at 93% (1H09: 92%).
For certain derivative contracts, the associated assets and liabilities
previously accounted for separately have been regrouped and reported on a net
basis, to more appropriately reflect the underlying substance of these
positions. This resulted in a R41 billion reduction in derivative assets and
liabilities from that previously reported. The reclassification section
provides more detail.
Net asset value grew 5% or R4,3 billion since December 2009 with the inclusion
of earnings offset by R1,6 billion in dividends paid.
Income statement analysis
Analysis of income statement as reported
Net interest income was 12% lower than for the first six months of 2009. Lower
net interest margins (3,02% for 1H10 versus 3,45% for 1H09) and a flat loan
book were the primary reasons for the decline. The endowment impact of lower
average interest rates on capital and transactional balances has had a 54
basis point negative impact on margins. Deposit spreads were again constrained
due to the sustained low interest rate environment in most markets in which
the group operates and increasing competition for savings. The benefit of
continued repricing of lending margins on new business was dampened by muted
growth in the loan book.
Non-interest revenue declined 5% in the period with net fee and commission
revenue up 4%, trading revenue down 23% and other revenue up 21%. The group`s
partnership with the Industrial and Commercial Bank of China bolstered
advisory fee and commission income through increased cross border transaction
deal flow. In South Africa client activity in longer-term funding transactions
remained low. Increased customer activity in basic transactional banking
together with an annual pricing increase resulted in 7% growth in income from
account transaction fees. Of the 23% decline in trading income, 13% was due to
the translation effect of a stronger rand and 10% due to lower levels of
client activity due to general nervousness about financial markets, especially
in the second quarter as the European sovereign debt crisis emerged. Other
revenue growth was supported by gains on listed property investments, positive
valuation adjustments on unlisted equities, improved short-term insurance
income and the solid contribution from the sale of insurance-related products
to bank customers, in partnership with Liberty.
Credit impairment charges almost halved for the period when compared to the
first half of 2009 and were 24% down on the second half of 2009 reflecting the
continued improvement in the credit environment. Non-performing loans (NPLs)
remained high at 6,24% of the book (FY09: 6,15%), however the notable slowing
of new defaults contributed to reducing NPL impairments from R7 billion in the
first half of 2009 to R4 billion in the first half of 2010. Corporate
restructuring and the lower probability of client defaults in Corporate &
Investment Banking resulted in names being removed from watchlists and a
subsequent net reversal of portfolio provisions previously raised. The credit
loss ratio of 1,04% is an improvement over the ratio of 1,84% for the first
half of 2009 and 1,31% for the second half of that year.
Banking activities cost growth was 7% for the period, and, adjusted for a
constant currency, cost growth was 15%. Staff costs increased 6% with the
increase primarily coming from Personal & Business Banking on the back of
annual increases and increased headcount, particularly in Africa to support
franchise growth. Other operating costs grew 8% with higher depreciation costs
in the current period and continued investment in IT systems and
infrastructure. Given slower revenue growth, the cost-to-income ratio
increased to 58,1%.
Within banking activities, income from associates and joint ventures more than
doubled to R259 million largely due to the first time inclusion of equity
accounted earnings (USD24 million) from our investment in Troika Dialog in
Russia.
Summarised analysis of group earnings on constant currency
The average US dollar/rand exchange rate strengthened from 9,20 in the first
half of 2009 to 7,53 in the period under review. This, together with the
rand`s strength against the basket of African currencies in which the group
operates, meant foreign earnings were dampened when translated into rands. On
a constant currency basis (which restates the prior period income statement
using the current period average exchange rate) total income was down 3%
(reported: down 9%), operating expenses were up 15% (reported: up 7%) and
normalised headline earnings were up 16% (reported: up 11%).
Overview of business unit performance
Personal & Business Banking
Headline earnings of R1 988 million in Personal & Business Banking were 2% up
on the same period in 2009. An ROE of 16,1% was achieved. Margins continued to
be impacted by low interest rates, however, credit impairments reduced faster
than anticipated.
In mortgage lending the number of new applications for finance was up by an
encouraging 77% and the number of registrations was 56% higher. Book growth of
4% was achieved largely attributable to the reintroduction of the mortgage
origination channel in the third quarter of 2009 and the purchase of a further
R2,8 billion of mortgages from SA Home Loans in 2010. Margins in mortgage
lending were impacted by the relatively higher cost of term funding as the
group further lengthens its funding profile. With more emphasis being placed
on ongoing concession management for new loans, year-to-date weighted average
new business concessions in South Africa improved to 0,28% compared to 1,07%
for the six months ended June 2009; however this was not enough to offset the
increase in funding costs.
The lag effect of the high inflation and interest rate environment during 2008
and the impact of bottlenecks in the debt review process introduced by the
National Credit Act remain evident in the home loans portfolio, with NPLs
increasing to R27 billion (10,4% of the book compared to 10,1% at December
2009). We have remained steadfast in our risk-based strategy of assisting
clients to remain in their houses which has resulted in low levels of
foreclosures and evictions and hence low levels of write-offs in the period.
The slower growth rate in NPLs and an improved outlook for consumers and house
prices in South Africa allowed the credit impairments for home loans to reduce
by 9% for the period resulting in a lower yet high credit loss ratio of 1,36%
(1H09: 1,55%). Recently announced improvements to the debt review process
should help alleviate the accumulation of NPLs in this portfolio.
The instalment finance book continued to shrink as some sectors of the
business market struggle to recover from the impact of the economic recession,
although a recent pick-up in new business volumes has been observed. NPLs are
reducing in this portfolio and the credit loss ratio improved to 2,37% (1H09:
3,60%) with further improvement expected.
Card showed healthy earnings growth for the period despite lower revenues.
Pressures on revenues continued with lower cardholder activity and reduced
outstanding average balances as consumers reduce debt obligations. A reduced
credit loss ratio of 4,82% (1H09: 7,24%) and lower fraud losses as chip and
pin cards are rolled out contributed to growth in headline earnings of 37%.
Transactional and lending product deposit margins remained under pressure due
to the negative endowment impact of lower interest rates on transactional
accounts. Branch strategies to attract new deposit customers were successful
with the number of current accounts increasing 17% in personal markets and 5%
in business markets in South Africa. Deposits continue to grow across the
African network, particularly in Nigeria. Credit losses in the business
banking book reduced as trading conditions improved.
Bancassurance income grew 21% as complex product sales increased off a low
base in 2009 and the simple products benefited from improved claims ratios.
Corporate & Investment Banking
Corporate & Investment Banking generated headline earnings of R3 237 million,
down 6% on the same period in 2009. An ROE of 15,1% was recorded. General
nervousness in financial markets in the second quarter resulted in much lower
client activity than anticipated. Given the dependence that this business has
on client volumes, revenues were hard hit. This was partly mitigated by an
improved credit environment, allowing a net reversal of credit impairments.
The global markets business endured a challenging first half of the year with
income down 23% off the high base set in 2009. Global markets` income earned
outside South Africa was particularly impacted by the translation effect of
the strong rand, and by income earned in Russia previously reflected under
trading income, now accounted on a net basis as earnings from associates
following the acquisition of Troika Dialog. Adjusting for these two impacts,
global markets income is down 5%. Most notably in the second quarter,
financial markets showed continuing signs of uncertainty as concerns of
Eurozone debt and the strength of the global recovery reduced client risk
appetite. This impacted client franchise performances across forex, interest
rate, commodities and equities. However, improvements in credit trading were
experienced in South Africa. The global markets business in the rest of Africa
showed strong results from interest rate trading due to increased client
activity.
Investment banking income was down 4% on the same period in the prior year
with advisory businesses performing well across all regions. Term lending
across Africa delivered a strong performance on the back of improved economic
conditions across much of the continent and a solid deal pipeline, despite
margins being impacted by the negative endowment effect. Investment banking in
operations outside Africa experienced a challenging first half characterised
by a slowdown in deal flow. Investment banking recorded a turnaround in
impairments for credit losses with some reversals of provisions previously
raised in South Africa, as clients restructured their debt during the period.
Transactional products and services income was down 17% on the prior period.
Margins were compressed by the negative endowment effect on transactional
balances across Africa. Underlying transactional volumes and cash management
deposits increased in South Africa with the electronic banking business
performing well.
Wealth - Liberty
The financial results reported for the wealth business unit represent the
consolidated results of the group`s 53,7% investment in Liberty Holdings
Limited (Liberty). Bancassurance results are included under Personal &
Business Banking.
Normalised headline earnings were R1 007 million for the period compared to a
R1 207 million loss reported for the same period in 2009, a significant
improvement indicating a return to more normal levels of earnings from core
insurance operations. Of these headline earnings, R540 million was
attributable to Standard Bank Group (1H09: loss of R647 million). The progress
made in improving policyholder persistency across the risk books has been
particularly pleasing. Balance sheet management continued as planned during
the period: returns on the shareholder investment portfolio were satisfactory
given market performance and asset/liability positions were managed within
risk limits. Despite a difficult operating environment, Stanlib and Liberty
Africa asset management operations continued to attract net cash inflows,
totalling R11,7 billion, with particular strength in the fixed interest
franchise.
Expansion into Africa is still in a build phase and good progress has been
made in Namibia and Botswana. The acquisition of the non-banking entities of
CfC Stanbic in Kenya (CfC Insurance Holdings) has been delayed until the
fourth quarter of 2010 due to the extended regulatory process in Kenya.
Shareholders are referred to the full Liberty Holdings interim results
announcement dated 5 August 2010.
Capital management
The group remains well capitalised with a tier I ratio of 11,8%, well above
the group`s internal targets and at levels similar to those at December 2009.
Liquidity
Growth in term lending remained subdued throughout the first half of 2010.
Under these circumstances the group has placed particular emphasis on cost
effective refinancing and funding in support of meeting its ongoing structural
liquidity requirements. The group increased its long-term funding ratio to
26,3% and prudently maintains a sizeable liquidity buffer with unencumbered
marketable assets totalling R105 billion (12,3% of funding-related
liabilities) as at 30 June 2010.
We are encouraged by the recently announced revised Basel III proposals, which
are more conducive to credit growth required to support developing economies,
particularly the revisions to liquidity requirements.
Dividends
Given the outlook mentioned below, the board has considered it prudent to hold
the dividend at the same level as the prior interim period at 141 cents. The
resultant interim cover ratio is 2,7 times, slightly higher than the existing
policy of 2,5 times.
Prospects
Uncertainty regarding a sustained improvement in market conditions remains.
Although a second global recession seems unlikely at this point, a loss of
momentum in the recovery is evident. While the South African economy has grown
relatively robustly in the first half of 2010, it is possible that the second
half of the year will see a modest pull-back in economic activity, given the
uncertain global environment and the debt overhang of households. In the near
term we therefore expect revenue growth to remain challenging.
It is expected that the credit environment across most regions will continue
to gradually improve. Personal & Business Banking should benefit from
reductions in NPLs in the second half of the year and into 2011. The risk of
corporate defaults is not expected to increase and, although our client
watchlists are shortening, a much subdued economic environment could raise
this risk.
Notwithstanding lingering uncertainties about the condition of world markets,
we remain committed to the long-term growth of our emerging markets franchise.
We continue to invest in our infrastructure and people to enable us to deliver
the quality products and services that our customers demand, and to provide
good long-term results for our shareholders.
We are in the process of improving the effectiveness of our organisational
structures to support the sustainable building of the franchise but at the
same time achieving better cost efficiency. This enterprise-wide initiative is
expected to take some time to bear fruit and is not expected to have an impact
in the current year.
While the results for the group in 2010 are under some pressure, we firmly
believe we have the right strategy in place and remain confident about the
future.
Jacko Maree Fred Phaswana
Chief executive Chairman
11 August 2010
Normalised results
With effect from 2004, we have adjusted the group`s results reported under
IFRS for required accounting conventions that do not reflect the underlying
economic substance of transactions. 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;
* group companies` shares held for the benefit of Liberty 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; and
* group share exposure entered into to facilitate client trading activities.
As part of the normal trading operations, a group subsidiary offers to its
clients trading positions of listed shares, including its own shares. In order
to hedge the risk on these shares the subsidiary buys or sells short group
shares in the market. Although the share exposure on the group`s own shares is
deducted from equity and the related fair value movements are reversed in the
income statement on consolidation, the client trading position and fair value
movements are not eliminated, resulting in an accounting mismatch.
The group has corrected these accounting mismatches resulting from the
application of IFRS in preparing the normalised results.
The result of these adjustments is shown in the table below:
Normalised headline earnings
Weighted average Headline Growth on
number of shares earnings 1H09
`000 Rm %
Disclosed on an IFRS basis 1 481 814 5 868 16
Tutuwa initiative 63 479 115
Group shares held for the benefit of 27 297 54
Liberty policyholders
Share exposures held to facilitate (4 465) (48)
client trading activities
Normalised 1 568 125 5 989 11
Summarised unaudited results in accordance with IFRS
Consolidated income statement
for the six months ended 30 June 2010
Rm % 1H10 1H09 FY09
change Unaudited Unaudited Audited
Income from banking activities (9) 28 995 31 804 62 828
Net interest income (13) 14 452 16 522 31 316
Non-interest revenue (5) 14 543 15 282 31 512
Income from investment management and 64 15 255 9 287 43 458
life insurance activities
Total income 8 44 250 41 091 106 286
Credit impairment charges (47) 3 790 7 115 12 097
Benefits due to policyholders 42 9 389 6 634 33 915
Income after credit impairment 14 31 071 27 342 60 274
charges and
policyholders` benefits
Operating expenses in banking 7 17 019 15 962 32 827
activities
Operating expenses in investment 3 4 295 4 170 9 052
management and life insurance
activities
Net income before goodwill 35 9 757 7 210 18 395
Goodwill impairment (100) 2 42
Net income before associates and 35 9 757 7 208 18 353
joint ventures
Share of profit from associates and 96 269 137 33
joint ventures
Net income before indirect taxation 37 10 026 7 345 18 386
Indirect taxation (3) 656 679 1 710
Profit before direct taxation 41 9 370 6 666 16 676
Direct taxation 51 2 456 1 627 4 680
Profit for the period 37 6 914 5 039 11 996
Attributable to minorities >100 818 (361) 411
Attributable to preference (31) 199 289 531
shareholders
Attributable to ordinary shareholders 15 5 897 5 111 11 054
Basic earnings per share (cents) 12 398,0 354,7 757,5
Diluted earnings per share (cents) 12 383,1 343,5 731,6
Headline earnings
for the six months ended 30 June 2010
Rm % 1H10 1H09 FY09
change Unaudited Unaudited Audited
Group profit attributable to ordinary 15 5 897 5 111 11 054
shareholders
Headline earnings adjustable items (63) (44) 205
(reversed)/added back
Goodwill impairments - 2 42
IFRS 3
Loss on deemed disposal of associate 10
- IFRS 3
Profit on sale of property and (38)
equipment - IAS 16 (19) (18)
Impairment of property and equipment 46
- IAS 16
Realised foreign currency translation (18)
reserve
on foreign operations - IAS 21
Gains on the disposal of businesses 7
and divisions - IAS 27
Impairment of associates - IAS 28 379
Impairment of intangible assets - IAS 11 96
38
Realised gains on available-for-sale (54) (39) (309)
assets - IAS 39
Taxation on headline earnings 20 10 16
adjustable items
Minority share of headline earnings 14 2 (22)
adjustable items
Headline earnings 16 5 868 5 079 11 253
Consolidated statement of financial position
as at 30 June 2010
Rm % 1H10 1H09 FY09
change Unaudited Unaudited Audited
Assets
Cash and balances with central 13 25 687 22 731 24 983
banks
Financial investments, trading 10 371 700 337 536 356 518
and pledged assets
Loans and advances 1 716 875 707 675 721 389
Loans and advances to banks 26 124 487 98 606 122 923
Loans and advances to customers (3) 592 388 609 069 598 466
Investment property 10 19 520 17 695 19 058
Derivative and other assets (13) 148 154 170 877 140 703
Non-current assets held for sale
(100) 3 363
Interest in associates and joint 43 9 723 6 800 9 529
ventures
Goodwill and other intangible 8 10 069 9 356 9 409
assets
Property and equipment 41 13 316 9 467 12 250
Total assets 2 1 315 044 1 285 500 1 293 839
Equity and liabilities
Equity 9 104 006 95 445 99 369
Equity attributable to ordinary 9 88 025 80 632 84 022
shareholders
Ordinary share capital 2 159 156 156
Ordinary share premium 2 17 277 16 944 17 041
Reserves 11 70 589 63 532 66 825
Preference share capital and 5 503 5 503 5 503
premium
Minority interest 13 10 478 9 310 9 844
Liabilities 2 1 211 038 1 190 055 1 194 470
Deposit and current accounts 1 773 128 769 052 768 548
Deposits from banks 11 101 345 90 906 106 018
Deposits from customers (1) 671 783 678 146 662 530
Derivative, trading and other 0 229 590 228 509 215 722
liabilities
Non-current liabilities held for (100) 2 054
sale
Policyholders` liabilities 8 181 593 168 733 183 544
Subordinated debt 23 26 727 21 707 26 656
Total equity and liabilities 2 1 315 044 1 285 500 1 293 839
Contingent liabilities and capital commitments
as at 30 June 2010
Rm 1H10 1H09 FY09
Unaudited Unaudited Audited
Letters of credit and bankers 11 881 11 285 10 784
acceptances
Guarantees 31 349 28 955 29 078
Contingent liabilities 43 230 40 240 39 862
Contracted capital expenditure 1 822 3 164 1 689
Capital expenditure authorised but not 9 358 7 862 10 075
yet contracted
Capital commitments 11 180 11 026 11 764
Consolidated cash flow information
for the six months ended 30 June 2010
Rm 1H10 1H09 FY09
Unaudited Unaudited Audited
Net cash flows from operating 9 338 212 6 295
activities
Net cash flows used in investing (6 001) (1 182) (7 372)
activities
Net cash flows (used in)/from financing
activities (2 775) 557 2 887
Effects of exchange rate changes on 142 (2 553) (2 524)
cash and cash equivalents
Net increase/(decrease) in cash and 704 (2 966) (714)
cash equivalents
Cash and cash equivalents at beginning 24 983 25 697 25 697
of the period
Cash and cash equivalents at end of the 25 687 22 731 24 983
period
Consolidated statement of comprehensive income
for the six months ended 30 June 2010
1H10 1H09 FY09
Rm Ordinary Minorities Total Total Total
shareholders` and
equity preference
shareholders
Profit for the period 5 897 1 017 6 914 5 039 11 996
Other comprehensive (524) 212 (312) (7 715) (9 464)
income after tax for
the period
Exchange rate 198 126 324 (8 110) (9 567)
differences on
translating equity
investment in foreign
operations
Foreign currency (653) (653) 96 (106)
hedge of net
investment
Cash flow hedges (225) (225) 218 85
Available-for-sale
financial assets
159 122 281 102 40
Revaluation and other (3) (36) (39) (21) 84
(losses)/gains
Total comprehensive 5 373 1 229 6 602 (2 676) 2 532
income
for the period
Attributable to 1 030 1 030 (2 255) (1 658)
minorities
Attributable to 5 373 199 5 572 (421) 4 190
equity holders
of the parent
Attributable to 199 199 289 531
preference
shareholders
Attributable to 5 373 5 373 (710) 3 659
ordinary
shareholders
Consolidated statement of changes in equity
for the six months ended 30 June 2010
Rm Ordinary Preference Minority
shareholders` share interest Total
equity capital equity
and
premium
Balance at 1 January 2009 81 953 5 503 12 045 99 501
Total comprehensive income 3 659 531 (1 658) 2 532
for the period
Equity-settled share-based 307 37 344
payment transactions
Tax on share-based 58 58
payments
Issue of share capital and 200 (10) 190
share premium
Net decrease in treasury 691 316 1 007
shares
Net dividends paid (2 846) (531) (886) (4 263)
Balance at 31 December 84 022 5 503 9 844 99 369
2009
Balance at 1 January 2010 84 022 5 503 9 844 99 369
Total comprehensive income 5 373 199 1 030 6 602
for the period
Equity-settled share-based 199 17 216
payment transactions
Tax on share-based (5) (5)
payments
Issue of share capital and 239 34 273
share premium
Change in shareholding of
subsidiary (43) 33 (10)
Net (increase)/decrease in (173) 68 (105)
treasury shares
Net dividends paid (1 587) (199) (548) (2 334)
Balance at 30 June 2010 88 025 5 503 10 478 104 006
Financial statistics
for the six months ended 30 June 2010
% 1H10 1H09 FY09
change Unaudited Unaudited Audited
Number of ordinary shares
in issue (000`s)
- end of period 3 1 498 023 1 457 831 1 474 344
- weighted average 3 1 481 814 1 440 769 1 459 337
- diluted weighted average 3 1 539 165 1 487 924 1 511 038
Cents per ordinary share
Headline earnings 12 396,0 352,5 771,1
Diluted headline earnings 12 381,2 341,3 744,7
Dividend 141,0 141,0 386,0
Basic earnings 12 398,0 354,7 757,5
Diluted earnings 12 383,1 343,5 731,6
Net asset value 6 5 876 5 531 5 699
Financial performance (%)
ROE 13,9 12,4 13,7
Net interest margin 3,01 3,44 3,19
Credit loss ratio 1,04 1,84 1,60
Cost-to-income ratio 58,2 50,0 52,3
Capital adequacy (%)
Capital ratios (unaudited)
- tier I capital 11,8 12,0 11,9
- total capital 14,6 14,4 15,1
Segment report
for the six months ended 30 June 2010
Rm % 1H10 1H09 FY09
change Unaudited Unaudited Audited
Revenue contribution by
business unit
Personal & Business Banking (4) 16 510 17 145 34 099
Corporate & Investment (16) 11 964 14 241 27 681
Banking
Central and other 7 542 506 930
Banking activities (9) 29 016 31 892 62 710
Liberty 59 15 395 9 684 44 338
Standard Bank Group - 7 44 411 41 576 107 048
normalised
Adjustment for IFRS (161) (485) (762)
Standard Bank Group - IFRS 8 44 250 41 091 106 286
Profit and loss
attributable to ordinary
shareholders
Personal & Business Banking 1 982 1 982 3 375
Corporate & Investment (5) 3 271 3 455 7 712
Banking
Central and other (65) 225 649 360
Banking activities (10) 5 478 6 086 11 447
Liberty >100 540 (647) 72
Standard Bank Group - 11 6 018 5 439 11 519
normalised
Adjustment for IFRS (121) (328) (465)
Standard Bank Group - IFRS 15 5 897 5 111 11 054
Private equity associates and joint ventures
for the six months ended 30 June 2010
Rm 1H10 1H09 FY09
Unaudited Unaudited Audited
Cost 402 303 409
Carrying value 644 418 658
Fair value 817 418 818
Loans to associates and 460 515 432
joint ventures
Equity accounted income (12) 12 128
Accounting policies
Basis of preparation
These results are prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS), its
interpretations adopted by the International Accounting Standards Board
(IASB), the presentation and the disclosure requirements of IAS 34 Interim
Financial Reporting, the AC 500 standards as issued by the Accounting
Practices Board or its successor, the Listings Requirements of the JSE Limited
and the requirements of Schedule 4 Part iv of the South African Companies Act
61 of 1973, as amended. The consolidated financial results are prepared in
accordance with the going concern principle under the historical basis as
modified by the fair value accounting of certain assets and liabilities where
required or permitted by IFRS. The interim results have not been audited.
Changes in accounting policies
The accounting policies are consistent with those adopted in the previous year
except for the standards and interpretations noted below and are in terms of
IFRS.
The following revised and amended standards became effective on 1 January
2010:
* IFRS 1 First-time Adoption of International Financial Reporting Standards
(2010 Improvements to IFRS);
* IFRS 2 Share-based Payment (2009 Improvements to IFRS);
* IFRS 3 Business Combinations (revised 2008);
* IFRS 3 Business Combinations (revised 2008) (2010 Improvements to IFRS);
* IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (2008
Improvements to IFRS);
* IAS 1 Presentation of Financial Statements (2010 Improvements to IFRS);
* IAS 17 Leases (2009 Improvements to IFRS);
* IAS 27 Consolidated and Separate Financial Statements (revised 2008);
* IAS 27 Consolidated and Separate Financial Statements (revised 2008)
(2010 Improvements to IFRS);
* IAS 38 Intangible Assets (2009 Improvements to IFRS);
* IAS 39 Financial Instruments: Recognition and Measurement (2009
Improvements to IFRS);
* IFRIC 9 Reassessment of Embedded Derivatives (2009 Improvements to IFRS);
and
* IFRIC 13 Customer Loyalty Programmes (2010 Improvements to IFRS).
The following new interpretation became effective on 1 January 2010:
* IFRIC 17 Distributions of Non-cash Assets to Owners.
The adoption of these standards and interpretation has had no material effect
on the results, nor has it required any restatements of the results.
Reclassification
A review of the group`s derivative positions was undertaken during the course
of the year to determine whether the presentation applied was in accordance
with international best practice. The group`s cross currency interest rate
swap contracts incorporate, as standard market practice, reset dates on which
cash flows are exchanged to manage the credit risk on the contract`s notional
amounts. These cash flows have historically been presented as derivative
assets and liabilities separately from the underlying derivative contract.
Following the review it was decided to present the cash flows, together with
the underlying derivative contract, as a single contractual relationship with
the group`s counterparty. The group believes that this treatment better
reflects the nature of the underlying transactions and the credit risk of its
relationship with its counterparty. The comparative statements of financial
position have been adjusted to reflect the presentation consequences of the
reclassification. The reclassification has not affected the group`s published
financial ratios, risk profile, income statement or its statement of
comprehensive income.
Declaration of dividends
Notice is hereby given that the following interim dividends have been
declared:
*Ordinary dividend No. 82 of 141 cents per ordinary share (share codes: SBK
and SNB, ISIN: ZAE000109815), payable on Monday, 13 September 2010, to
ordinary shareholders recorded in the books of the company at the close of
business on the record date, Friday, 10 September 2010. The last day to trade
to participate in the dividend is Friday, 3 September 2010. Ordinary shares
will commence trading ex-dividend from Monday, 6 September 2010;
*6,5% first cumulative preference shares (first preference shares) dividend
No. 82 of 3,25 cents per first preference share (share code: SBKP, ISIN:
ZAE000038881), payable on Monday, 6 September 2010, to holders of first
preference shares recorded in the books of the company at the close of
business on the record date, Friday, 3 September 2010. The last day to trade
to participate in the dividend is Friday, 27 August 2010. First preference
shares will commence trading ex-dividend from Monday, 30 August 2010; and
*Non-redeemable, non-cumulative, non-participating preference shares (second
preference shares) dividend No. 12 of 355,16 cents per second preference share
(share code: SBPP, ISIN: ZAE000056339), payable on Monday, 6 September 2010,
to holders of second preference shares recorded in the books of the company at
the close of business on the record date, Friday, 3 September 2010. The last
day to trade to participate in the dividend is Friday, 27 August 2010. Second
preference shares will commence trading ex-dividend from Monday, 30 August
2010.
The relevant dates for the payment of dividends are as follows:
Ordinary shares 6,5% Non-redeemable,
cumulative non-cumulative,
preference shares non-participating
(First preference preference shares
shares) (Second preference
shares)
JSE Limited (JSE)
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock
Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend per share 141 3,25 355,16
(cents)
Last day to trade Friday, Friday, Friday,
"CUM" dividend 3 September 2010 27 August 2010 27 August 2010
Shares trade "EX" Monday, Monday, Monday,
dividend 6 September 2010 30 August 2010 30 August 2010
Record date Friday, Friday, Friday,
10 September 2010 3 September 2010 3 September 2010
Payment date Monday, Monday, Monday,
13 September 2010 6 September 2010 6 September 2010
Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 6 September 2010 and Friday, 10 September 2010, both days
inclusive.
Preference share certificates (first and second) may not be dematerialised or
rematerialised between Monday, 30 August 2010 and Friday, 3 September 2010,
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 hold
dematerialised shares will have their accounts at their CSDP or broker
credited on Monday, 6 September 2010. Ordinary shareholders who hold
dematerialised shares will have their accounts at their CSDP or broker
credited on Monday, 13 September 2010.
On behalf of the board
Loren Wulfsohn
Group secretary
Administrative information
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
Directors
TMF Phaswana (Chairman), Kaisheng Yang** (Deputy chairman), SJ
Macozoma (Deputy chairman), JH Maree* (Chief executive), DDB Band,
RMW Dunne#, TS Gcabashe, SE Jonah KBE##, Sir Paul Judge#, KP Kalyan,
Yagan Liu**, RP Menell, Adv KD Moroka, AC Nissen, MC Ramaphosa, SP
Ridley*, MJD Ruck, 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
Computershare Investor
Services (Proprietary)
Limited
70 Marshall Street,
Johannesburg 2001
PO Box 61051, Marshalltown
2107
Namibia
Transfer Secretaries
(Proprietary) Limited
Shop 8, Kaiserkrone Centre,
Post Street Mall, Windhoek
PO Box 2401, Windhoek
Independent sponsor
Deutsche Securities (SA) (Proprietary) Limited
Joint sponsor
Standard Bank
Investors are referred to www.standardbank.com where a detailed analysis of
the group financial results, including an income statement and a statement of
financial position for The Standard Bank of South Africa Limited (SBSA), can
be found.
www.standardbank.com
Date: 12/08/2010 08:00:01 Produced by the JSE SENS Department.
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