| Wed 16 Aug 2006, 8:00 | | Standard Bank - Unaudited interim results: six mon |
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SBK SBPP SBKP
SBK
Standard Bank - Unaudited interim results: six months ended 30 June 2006.
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Reg No 1969/017128/06)
Share code: SBK & ISIN: ZAE000057378
Unaudited interim results for the six months ended 30 June 2006.
The group"s key financial highlights were:
IFRS Normalised
Headline earnings growth (%) 18 18
Headline earnings per share growth (%) 17 18
Headline earnings per share (cents) 384,0 359,0
Return on equity (%) 26,6 24,2
Dividend per share growth (%) 18 18
Cost-to-income ratio (%) 54,7 54,2
Overview of financial results
For the six months ended 30 June 2006, Standard Bank Group increased headline
earnings per share by 17% to 384,0 cents per share and posted a return on
equity of 26,6%. On a normalised basis headline earnings per share grew 18%
and the return on equity was 24,2%. The group"s results are prepared in
accordance with International Financial Reporting Standards (IFRS). Certain
of the accounting conventions under IFRS, in the opinion of the board,
distort the results from an economic perspective. The normalised results,
more fully discussed in the normalised results section of this announcement,
adjust for these anomalies.
From a macroeconomic perspective, global economic growth remained generally
strong for the six months under review. However, rising inflation in most of
the markets in which the group operates resulted in tighter monetary policies
and reduced liquidity. Towards the end of the period investors became more
risk averse and selective, with the consequence of widening emerging market
risk spreads. The resultant volatility in emerging market currencies also
negatively affected equities in these markets.
The South African economy remained buoyant in the first half of 2006 and
brisk growth in credit extension continued. Consumer spending remained strong
although there are now signs of slower growth, albeit off a high base.
Inflationary pressures prompted the South African Reserve Bank to tighten
monetary policy with a 50bp increase in interest rates in June and a further
50bp at the beginning of August.
Key factors impacting the results
Strong revenue growth
Total banking income grew 21% for the period under review, with strong
contributions from both net interest income and non-interest revenue, driven
by increased customer activity and demand across most businesses.
Healthy asset growth
Corporate & Investment Banking loans and advances grew by 56%, boosted by
balances from interbank trades and the warehousing of surplus liquidity in
the market. Excluding these balances, core lending grew by 43%, after several
years of subdued growth. International deal flow improved in both trade
finance and structured lending while locally, empowerment financing was a
very strong driver of asset growth. Personal & Business Banking grew lending
assets by a healthy 28% on the back of a 13,4% increase in average property
prices for the period and record home loan registration volumes. Sales
campaigns in the card business have been successful at targeting all income
bands, with increasing emphasis on LSM 4 - 8 customers.
Opportunities arising from volatile financial and commodity markets Revenues
were positively impacted by volatility in foreign exchange and commodities
markets and, to a lesser extent, negatively impacted in equity derivative
trading. Investment Management & Life Insurance benefited from strong equity
markets for most of the period. Despite the increased volatility in emerging
markets, no material trading losses were incurred.
Credit impairment charges increase
As expected, the low level of credit losses of 2005 did not continue into
2006. The return to a more normal credit loss experience in Corporate &
Investment Banking contrasts adversely with the substantial credit recoveries
made in the comparative period. Personal & Business Banking"s credit loss
ratio increased to 1,02% for the period under review, from 0,85% in 2005.
Reliance on wholesale priced funding continues
Retail priced customer deposits continue to grow at a slower pace than
consumer lending, resulting in an increasing reliance on more expensive
wholesale funding. This has continued to place pressure on margins.
Continued investment in operations outside of South Africa
The group continues to scale up its operations outside of South Africa,
investing in talent and infrastructure which has the immediate effect of
increasing costs. The proposed acquisition of BankBoston Argentina remains
subject to regulatory approvals. The group is actively investigating further
opportunities to expand its activities in West Africa and in July 2006 an
office was opened in Angola to take advantage of corporate banking
opportunities offered by that market.
Income statement analysis
Net interest income
Net interest income grew 24% (normalised: 23%) mainly in Personal & Business
Banking (19%) and in Corporate & Investment Banking (27%).
The group margin reflects a 17bp decline for the six months due to
proportionately faster growth in lower margin corporate assets, a R20 billion
increase in low margin surplus liquidity assets (a reservoir of liquidity to
meet internal liquidity risk standards implemented during the second half of
the prior year), and the increased reliance on wholesale funding.
Non-interest revenue
Non-interest revenue grew 20%, comprising 16% growth in fee and commission
revenue, 20% in trading revenue and 44% in other revenue sources.
Personal & Business Banking increased fee and commission revenue by 17%. Card-
based fees grew 24% as cardholder and merchant turnover volumes rose by 29%
and approximately 475 000 new accounts were acquired since year end. Despite
low price increases, transaction fees from branches and other points of
representation were up 12% as business volumes increased off a higher current
account base. An increased number of Internet banking subscribers resulted in
51% growth in online transactions. This, together with higher volume ATM cash
withdrawals, increased electronic banking fees by 17%. Corporate & Investment
Banking fees increased by 15% as volume growth benefited banking transaction
and foreign currency fees. Knowledge-based fees grew by 19%, with increased
advisory activity and increased revenue from brokerage fees due to higher
trading volumes by clients.
Commodity trading revenue more than doubled due to increased customer
flows.These were spurred by a rising and more volatile commodity market
driven by high demand, supply concerns and speculative and hedging
activities. Trading revenue in debt securities was lower as liquidity in
emerging markets reduced.Foreign exchange trading grew by 14% as rand
volatility boosted trading volumes and market share was gained outside of
South Africa. Equity trading income was lower due to the non-recurrence of
2005 fair value gains on unlisted equities and the equity derivative trading
book being negatively affected by May"s weakening in equity markets. Trading
revenue from international sources increased by 35% mainly due to
commodities.
Growth in other revenue is attributable to an improved underwriting
performance in short-term insurance together with increased momentum in
income from bancassurance activities. Included in other revenue is a R157
million profit realised on the sale of shares in MasterCard in which 59% of
the MasterCard shares owned by the group were sold as part of MasterCard"s
initial public offering. As this investment is classified as an investment in
banking infrastructure and consequently accounted for as an available-for-
sale asset,the realised gain is excluded from headline earnings while the
remaining unrealised portion of the investment is accounted for at fair
value. The unrealised gain applicable to this portion at 30 June 2006 of R173
million was accounted for directly in equity, bringing the total return for
the periodto R330 million.
Credit impairment charges
Credit impairment charges rose 104% off a low base, with the group"s credit
loss ratio increasing from 0,45% to 0,70% on a normalised basis. This was
mainly as a result of strong growth in lending books and the non-recurrence
of prior year corporate recoveries. In Personal & Business Banking the credit
loss ratio increased from 0,85% to 1,02%. As anticipated, credit losses in
card debtors increased significantly in line with the higher revolving credit
portion of the card book, while losses in instalment finance resulted mainly
from non-performing finance leases in the transport industry. Additional
portfolio provisions based on the potential implications of the National
Credit Act and a higher interest rate environment are included in the
performing loans charge. The credit loss ratio in Corporate & Investment
Banking swung from a 2005 release of 0,16% through substantial recoveries of
impaired loans, to a charge of 0,26%. The current year charge relates mainly
to two mining and resource clients having difficulty in meeting commodity
delivery schedules, impacting their ability to service debt and hedging
commitments. Total non-performing loans increased by 20% but reduced as a
percentage of the lending book from 1,5% to 1,3%.
Operating expenses
Operating expenses in the group"s banking operations increased by 16% with
staff costs up 14% and other operating expenses up 20%. With total income
growth of 21% exceeding cost growth across the group"s businesses, the
group"s normalised cost-to-income ratio improved from 56,4% to 54,2%.
Staff cost growth was influenced by a number of factors. These included
planned increased headcount in growth areas outside Africa, higher incentive
provisions in line with a planned move to increase the proportion of
performance-related remuneration, annual staff increases, as well as greater
need for temporary staff due to increased business volumes and compliance
requirements, and the phase-in of share option costs in terms of IFRS2.
Growth in other operating expenses resulted from increased business
volumes,escalating premises rentals, and costs relating to repositioning the
group brand. Higher IT fees resulted from human resource related systems and
trading system implementations and the growth in software, maintenance and
licence expenses. Expenses were also increased by professional fees related
to the group"s preparation for Basel II and the National Credit Act.
Business units
As detailed in the annual report and previous announcements, the group"s
business units have been segmented in 2005 along business lines which are no
longer defined by geography and clearly reflect executive responsibility and
reporting lines.
Personal & Business Banking comprises 43% (June 2005: 41%) of the group"s
headline earnings and grew its earnings by 24%. South Africa was the main
source of earnings growth in this segment. Robust growth was posted across
most consumer lending products offsetting the impact of tighter margins. An
increase in credit losses was experienced with the most noticeable increase
in card debtors. Buoyant economic activity boosted transactional fee income
despite low fee increases. Income from short-term insurance and bancassurance
activities showed strong growth. Income from associates and joint ventures
increased significantly, mainly as a result of strong performances from the
African Bank (ABIL) joint venture, the recently acquired investment in RCS
Investment Holdings and the investment in SA Home Loans.
Given the substantial growth potential in the mass market, we believe that
direct access to this segment is vital. To this end it was announced that the
ABIL joint venture will be terminated, allowing Standard Bank to more
independently drive its mass market strategy. Competitive pressures in retail
banking in South Africa continue to intensify and a number of factors have
had a dampening effect on short-term profitability. The proportion of new
home loan business from external originators increased, pushing up
acquisition costs.
Corporate & Investment Banking, comprising 45% (June 2005: 46%) of the
group"s earnings, grew its earnings by 17%. The global markets division
benefited from a good trading performance, underpinned by the run in base and
precious metal markets coupled with increased volatility in foreign exchange
markets. This was partially offset late in the reporting period by higher
volatility in debt and equity markets, which reduced overall trading income.
Increased deal flow in cross-border repurchase trades, structured lending
transactions, clearing facilities and property loans benefited banking and
trade finance. Fee income was boosted by increased transaction volumes in
electronic banking, trade finance and custody. As mentioned above, credit
impairments reverted from recoveries in 2005 to a charge in 2006. Investment
banking achieved strong earnings growth by increasing project and structured
finance lending balances and fees. Realisations of property investments
contributed to income growth but were partially offset by adverse fair value
adjustments on the listed property portfolio towards the end of the period.
Investment Management & Life Insurance contributed 7% (June 2005: 7%) to the
group"s headline earnings and grew its earnings by 20%. Notwithstanding a
difficult operating environment, and a slow down in new premium growth,
Liberty Life recorded good financial results for the period. Return on
embedded value improved from 16,3% to 18,3%. The results were positively
impacted by strong investment market performance, higher average asset levels
earning higher management fees and better risk experience.
Balance sheet analysis
The group"s banking assets increased by 34%. This included growth in Personal
& Business Banking of 27% and Corporate & Investment Banking of 39%.
Personal & Business Banking"s mortgage loan book increased 31% buoyed by
strong volumes and client demand which saw record registrations of new
mortgages in South Africa towards the end of the period. The instalment
finance book was up 17% on June 2005 (10% on December 2005). Growth in
instalment finance lending slowed as a result of early settlements and low
growth mainly in non-motor new business transaction volumes. The focus on
card growth generated a 44% increase in card debtors. This growth was driven
by an increase in new accounts, a higher level of revolving facilities and
increased consumer spending.The group"s South African market share in
mortgage lending and instalment finance at June 2006 decreased to 25,1% (June
2005: 26,6%) and 20,5% (June 2005: 22,1%) respectively. These declines were
partly due to some R10 billion of securitisation transactions as part of the
bank"s funding strategy. Market share in credit card debtors increased to
35,9% (June 2005: 34,0%).
A 56% loan growth in Corporate & Investment Banking arose across all lending
categories. Fully collateralised lending, which requires minimal capital
usage, has increased significantly as a result of new product offerings and
increased customer demand. The provision of dollar liquidity on a
collateralised basis to emerging market counterparties and commodity related
variation margins has also increased significantly. Term lending increased by
55% assisted by the conclusion of a number of large corporate transactions in
South Africa. Strong growth also occurred in trade and specialised finance
lending. The group"s global markets business benefited from cross-border
repurchase trades, structured lending transactions and higher clearing
facilities.
The group"s ordinary shareholders" equity grew year-on-year by 23% on a
normalised basis. This growth resulted from earnings retained after dividends
and a R2,1 billion increase in the foreign currency translation reserve. The
group utilised R102 million to buy back 1,3 million shares and issued 7,6
million shares to settle share-option obligations. The group issued bonds
qualifying as Tier II banking capital to the value of R3 billion.
Dividends
The group"s stated policy is a dividend cover ratio for both interim and year-
end dividends of 2,5 times covered by normalised headline earnings. This
policy is subject to annual review and may be adjusted for the purposes of
growing the business, acquisition activity, the impact of Basel II or changes
in reported earnings resulting from applying fair value principles.
Based on an unchanged cover ratio of 2,5 times, a dividend of 144 cents per
share (June 2005: 122 cents) was declared for the six-month period, 18%
higher than the comparative prior period.
Financial Sector Charter progress
The group provided an audited Financial Sector Charter scorecard in the
Sustainability and BEE Report as at 31 December 2005. This report was the
first of its kind from Standard Bank and conveys key outcomes achieved by the
bank towards fulfilling charter responsibilities and is available on
www.standardbank.co.za.
Highlights of improvements made subsequent to this date are: financing for
empowerment transactions increased by 33% to R10 billion; procurement from
approved vendors increased to 47% (December 2005: 38%) of total procurement;
employment equity improved with the percentage of black managers increasing
across all bands, black managers approaching an average of 40% of total
management across all categories at June 2006 (December 2005: 37%).
As recently announced in the press, Standard Bank has made good progress in
identifying the SMEs that will become beneficiaries in the Tutuwa Community
Trust. Of the total of 250 SMEs, 172 have been identified and the process has
been extended to 31 October 2006 when it will be finalised.
Prospects
Globally, economic growth may decelerate as geo-political tensions escalate
and higher interest rates and energy costs dampen growth expectations.
Increased volatility and decreased risk appetite among investors could
further impact emerging markets, resulting in upward pressure on inflation
and interest rates. In South Africa, further increases in interest rates may
entrench lower growth in consumer spending. Despite this, domestic GDP growth
is expected to remain healthy.
In this environment, lending growth in Personal & Business Banking is set to
slow down off its high base. Higher interest rates should benefit interest
margins. This will be offset to some degree by an anticipated increase in
credit losses which historically have followed any increase in interest
rates.
Corporate & Investment Banking is expected to benefit from growth in South
African infrastructural and empowerment financing and an increase in
corporate credit demand. The absence of substantial credit recoveries
compared to previous periods should result in an increased credit loss ratio
for the full year. Trading activities should continue to enjoy increased
client flow from the commodity and foreign exchange markets.
In Investment Management & Life Insurance, investment markets have continued
to deliver higher than expected investment returns, but recent volatility is
causing some uncertainty around future returns.
The group"s growth prospects continue to be underpinned by its diverse
portfolio. Although headline earnings growth may be slower in the second
half, we believe that our principal financial objectives for 2006, as
previously published, of a normalised return on equity of 24,0%, and
normalised headline earnings per share growth of South African inflation
(CPIX) plus 10 percentage points remain achievable.
Jacko Maree Derek Cooper
Chief executive Chairman
Johannesburg
15 August 2006
Declaration of dividends
Notice is hereby given that the following interim dividends have been
declared:
Ordinary dividend No. 74 of 144 cents per ordinary share (share codes: SBK
and SNB, ISIN: ZAE000057378), payable on Monday, 18 September 2006, to
ordinary shareholders recorded in the books of the company at the close of
business on the record date, Friday, 15 September 2006. The last day to trade
to participate in the dividend is Friday, 8 September 2006. Ordinary shares
will commence trading ex-dividend from Monday, 11 September 2006;
6,5% first cumulative preference shares (first preference shares) dividend
No. 74 of 3,25 cents per first preference share (share code: SBKP, ISIN:
ZAE000038881), payable on Monday, 11 September 2006, to holders of first
preference shares recorded in the books of the company at the close of
business on the record date, Friday, 8 September 2006. The last day to trade
to participate in the dividend is Friday, 1 September 2006. First preference
shares will commence trading ex-dividend from Monday, 4 September 2006; and
Non-redeemable, non-cumulative, non-participating preference shares (second
preference shares) dividend No. 4 of 366,12 cents per second preference share
(share code: SBPP, ISIN: ZAE000056339), payable on Monday, 11 September 2006,
to holders of second preference shares recorded in the books of the company
at the close of business on the record date, Friday, 8 September 2006. The
last day to trade to participate in the dividend is Friday, 1 September 2006.
Second preference shares will commence trading ex-dividend from Monday, 4
September 2006.
The relevant dates for the payment of the dividends are as follows:
Non-redeemable,
non-cumulative,
6,5% preference non-participating
shares preference shares
(First preference (Second preference
Ordinary shares shares) shares)
JSE Limited SBK SBKP SBPP
(JSE)Share code
ISIN ZAE000057378 ZAE000038881 ZAE000056339
Namibian Stock SNB
Exchange (NSX)
Share code
ISIN ZAE000057378
Dividend number 74 74 4
Dividend per share 144 3,25 366,12
(cents)
Dividend payment
dates:
Last day to trade Friday, Friday, Friday,
"CUM" dividend 8 September 2006 1 September 2006 1 September 2006
Shares trade Monday Monday Monday
"EX" dividend 11 September 2006 4 September 2006 4 September 2006
Record date Friday Friday Friday
15 September 2006 8 September 2006 8 September 2006
Payment date Monday Monday Monday
18 September 2006 11 September 2006 11 September 2006
Ordinary share certificates may not be dematerialised or rematerialized
between Monday, 11 September 2006 and Friday, 15 September 2006, both days
inclusive.
Preference share certificates (first and second) may not be dematerialised or
rematerialised between Monday, 4 September 2006 and Friday, 8 September 2006,
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. Preference shareholders who have dematerialised their share
certificates will have their accounts at their CSDP or broker credited on
Monday, 11 September 2006. Ordinary shareholders who have dematerialised
their share certificates will have their accounts at their CSDP or broker
credited on Monday, 18 September 2006.
On behalf of the board
Loren Wulfsohn
Group secretary
Board of directors
DE Cooper (Chairman), JH Maree* (Chief executive), DDB Band, E Bradley, TS
Gcabashe, DA Hawton, SE Jonah KBE +, Sir Paul Judge#, SJ Macozoma, RP Menell,
Adv KD Moroka, AC Nissen, MC Ramaphosa, Dr MA Ramphele, MJD Ruck, MJ Shaw,
Sir Robert Smith#
*Executive director #British +Ghanaian
Group secretary
L Wulfsohn
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registered bank controlling company)
(Reg No 1969/017128/06)
Share code: SBK
ISIN: ZAE000057378
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 2004 (Proprietary) Limited
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown,
Johannesburg 2107
Namibia
Transfer Secretaries (Proprietary) Limited
Shop 8, Kaiserkrone Centre, Post Street Mall, Windhoek
PO Box 2401, Windhoek
Unaudited normalised results
Normalised results have been adjusted for the following required accounting
conventions that do not reflect the underlying economic substance of
transactions:
Black Economic Empowerment Ownership (Tutuwa) initiative
In terms of the accounting treatment of the Tutuwa initiative concluded in
October 2004, preference share funding to the empowerment participants by the
group is not recognised as an asset but deducted from equity. Income legally
accrued on these preference shares is therefore not reflected in
income.Perpetual preference share capital raised to fund the transaction is
classified as equity and thus dividends are only accounted for when
declared.The ordinary shares delivered to the Tutuwa participants, although
legally effected, are deemed to be treasury shares for accounting purposes
until eventual redemption or refinancing of the preference share funding. The
"normalised" calculation adjusts results for preference dividends
receivable but not included in income and reverses the elimination of
preference shares against equity. Dividends declared on perpetual preference
shares are adjusted to an accrual basis. In addition, in calculating
normalised headline earnings per share, the number of shares held by the
Tutuwa participants is added back to the weighted number of shares in issue.
Group companies" shares held for the benefit of policyholders
Group companies" shares held by Liberty Life are invested for the risk and
reward of its policyholders, not its shareholders, and consequently the
group"s shareholders are exposed to an insignificant portion of the fair
value changes on these shares. In terms of IFRS, with effect from January
2005, Standard Bank and Liberty Holdings shares held by Liberty Life on
behalf of policyholders are deemed to be treasury shares and the investment
in these shares is accordingly set off against equity in the group"s
financial statements. The cost price of these shares is eliminated against
ordinary shareholders" funds and minority interests on consolidation. Fair
value movements are eliminated from the income statement and dividends
received are eliminated against dividends paid without a corresponding
elimination in policyholders" liabilities resulting in a mismatch in the
group"s income statement. The elimination is attributable to Standard Bank
ordinary shareholders to the extent of the effective holding in Liberty Life
(approximately 30%).
The weighted average number of shares in issue for earnings per share is
calculated by deducting the full number of group shares held (100%), as the
accounting standard IAS 33: Earnings per share, does not contemplate minority
portions of treasury shares. This treatment exaggerates the reduction in the
weighted number of shares used for per share calculations.
For purposes of calculating the normalised numbers and ratios, the
adjustments described above are reversed and the group shares held are
treated as assets invested on behalf of policyholders. The result of these
adjustments is as follows:
Normalised headline earnings
Weighted
average number Headline Growth on
of shares earnings 30 June
Unaudited Unaudited 2005
"000 Rm %
Disclosed in terms of IFRS 1 211 650 4 653 18
Tutuwa initiative 99 190 186
Group shares held for the benefit
of policyholders 45 362 30
Normalised for Tutuwa initiative
and group shares held for the
benefit of policyholders 1 356 202 4 869 18
Normalised financial statistics
for the six months ended
June June December
% 2006 2005 2005
change Unaudited Unaudited Unaudited
Standard Bank Group
Number of ordinary shares
in issue (000"s)
- weighted average 1 356 202 1 353 703 1 353 382
- fully diluted weighted
average 1 379 172 1 373 708 1 377 085
Cents per ordinary share
Headline earnings 18 359,0 304,8 666,0
Fully diluted headline earning 18 353,0 300,4 654,5
Dividends 18 144,0 122,0 267,0
Earnings 27 377,6 298,1 663,6
Fully diluted earnings 26 371,3 293,8 652,2
Net asset value 22 3 231 2 644 2 830
Financial performance (%)
ROE 24,2 23,7 25,2
Net interest margin 2,75 2,92 2,97
Credit loss ratio 0,70 0,45 0,40
Cost-to-income ratio 54,2 56,4 56,0
Normalised headline earnings contribution by business unit
for the six months ended
June June December
% 2006 2005 2005
Rm change Unaudited Unaudited Unaudited
Personal & Business Banking 24 2 086 1 683 3 990
Corporate & Investment Banking 17 2 210 1 896 4 050
Central and other (10) 243 271 353
Central and other - IFRS (30) 70 100 8
Tutuwa adjustments 1 173 171 345
Banking activities 18 4 539 3 850 8 393
Investment Management &
Life Insurance 20 330 276 620
Investment Management &
Life Insurance - IFRS 10 287 262 416
Policyholder deemed treasury shares
and Tutuwa adjustment >100 43 14 204
Standard Bank Group 18 4 869 4 126 9 013
Unaudited results prepared in accordance with International Financial
Reporting Standards
Consolidated income statement
for the six months ended 30 June 2006
June June December
% 2006 2005 2005
Rm change Unaudited Unaudited Audited
Income from banking
activities 22 16 512 13 589 28 943
Net interest income 24 7 464 6 023 13 015
Interest income 22 22 094 18 088 38 625
Interest expense 21 14 630 12 065 25 610
Non-interest revenue 20 9 048 7 566 15 928
Income from investment
management
and life insurance
activities 18 24 084 20 373 52 332
Total income 20 40 596 33 962 81 275
Credit impairment charges >100 1 300 638 1 207
Benefits due to
policyholders 29 18 747 14 574 41 004
Income after credit
impairment charges
and policyholders" benefits 10 20 549 18 750 39 064
Operating expenses
in banking activities 16 9 039 7 759 16 403
Operating expenses
in investment management
and life insurance
activities (28) 2 777 3 846 7 797
Net income before goodwill 22 8 733 7 145 14 864
Goodwill impairment (99) 4 415 421
Net income before
associates and joint ventures 30 8 729 6 730 14 443
Income from associates
and joint ventures 75 103 59 226
Net income before indirect
taxation 30 8 832 6 789 14 669
Indirect taxation 14 436 383 778
Profit before direct
taxation 31 8 396 6 406 13 891
Direct taxation 20 2 377 1 977 4 312
Profit for the period 36 6 019 4 429 9 579
Attributable to minorities >100 1 002 464 921
Attributable to
preference shareholders (2) 112 114 226
Attributable to
ordinary shareholders 27 4 905 3 851 8 432
Consolidated cash flow information
for the six months ended 30 June 2006
June June December
2006 2005 2005
Rm Unaudited Unaudited Audited
Net cash from operating activities 10 189 8 516 19 261
Net cash from operating funds 3 581 17 678 23 767
Net cash used in investing activities (2 702) (4 237) (5 471)
Net cash from/(used in) financing activities 1 744 (1 548) (2 054)
Statement of changes in shareholders" funds
for the six months ended 30 June 2006
Ordinary Preference
shareholders" share capital Minority Total
funds and premium interest equity
Rm Audited Audited Audited Audited
Balance at 1
January 2005 28 163 2 991 3 722 34 876
Consolidation of
minority property
partnerships 2 449 2 449
Restated balance
at 1 January
2005 28 163 2 991 6 171 37 325
Profit for the
year 8 432 226 921 9 579
Net dividends
paid (3 747) (226) (637) (4 610)
Net translation
gain and hedging 397 (21) 376
Issue of share
capital and
share premium 246 71 317
Share buy-backs (677) (677)
Other reserve
movements 117 (735) (618)
Balance at 31
December 2005 32 931 2 991 5 770 41 692
Unaudited Unaudited Unaudited Unaudited
Balance at 1
January 2006 32 931 2 991 5 770 41 692
Profit for the
period 4 905 112 1 002 6 019
Net dividends
paid (1 769) (112) (541) (2 422)
Net translation
gain and hedging 2 062 25 2 087
Issue of share
capital and
share premium 203 1 500 36 1 739
Share buy-backs (102) (102)
Other reserve
movements 363 (2) (583) (222)
Balance at 30
June 2006 38 593 4 489 5 709 48 791
Consolidated balance sheet
as at 30 June 2006
June June December
% 2006 2005 2005
Rm change Unaudited Unaudited Audited
Assets
Cash and balances with banks 37 84 139 61 343 71 106
Short-term negotiable
securities 26 30 381 24 081 25 931
Derivative assets 16 120 021 103 434 100 188
Trading assets 98 66 083 33 374 38 431
Investments 20 172 931 144 619 159 147
Loans and advances 38 411 416 297 529 338 729
Current and deferred
taxation (26) 1 018 1 381 990
Other assets 14 32 080 28 221 13 186
Disposal groups held for
sale - - 2 380
Interest in associates and
joint ventures 44 6 047 4 195 4 985
Goodwill and other
intangible assets (3) 2 537 2 619 2 453
Property and equipment 14 4 658 4 089 4 581
Total assets 32 931 311 704 885 762 107
Equity and liabilities
Equity 22 48 791 39 861 41 692
Equity attributable to
ordinary
shareholders 27 38 593 30 473 32 931
Preference share
capital and premium 50 4 489 2 991 2 991
Minority interest (11) 5 709 6 397 5 770
Liabilities 33 882 520 665 024 720 415
Derivative liabilities 12 120 494 107 125 103 482
Trading liabilities 94 43 538 22 474 21 462
Deposit and current accounts 33 498 994 374 063 412 309
Current and deferred
taxation 17 6 737 5 768 6 926
Other liabilities >100 46 445 21 333 21 490
Disposal groups held for
sale - - 1 267
Policyholders" liabilities 22 150 282 123 081 140 835
Subordinated bonds 43 16 030 11 180 12 644
Total equity and liabilities 32 931 311 704 885 762 107
Contingent liabilities and capital commitments
as at 30 June 2006
June June December
2006 2005 2005
Rm Unaudited Unaudited Audited
Contingent liabilities
Letters of credit 7 644 5 107 5 398
Guarantees 21 290 18 309 16 309
Irrevocable unutilised facilities 37 064 23 698 26 417
65 998 47 114 48 124
Capital commitments
Contracted capital expenditure 484 384 552
Capital expenditure authorised
but not yet contracted 833 556 876
1 317 940 1 428
Segment report
for the six months ended 30 June 2006
Headline earnings contribution by business unit
June June December
% 2006 2005 2005
Rm change Unaudited Unaudited Audited
Personal & Business Banking 24 2 086 1 683 3 990
Corporate & Investment
Banking 17 2 210 1 896 4 050
Central and other (30) 70 100 8
Banking activities 19 4 366 3 679 8 048
Investment Management &
Life Insurance 10 287 262 416
Standard Bank Group 18 4 653 3 941 8 464
Headline earnings
for the six months ended 30 June 2006
June June December
% 2006 2005 2005
Rm change Unaudited Unaudited Audited
Group profit attributable
to ordinary shareholders 27 4 905 3 851 8 432
Headline earnings
adjustable items added
back or reversed(1) (532) 369 293
Goodwill impairment 4 415 421
Profit on sale of
properties and equipment (1) (46) (64)
Gains on disposal of
businesses and divisions (378) - -
Recycled investment gains on
available-for-sale assets (157) - (64)
Taxation on headline
earnings adjustable items 21 1 20
Minority share of
headline earnings
adjustable items 259 (280) (281)
Headline earnings 18 4 653 3 941 8 464
(1) These headline earnings adjustable items have been included in the
calculation of normalised headline earnings disclosed above.
Financial statistics
for the six months ended 30 June 2006
June June December
% 2006 2005 2005
change Unaudited Unaudited Audited
Standard Bank Group
Number of ordinary shares
in issue (000"s)
- weighted average 1 211 650 1 203 775 1 205 169
- fully diluted weighted
average 1 279 620 1 254 125 1 261 527
Cents per ordinary share
Headline earnings 17 384,0 327,4 702,3
Fully diluted headline
Earnings 16 363,6 314,2 670,9
Dividends 18 144,0 122,0 267,0
Earnings 27 404,8 319,9 699,7
Fully diluted earnings 25 383,3 307,1 668,4
Net asset value 25 3 176 2 534 2 729
Financial performance (%)
ROE 26,6 26,7 27,8
Net interest margin 2,71 2,86 2,92
Credit loss ratio 0,71 0,45 0,40
Cost-to-income ratio 54,7 57,1 56,7
Capital adequacy (%)
Capital ratio
- primary capital 10,6 10,8 10,5
- total capital 14,7 15,0 14,2
Accounting policies
The consolidated financial statements are prepared in accordance with, and
comply with International Financial Reporting Standards (IFRS) and the South
African Companies Act of 1973. The consolidated financial statements are
prepared in accordance with the going concern principle under the historical
cost basis as modified by the revaluation of financial instruments classified
as available-for-sale, financial assets and liabilities held at fair value
through profit and loss, investment properties and derivative instruments.
The accounting policies are consistent with those adopted in the previous
year except for the adoption of accounting standards and interpretations
issued with effective date of 1 January 2006. The adoption of these standards
and interpretations has not had a material effect on the results, nor has it
required any restatements of the results.
Since the previous results announcement, the group reclassified certain asset
and liability balances to more appropriate classifications resulting in
changes to individual asset and liability line items. In addition, Stanlib,
the group"s asset management operation, has been reclassified from banking
activities to insurance activities to reflect the revised operating structure
of the group. This reclassification impacted certain individual banking and
insurance income statement line items. In addition, minority interests in
unincorporated property partnerships have been consolidated and the opening
balance of minority interest restated accordingly. These reallocations did
not impact profit or equity attributable to ordinary shareholders of the
group.
The interim results have not been audited.
Date: 16/08/2006 08:00:24 AM Produced by the JSE SENS Department
