| Wed 14 Aug 2002, 0:00 | | Standard Bank Group Limited - Interim Results And |
|
Standard Bank Group Limited - Interim Results And Dividend Announcement
For The Six Months Ended 30 June 2002
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Reg No 1969/017128/06)
JSE Securities Exchange share code: SBK
Namibian Stock Exchange share code: SNB
ISIN: ZAE000038873
- Headline earnings 19% up
- Headline earnings per share 18% higher
- Cost-to-income ratio 57,5%
- Return on equity 19%
Trading conditions and overall results
The major markets in which the group operates continued to be affected
over the period by the prolonged global economic slowdown. As
experienced in the latter part of 2001, these effects were more
pronounced in the group`s international banking operations, with
domestic banking operations trading well despite the turmoil in the
local banking industry and increasingly uncertain international business
conditions. Performance highlights for the period were as follows:
- Headline earnings of R2 402 million, 19% higher;
- Headline earnings per share of 181 cents, 18% up;
- Cost-to-income ratio of 57,5% compared with 57,7% in June 2001; and
- Return on equity of 19% compared with 21% in June 2001, with this
decline mainly due to the inclusion of substantial translation gains
in
equity.
Headline earnings from domestic banking operations for the period were
23% higher with all divisions contributing to this performance.
International Operations were 23% higher in Rand terms but 11% down in
Sterling terms as a result of increased volatility in world markets and
higher levels of credit provisioning. Headline earnings from African
operations were 26% higher.
In contrast to the 2001 year when a gain of R4,0 billion on translation
of shareholders` funds was taken directly to reserves, a R1,5 billion
reversal of this gain was charged to reserves for the period in
accordance with the group`s accounting policy. This reversal was due to
the recovery in the value of the Rand at the period end compared with
December 2001.
Earnings
Standard Bank operations
The asset management and wealth creation businesses of Standard Bank and
Liberty were merged into the group entity, STANLIB, with effect from 1
January 2002. STANLIB`s results have been included with those of
Standard Bank operations for the current and prior periods.
Headline earnings from banking operations for the six months of R2 215
million were 23% up on the comparable period. This result reflected good
contributions from both retail and wholesale banking activities and the
favourable exchange rate effect on earnings from International
Operations.
Total income, after provision for credit losses, of R9 055 million was
25% higher.
- Net interest income before provisions was 25% up. The interest margin
for the period reduced from 3,51% to 3,04% due mainly to growth in
lower
margin assets both domestically and internationally. Total advances at
the period end of R162 billion were 18% higher, with advances in the
local market, which account for 82% of total advances, 13% up.
- Non-interest revenue of R5 287 million was 27% higher and comprised
52%
of total income.
- Fees and commissions were 23% up as a consequence of higher business
volumes and the repricing of products and services.
- Trading income was 48% higher with Domestic operations 24% up, and
International Operations 64% up as a result of the expansion of
activities and the exchange rate effect.
The charge for credit losses of R1 049 million was 40% higher, with
specific provisions 28% up, and general provisions 127% higher due to
the implementation of minimum regulatory requirements with effect from
January 2002, and in recognition of the unsettled conditions in world
markets. The increased level of provisioning was mainly occasioned by
the significant increase in provisions in International Operations, with
total domestic provisions only 11% higher. As a percentage of advances,
the total charge for credit losses has increased from 1,13% in 2001 to
1,31%. The overall quality of the loan book has been maintained with non-
performing loans as a percentage of average loans at 3,2% compared with
3,3% at December 2001 and 4,0% at June 2001.
Operating expenses for the period were 26% higher, with staff and other
costs 31% and 20% higher respectively. Costs over the period were
affected by acquisitions and by exchange rate movements and, on
excluding the effect of these, the increase in costs for the period was
13%. Costs domestically were restricted to an increase of 11%. The cost-
to-income ratio of 57,5% was marginally better than the 57,7% for the
comparable period.
The tax charge for the period was 21% higher, with an effective rate,
inclusive of indirect taxes, of 31%.
Liberty operations
Liberty performed well in all aspects under its control during the
period with good new business growth in testing markets and further
value created in the in-force insurance portfolio. This satisfactory
operational performance could not, however, offset the adverse
investment market trends experienced globally. The headline earnings
contribution for the period of R187 million was 11% lower than the
comparable period.
Balance sheet
Total assets of R416 billion were 34% higher than at June 2001, with
banking assets 41% up. The sizeable fall in the value of the Rand,
together with substantially higher hard currency assets in International
Operations, contributed to this high rate of growth. Measured against
December 2001, total assets were 5% higher. Net cash inflow from
operating activities increased due to the temporary warehousing of
surplus funds in short-term money market instruments.
Total capital and reserves were 31% higher than at June 2001, due mainly
to the level of retained earnings and the net translation gain over the
twelve-month period.
The group remains well capitalised, with total regulatory capital at
14,8% of risk-weighted assets. A tertiary capital issue of R1 billion
was successfully concluded during the period.
Interim dividend
An interim dividend of 34 cents per share (2001: 28 cents) has been
declared to shareholders, 21% up on the comparable interim dividend. The
amount of the interim dividend has been determined in accordance with
the group`s policy of declaring approximately one third of the previous
year`s total dividend per share at the half year.
Prospects
The current state of world financial markets is unlikely to improve
significantly in the short term. Similar growth in earnings to that
recorded in the first half is achievable in the second half but this
could be affected by continuing adverse or worsening conditions in
international markets.
Derek Cooper, Chairman
Jacko Maree, Chief Executive
13 August 2002
SEGMENTAL REPORT
Domestic banking performed well, with headline earnings 23% higher and
the contribution to the group`s headline earnings increased from 66% to
68%. Net interest income was 13% higher, with an interest margin of
3,56% compared with 3,86% for the comparable period. Non-interest
revenue was 16% up, with the main components of fees and commissions and
trading income 17% and 24% higher respectively. The cost-to-income ratio
at 55,4% was 1,8 percentage points lower than at June 2001.
Retail Banking`s headline earnings of R761 million were 22% higher.
Total revenue growth for the period was 13% with interest income and non-
interest revenue 12% and 14% higher respectively. The provision for
credit losses was 15% higher. Operating costs for the period were 10%
up, with the cost-to-income ratio improving further to 62,5%.
SCMB`s headline earnings of R580 million were 23% higher. Factors in
this performance were good growth in net interest income of 16%, a
modest increase in debt provisioning and trading income 23% higher. The
cost-to-income ratio for the period of 50,7% was 1,8 percentage points
lower than in 2001.
Commercial Banking`s headline earnings of R276 million were 26% higher,
with total revenue growth of 12% and operating expenses 10% higher. The
results for the period were assisted by the 16% decline in the level of
credit provisioning. The cost-to-income ratio of 39,3% was 0,7
percentage points lower than the comparable period.
International Operations` headline earnings of R336 million were 23%
higher in Rand terms but 11% down in Sterling terms. Trading conditions
deteriorated over the period as a consequence of the fragile global
economic situation and heightened market uncertainties. The charge for
credit losses for the period was R163 million higher due to the exchange
rate effect, additional general debt provisions raised and specific
provisions established in response to the difficult market conditions.
Earnings from International Operations contributed 13% of the group`s
headline earnings.
The table below sets out the geographic spread of internally weighted
risk exposures for International Operations at 30 June 2002.
International Operations
Risk exposures - 30 June 2002
Geographic region %
Europe 37
North America 22
Asia 15
Sub-Saharan Africa 10
Eastern Europe 6
South America 5
Middle East 5
Total 100
These exposures are to banks, corporates and sovereign entities, with
70% rated as investment grade.
Stanbic Africa`s headline earnings of R231 million were 26% higher for
the period, with strong performances from Zambia, Botswana and Namibia,
and the inclusion of acquisitions in Malawi and Uganda. The situation in
Zimbabwe remains of concern and, as a consequence, no contribution has
been recognised in the current period. Stanbic Africa`s credit exposure
of R8 billion, by geographic area, was as follows: CMA countries 55%;
Central and southern Africa 20%; East Africa 21% and West Africa 4%.
STANLIB was formed with effect from 1 January 2002 and represents the
group`s combined asset management and wealth creation operations.
Headline earnings of R41 million were contributed for the period, 3%
higher than in 2001. Operations over the period were affected by the
merging of the respective businesses and by overall market conditions.
Liberty operations` headline earnings declined by 11%, from R209 million
to R187 million, with this decrease mainly attributable to the effect of
the weak investment markets on the life fund operating surplus. Headline
earnings from continuing operations were 4% lower. The current period
included a R44 million STC charge in respect of the 2001 final dividend,
with no STC charge in the comparable period.
SEGMENTAL REPORT
Six months ended Year ended
30 June 30 June 31 December
2002 2001 2001
% R million R million R million
Change Unaudited Unaudited
Audited
Headline earnings
Domestic Banking 23 1638 1334 2956
- Retail Banking 22 761 625 1464
- Wholesale Banking 23 918 748 1521
- SCMB 23 580 471 958
- Commercial Banking 26 276 219 443
- Properties 7 62 58 120
- Central services (41) (39) (29)
International Operations 23 336 274 648
Stanbic Africa 26 231 183 325
STANLIB 3 41 40 106
Central funding (31) (30) (50)
Standard Bank operations 23 2215 1801 3985
Liberty operations (11) 187 209 434
Standard Bank Group 19 2402 2010 4419
CONSOLIDATED INCOME STATEMENT
Six months ended Year ended
30 June 30 June 31 December
2002 2001 2001
% R million R million R million
Change Unaudited Unaudited Audited
Standard Bank operations
Interest income 30 14377 11074 24368
Interest expense 33 9560 7207 16191
Net interest income before
provision for credit losses 25 4817 3867 8177
Provision for credit losses 40 1049 747 1603
Net interest income 21 3768 3120 6574
Non-interest revenue 27 5287 4152 9135
Total income 25 9055 7272 15709
Operating expenses 26 5813 4629 9940
Staff costs 31 3237 2475 5347
Other operating expenses 20 2576 2154 4593
Operating profit 23 3242 2643 5769
Income from associated
undertakings 30 18 49
Exceptional items (61) (4) (65)
Income before taxation 21 3211 2657 5753
Taxation 21 1001 827 1756
Income after taxation 21 2210 1830 3997
Attributable to outside and
preference shareholders 56 33 77
Standard Bank income attributable
to ordinary shareholders 20 2154 1797 3920
Liberty operations
Income before taxation 25 927 741 2114
Taxation 306 354 980
Income after taxation 621 387 1134
Attributable to outside and
preference shareholders 436 291 816
Net income before investment
surplus 185 96 318
Net income from continuing
operations (4) 187 195 420
Net income from unbundled
operations - 14 14
Exceptional items (2) (113) (116)
Investment surplus 39 158 287
Liberty income attributable
to ordinary shareholders (12) 224 254 605
Group income attributable to
ordinary shareholders 16 2378 2051 4525
HEADLINE EARNINGS
Group income attributable to
ordinary shareholders 16 2378 2051 4525
Standard Bank income adjusted for:
- goodwill amortised 61 4 65
Liberty income adjusted for: 2 113 116
- secondary tax on companies
relating to capital reduction - 111 111
- goodwill amortised 2 2 5
Liberty investment surplus (39) (158) (287)
Headline earnings 19 2402 2010 4419
CONSOLIDATED BALANCE SHEET
30 June 30 June 31 December
2002 2001 2001
R million R million R million
Unaudited Unaudited Audited
ASSETS
Standard Bank operations 327124 232094 306466
Cash and short-term funds 60854 29802 43578
Investment and trading
securities 51456 23169 45807
Loans and advances 162013 137837 157878
Other assets 49032 38364 55249
Interest in associated
undertakings 173 93 187
Goodwill 496 - 403
Property and equipment 2930 2577 3049
Acceptances outstanding 170 252 315
Liberty operations 89297 78129 88994
Current assets 3476 2724 2979
Investments 85335 74909 85487
Intangible assets 44 44 70
Goodwill 104 115 113
Equipment and furniture 338 337 345
Total assets 416421 310223 395460
EQUITY AND LIABILITIES
Capital and reserves 25636 19542 25693
Share capital 141 140 140
Share premium 2108 2006 2047
Reserves 23387 17396 23506
Minority interest 6427 5271 5973
Liabilities 384358 285410 363794
Standard Bank operations 303705 214556 282964
Deposit and current accounts 259786 184973 236553
Other liabilities and provisions 36819 26034 40197
Bonds 6930 3297 5899
Acceptances outstanding 170 252 315
Liberty operations 80653 70854 80830
Life funds 75521 66187 75918
Long-term liabilities 2433 1906 2874
Other liabilities 2699 2761 2038
Total equity and liabilities 416421 310223 395460
CONTINGENT LIABILITIES AND
CAPITAL COMMITMENTS
30 June 30 June 31 December
2002 2001 2001
R million R million R million
Unaudited Unaudited
Audited
Contingent liabilities
- letters of credit 5430 3151 5449
- guarantees 21048 15962 19199
Capital commitments
- contracted 166 163 84
- authorised but not yet
contracted 300 230 38
Ordinary shareholders` funds
adjusted for the increase in market
value over the carrying value of
Liberty Group, and over the book value
of investments and property 28171 23025 28330
STATEMENT OF CHANGES IN SHAREHOLDERS` FUNDS
Six months ended Year ended
30 June 30 June 31 December
2002 2001 2001
R million R million R million
Unaudited Unaudited Audited
Shareholders` funds at beginning
of the period
Previously reported 25693 18300 18300
Effect of change in accounting
policies:
- Investment Properties (AC 135) - (334) (334)
Restated 25693 17966 17966
Movements in share capital and
share premium
Shares issued 62 359 400
Movements in reserves (119) 1217 7327
Retained earnings 1398 1226 3329
Group income attributable to
ordinary shareholders 2378 2051 4525
Dividends paid (980) (825) (1196)
Translation (losses)/gains (1512) - 4037
Capital deficit (5) (9) (39)
Shareholders` funds at
end of the period 25636 19542 25693
CONSOLIDATED CASH FLOW INFORMATION
Six months ended Year ended
30 June 30 June 31 December
2002 2001 2001
R million R million R million
Unaudited Unaudited Audited
Net cash inflow/(outflow)
from operating activities 20317 316 (195)
Net cash (outflow)/inflow
from investing activities (1963) 493 (2443)
Net cash outflow from
financing activities (192) (2861) (858)
FINANCIAL STATISTICS
Six months ended Year ended
30 June 30 June 31 December
2002 2001 2001
% R million R million R million
Change Unaudited Unaudited Audited
Standard Bank Group
Shares in issue (millions)
Number of ordinary shares
in issue
- end of period 1329 1322 1325
- weighted average 1327 1314 1319
Share statistics per ordinary
share (cents)
Earnings 15 179,3 156,1 343,1
Fully diluted earnings 15 176,7 153,4 337,9
Headline earnings 18 181,1 153,0 335,1
Dividends 21 34,0 28,0 102,0
Net asset value 31 1929 1477 1939
Adjusted net asset value 22 2120 1741 2138
Financial performance (%)
Headline return on equity 18,7 21,3 20,1
Standard Bank operations
Selected returns and ratios (%)
Headline return on equity 19,1 21,1 19,9
Headline return on total assets 1,4 1,6 1,5
Cost-to-income ratio 57,5 57,7 57,4
Effective tax rate 31,5 31,3 30,8
Capital adequacy (%)
Capital ratio
- primary capital 11,2 10,9 11,1
- total capital 14,8 13,6 14,2
Accounting policies
The financial statements have been prepared under the historic cost
convention as modified by the revaluation of certain trading and
insurance assets and liabilities. The accounting policies adopted for
purposes of reporting comply in all material respects with South African
Statements of Generally Accepted Accounting Practice as well as the
South African Companies Act of 1973.
The accounting policies are consistent with those applied at 31 December
2001 except for the adoption of the new accounting statement on
Investment Property (AC 135). In terms of this statement, owner-occupied
properties are not permitted to be treated as investment properties and
are accounted for under the provisions of the statement dealing with
property, plant and equipment (AC 123). These properties are now
depreciated over their expected useful lives.
In addition to the above, comparative amounts have been restated where
necessary to allow for a more meaningful comparison of performance. The
comparative amounts relating to the businesses comprising the merged
STANLIB entity have been regrouped as follows:
Six months ended Year ended
30 June 31 December
2001 2001
R million R million
Liberty Group income attributable to
ordinary shareholders as previously
reported 265 629
Liberty Group business units
included in STANLIB and reported as
part of Standard Bank operations (11) (24)
Liberty operations as reported 254 605
Declaration of dividend No 66
Notice is hereby given that an interim dividend, No 66, of 34 cents per
ordinary share, has been declared payable on 23 September 2002 to
shareholders recorded in the books of the company at the close of
business on the record date, 20 September 2002. The last day to trade to
participate in the dividend is 13 September 2002. Shares will commence
trading ex-dividend from Monday 16 September 2002.
The relevant dates for the payment of the dividend are as follows:
Last day to trade "CUM" dividend 13 September 2002
Shares trade "EX" dividend 16 September 2002
Record date 20 September 2002
Payment date 23 September 2002
Share certificates may not be dematerialised or rematerialised between
Monday 16 September 2002 and Friday 20 September 2002, both days
inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders` bank accounts on payment
date. In the absence of specific mandates, dividend cheques will be
posted to shareholders.
Shareholders who have dematerialised their share certificates will have
their bank accounts, which are linked to their CSDP or broker`s safe
custody accounts, credited on 23 September 2002.
By order of the board,
Loren Wulfsohn, Group Secretary
13 August 2002
Board of Directors
DE Cooper (Chairman)
EAG Mackay (Joint Deputy Chairman)
SJ Macozoma (Joint Deputy Chairman)
JH Maree* (Chief Executive)
MJD Ruck* (Deputy Chief Executive)
RC Andersen*
PC Prinsloo*
DDB Band
E Bradley
DA Hawton
RJ Khoza
RP Menell
RA Plumbridge
CL Stals
CB Strauss
EP Theron
* Executive director
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 Limited
10th Floor, 11 Diagonal Street, Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
In Namibia
Transfer Secretaries (Proprietary) Limited
Shop 12, Kaiserkrone Centre
Post Street Mall, Windhoek
PO Box 2401, Windhoek
This announcement, together with a financial presentation, is available
on the Standard Bank website at: http://www.standardbank.co.za
Date: 14/08/2002 08:30:00 AM Produced by the JSE SENS Department
