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Standard Bank Plc annual report 2008

Standard Bank Plc

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Annual nancial statements 4 Directorsreport

9 Directorsresponsibilityornancialreporting

10 Independentauditorsreport

11 Consolidatedbalancesheet

12 Consolidatedincomestatement

13 Consolidatedstatementochangesinshareholdersequity

14 Consolidatedcashfowstatement

15 Companybalancesheet

16 Companystatementochangesin

shareholdersequity 17 Companycashfowstatement

18 Accountingpolicies

32 Notestotheannualnancialstatements

80 Acronymsandabbreviations

Table o contents

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The directors present theirreport and accounts or the yearended31December2008.

Standard Bank Group proleTheStandardBankGroupLimited,basedinJohannesburg,isthe ultimateholding company or the global activitiesotheStandardBankGroup.Withtotalassets inexcessoUS$160billionandemploying50,000peopleworldwide,theStandardBank Group is one o Aricas leading banking and nancialservicesorganisations.InNovember2007StandardBankGroupannounced a major strategic partnership with Industrial andCommercialBankoChinaLimited(ICBC),theworldslargest

bankbymarketcapitalisation,whichresultedinICBCbecominga20%shareholderintheStandardBankGroup.

TheStandardBankGroupoperateswithinthreekeybusinesssegments:Personal&BusinessBanking,Corporate&InvestmentBankingandInvestmentManagement&LieInsurance.Theseglobal business segments operate across South Arica, Aricaand other international locations outside o Arica. StandardInternational Holdings S.A. (SIH) is a Luxembourg basedholdingcompanywhichtogetherwithitssubsidiaries,comprisesthe international segment o the Corporate & InvestmentBanking business. SIHs principal operating subsidiary isStandardBankPlc(SBPlc).

Principal activities and product areasStandard Bank Plc is a bank authorised and regulated bythe United Kingdom Financial Services Authority providinga range o banking and related nancial services. It is amember o the London Stock Exchange, the London BullionMarket Association, the London Metal Exchange and theLondon Platinum and Palladium Market and is Chairman otheLondonPlatinumandPalladiumFixing.StandardBankPlcisa shareholder inLCH.Clearnet GroupLimited and has twoseatsontheNewYorkMercantileExchange(Comexdivision).The ranchise o Standard Bank Plc and its subsidiaries

(together the group) ocuses on emerging marketsprimarily debt, interest rate, equity and currency products,andnaturalresources.

Principal product areasGlobal Markets DivisionThe Global Markets division comprises all customer-drivenmarket-making activities across the ull spectrum o tradedrisknamely,thetradingointerestrate,FX,credit,equityandcommodityrisktogetherwiththeundingactivitiesothegroup.Thedivisionseekstooriginateexposuresdirectlyromclientsormarket-makingactivitieswhicharerepackagedandtradedwithmarketparticipants,assetmanagersandotherclientsthroughthe groups distribution network. A comprehensive range ooreignexchange,moneymarkets,interestrateandcommodityproductsareprovided,rangingromsimple riskmanagementtools to sophisticated investment structures. The divisionsexpertiseextendsacrossallthemajormetalsandthemajoranddevelopingmarketcurrencies.

Investment Banking DivisionInvestment BankingThe Investment Banking divisionprovidesa ull suite ocrossborderadvisoryandnancingsolutionstoclients,rangingromcorporate loansand bond issues tohighly structured productsacrosstheequityanddebtcapitalmarkets.KeystructuredproductareasincludeProjectFinance,StructuredTradeandCommodityFinance, Acquisition and Leverage Finance, Asset and LeaseFinance,IslamicFinanceandSecuritisation.Thebusinessocusesonemergingeconomiesandoersspecialisedexpertiseinthegroups key coverage sectors. The division works closely withtheClientCoverageandDistributionteamtoprovidebespoke

clientsolutions.

Emerging Markets Asset ManagementThe Emerging Markets Asset Management business housesthegroups alternative investmentrelated activitieso PrivateEquity, RealEstate, Special Situations andAssetManagement(TradedMarkets).

Private Client ServicesPrivateClientServices(PCS)leveragesthegroupsexpertiseinemergingmarketsandhighyieldassetsintoinvestmentproductsthat can be distributed to individual investors on a wholesalebasis.ThePCSbusinessserveshighnetworthclientsthroughthe

groupsdevelopingbankingnetwork.Bydistributingacombinationo the groups specialist developing markets and resourcesproduct range, thePCSbusinesscomplements theestablishedprivatebanking,assetmanagementandduciaryactivitiesintheStandardBankGroup.

Client Coverage and DistributionThe Client Coverage and Distribution division entrenchesclientcentricityintothebusinessoperatingmodelothebank.It is responsible or the servicing o the groups core clientrelationshipsbothorGlobalMarketsandInvestmentBanking.Thedivisionlocatesitselacrosstheglobetobeclosetoand

helpkeyclientsexploitrelevantmarketopportunitiesandideasacross the groups emerging markets ootprint. The divisioncentresonclientinteractionandadvicebutwillprovidesolutionsonthenancing,hedgingomarketexposures,andanabilitytodistributerisktothegroupsglobalinvestorbase.TheCoverageteamhasanumberospecialisedsectorteams,namelyOil,GasandRenewables;TelecomsandMedia;FinancialInstitutions;andPowerandInrastructure.ThegroupissupportedbyaResearchteam, which provides relevant market and corporate researcharound the relevant core sectors and market driven researcharoundAricaandcommodities.

Market conditions and developments

TheStandardBankPlcbusinessdeliveredastrongperormanceor the year,upon2007. Achieving this leveloperormancewasespeciallypleasinggiventhechaoticeventsintherapidlydeteriorating market place that was the eature o 2008. Allbanks were ully tested throughout the year and the groupwas not immune to the signicant market turbulence and

Directors report

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de-leveraging o the nancialmarkets whichtook place. Theseniormanagement,workingcloselyasaglobalteam,ensuredthenecessarymanagementactionswereexecutedswitlyanddiligentlyandthatthegroupsliquidityandcapitalratioswererobustatalltimes.

Lookingorwarditisanticipatedthattheinternationalmarketswillremainverychallenginginarecessionaryenvironmentwiththelikelihoodocontinueddepressedcommodityprices.Intheemergingmarkets,capitalinvestmentislikelytodeclineoverthecomingyearbutthequantumothiswill varybyregion.Thegroupwillensureitsstrategyandoperatingmodelisresponsive

tothemarketconditionsitmayaceoverthecomingyearandwilltakeadvantageotheopportunitieswhichwillbeorthcominginitskeymarkets.

The group is particularly well positioned to take advantageo any cross border fows notably between Arica and China,India and Brazil, and Russia and China respectively. TheICBC relationship has proved to be an important driver orbusinessin2008anditisanticipatedthiswillcontinueormanyyearstocome.

Goodprogresswasmadeontheinvestmentintheinrastructurewith urther trading platorms being implementedduring the

year including a major system roll out o the Rates and FXbusinesstradingplatorm.ThegroupalsoappliedtotheFSAormodelaccreditationoritsCreditTradingbusinessattheendotheyearwhich,iapprovedwillenablethebusinesstomoveto a CAD2 capital adequacyenvironment. This togetherwithpreviouslyobtainedmodelapprovalaswellastheaimtoachieveBaselIIAIRBregulatoryapprovalswillprovidethebusinesswithan enhanced risk management platorm and a more capitalecientoperatingmodelgoingorward.

Standard Bank Plcs long-term credit ratings rom MoodysInvestors Service (A3) and rom Fitch Ratings (A-) remainedunchanged during the year,aswell asthe short-term ratings

remainingunchanged.

PerormanceGlobal Markets DivisionDuring the year, as part o the groups overall divisionalrestructuring,thesalesandtradingcapabilitiesothegroupsPrecious & Base Metals and Energy trading businesses weretranserred to Global Markets. These trading desks now sitalong side the Foreign Exchange, Local Markets and CreditTradingbusinessestoprovideacentralisedtradinggroupwithasinglemanagementplatormandacommonapproachtoriskmanagementacrossalltradingaspectsothebusiness.

This newly enlarged trading group perormed exceptionallywellduringtheyear,increasingrevenuesandreturnssubstantiallywhencompared tothe prioryear.Thedivisionsclient driventrading model continued to operate successully despite thedicult market conditions and was well positioned to take

advantageothewideningcreditspreadenvironmentandvolatilemarket conditions which existed. The geographic and productdiversityothedivisionbuiltoverprioryearsalsoprovidedamorestableincomestreamthanwouldotherwisehavebeenthecasewithcountriessuchasArgentina,RussiaandSingaporeprovingparticularlyresilientandPrecious&BaseMetalsandLocalMarketsprovingkeyproductrevenuegeneratorsovertheyear.

Investment Banking DivisionInvestment BankingInspiteothechallengingmarketconditions,InvestmentBankingpostedstrongresults,aheadotheprioryear.

Business development achieved during the year included thesuccessulconsolidationandrestructuringothevariousnancingandadvisoryunctionsintoa singleInvestmentBankingdivisionwhich is now ully aligned globally. In addition, a Merger andAcquisition team was establishedto acilitate clientsneeds interms o cross border transactions between the groups coregeographiesoArica,China,Brazil,TurkeyandRussia.

The structured product teams perormed well and generatedconsiderable revenue using a diverse number o structuresincluding a number with equity-linked perormance ees.The Commodity Finance business in Asia and the ProjectFinance team also posted strong results. The divisioncontinuesto be supportedby theBusinessAdministrationandTransaction Management Unit which came into its ownduring the year and proved its worth as a highly eectiveront oce risk management, deal execution and transactionmonitoringunction.

Looking aheadto 2009, the divisionwill ocusondevelopingitscrossborderAdvisorycapabilitygloballyandconsolidatingitscoreproductcapabilityandclientrelationshipswiththeviewtomaximizinganycross-sellpotentialacrossitsproducts.

Emerging Markets Asset ManagementThe Private Equity business continued to grow its emergingmarketranchisebasedontwokeycomponents;thecallibreoitsteamanditsinvestmenttrackrecordanditsocusonmarketswhere,throughStandardBankGroupsranchiseandnetwork,thebankhasrealdierentiation.

TheSpecial Situations teamproduced pleasingpositive resultsor2008,anachievementinayearwherethevastmajorityoundsandproprietarydesksweredownsignicantly.GeographicdiversicationplayedakeyrolewiththeAsianNPL/distresseddebt portolio perorming particularly well, oset by negative

perormanceinAricanandLatinAmericanlocalcurrencyassets.Given the recent prolieration o distressed assets and sellersthereo,itisanticipatedthattherewillbeanumberoextremelyattractivedebtinvestmentopportunitiesortheteamtoconsideroverthenexttwoyears.

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During the year the Asset Management (Traded Markets)businesswasbuetedbymarketconditionsinitscoremarketsoemergingmarketdebtandcorporatehighyieldbondsandbyclientredemptions,whichnegativelyimpactedresults.

Private Client ServicesInspiteotheunprecedentednancialeventsthatprevailedduring 2008, Private Client Services experienced revenuegrowthovertheyear.GoodprogresswasmadeattheFamilyOce client level across the key target regions o EasternEuropeandtheMiddle-East.

The team worked closely with the other divisions on thewholesale sideothe banktoenhance its productcapabilitytoprivateclients.AnumberotheFamilyOceclientshavebeen included in the wholesale bank client coverage modelwith a view to working more closely with other divisions intheuture.

Lookingaheadto2009,PrivateClientServiceswillcontinuetoactivelymarketkeyFamilyOcesanddeepenitscoverageotargetgeographies.

Client Coverage and Distribution

TheCoverageteams intheOil,Gas& Renewables,Power&InrastructureandTelecoms&Mediasectorsallshowedstronggrowthduringtheyear.Thegroupwasonhandtooeritsservicestothecompanieswithinthesesectorsastheyacedthenancialchallengesotheyearwhichrequired,interalia,strategicadvice, innovativenancingstructures andhedgingagainstvolatilemarketexposures.

TheDistributionteamalsoperormedwell,asxedincomeandcreditmarketvolatilityhelpedcustomerfow.Theunwindingolocalcurrencyexposuresanddistressedsellingohighyieldingassets were the dominantthemes,withthe teams ability tointermediatethesefowstoselectivevalueinvestorscontinuing

tobeaverystrongsourceolowornon-riskrevenue.

GreateremphasiswasplacedonsupportingthegroupsstrongChina and Arica link. Specically, a client coverage teamwithinChinahasbeenestablishedandisworkingcloselywithcolleaguesinICBC,tohelpunlockthepotentialtoparticipateintradeand investmentfows betweenChina,Arica andotheremergingmarkets.

Lookingaheadinto2009,thestrongdriversoactivitywillbearoundadvice,nancingandhedgingwithinthecoresectorso Oil, Gas & Renewables, Telecoms & Mediaand Power &

Inrastructure.Itisexpectedthatthedistributionmarketwillremain tough, but will slowly open upas the market beginsto regain condence. The groups connectivity to specialistinvestors will continue to allow the bank to nd buyers orproperlypricedandwellstructuredrisk.

Financial resultsThegroupsresultsortheperiodareshownintheconsolidatedincome statement on page 12. Prot attributable to equityshareholders o US$57.8 million was US$10.2 million uponthe prior year. Notwithstanding signicantly increased creditimpairment charges and losses incurred on equity portoliosheld,attributableprotincreasedollowingstrongperormancebythecorebusinesseswithinGlobalMarketsandInvestmentBanking.Thereturnonequityo5.1%(2007:6.0%)decreasedasaconsequenceoanincreasedequitybase.Thesubstantiallyimprovedcosttoincomeratioo72.6%(2007:81.6%)refectsthe increase in operating revenue and the benets o cost

management initiatives. The eective tax rate increased intheyearto47.2%(2007:38.7%)duemainlytohighernon-deductiblecostsbeingincurredinthegroup.

TheamendmenttotheaccountingstandardIAS39recognisedtheimpactotheextrememarketconditionsonassettradingstrategiesandallowedorthetranserotradingbookassetstothebankingbook.TradingassetswithavalueoUS$412.9millionattranserdate,arenowheldatamortisedcost.

TotalassetsincreasedtoUS$35176.9millionromUS$32272.1millionintheprioryear,primarilyasaresultoselectiveincreases

inlendingandsubstantiallyhigherderivativesbalancesollowingincreased trading activity and market volatility. Reductionsintrading assets and loansgranted under resale agreementsrefectriskreductionmanagementactions.

Capital resourcesAttheyear-endthegroupsequitycapitalresourcesamountedtoUS$1506.8million(2007:US$918.3million)andtotalcapitalresources qualiying or prudential purposes amounted toUS$2040.7million(2007:US$1702.8million).Thesubstantialincreaseintheregulatorycapitalbasehasbeeninresponsetothe extreme market conditions and potential impacts onthegroupscapitalposition.Thegroupremainswellcapitalisedwith

acapitaladequacyratioo14.0%(2007:16.7%)andacoreTierIratioo9.6%(2007:8.3%).

During the year the company increased its share capital byUS$571millionthroughthreeshareissuestoStandardBankLondon Holdings at an average share price o US$1.45 pershare.SubordinateddebtinstrumentsoUS$100millionand43millionheldbyStandardBankGroupentities,andwhichqualiedasregulatorycapital,wereredeemedduringtheyear.In December 2008 the group bought back SubordinatedFloating Rate Notes redeemable in 2015 and PerpetualSubordinated Notes with notional values o US$10.4 million

andUS$58.3millionrespectively,heldbypartiesexternaltotheStandardBankGroup.

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Weexpect tomaintain the Core Tier 1 ratioat levels whichsignicantlyexceedtheminimumrequirementsotheFinancialServicesAuthority, or the duration o the current period onancialandeconomicstress.

Risk managementThe eective management o risk is undamental to thebusiness activities o the group as we remain committed tothe objective o increasing shareholder value by developingand growing business that is consistent with our agreedriskappetite.

Thegrouphadastrongocusonmanagingcreditriskinthecurrent environmentbymeanso a number o managementactions including early response to credit changes, creditportolioanalysisandstresstesting,specicreviewsandsectoranalysis. This process has been enhanced in 2008 by theormationoaCreditRiskReviewteaminlate2007whoin2008undertookareviewoallcreditportoliosandthecreditapprovalprocesses ineveryregionwhereassetsare booked.Thishasprovedtobeparticularlyhelpulinearlyidenticationoproblemconcentrationswithinspecicportoliosandallowedthegrouptotakeproactiveactiontominimiseloss.

A strong liquidity prole was maintained throughout therapidlydeterioratingmarketplacethatwasaeatureo2008,specicallytakinganumberomanagementactionsollowingthemarketcrisisoSeptember2008toensurethatliquiditycushions above the minimum requirements were maintainedat a high level, on precautionary grounds. In the currentmarketenvironment,accesstoandtheshortageinwholesaleterm unding has been one o the key challenges or allnancialinstitutions.Ourdiversiedundingbasecomprisedacombinationocorporateandinstitutionaldeposits,interbankdepositsand longer term unding rom a varietyoStandardBankGroupsourceshasgrownovertheyearandhasallowedus to meet these market challenges. The Standard Bank

Groupwillensurethat,exceptinthecaseopoliticalrisk,andunless specically excluded by local public notice, that thebanking entities within the group are able to meet theircontractualliabilities.

Thekeyrisksandriskmanagementprocessesandpoliciesaresetoutinnote31othisreport.

DividendsThedirectorsdonotrecommendthepaymentoadividend.

DirectorsThedirectorswhocurrentlyholdoceareasollows:

BJKruger (Chairman)

MEAustenDPHBurgess

DECooperDJDuy (ChieExecutive)

JKKnottRAGLeith

JHMaree CJSheridan

HEStauntonOn 14 February 2008, Ms J K Knott was appointed to theBoard.BJKrugertookoverasChairmanothecompanyromJHMareeon8May2008.JHMareeremainsadirectorothecompany.

None o the directors held any benecial interest in theordinary share capital o the group during the year or at31December2008.

Thedirectorswhoheldoceatthedateoapprovalothisdirectorsreportconrmthat,asarastheyareeachaware,thereisnorelevantauditinormationowhichthecompanysauditorsareunaware;andthateachdirectorhastakenallstepsthattheyoughttohavetakenasdirectorstomakethemawareo any relevant audit inormation and to establish that thecompanysauditorsareawareothatinormation.

CommitteesTheBoardoStandardBankPlcdelegatescertainunctionsandresponsibilitiestotheollowingboardcommittees.

Executive CommitteeThiscommitteeisresponsibleortheday-to-daymanagementothebank.Subjecttotheoverallauthorityotheboard,it

meetsregularly,todevelopbusinessstrategy,initiateandreviewstrategicinitiatives,reviewandapproveannualbusinessplans,monitor nancial perormance against budget, approve theintroductiononewproducts,authoriseandapproveappointmentostatoseniormanagerialpositionsandreviewtheactivitiesoexecutivesub-committees.

Membership:Thecommitteecomprisestheexecutivedirectorsandcertainseniorexecutives,namelyDavidDuy(Chairman),Paul Hartwell, Jenny Knott, Robert Leith, Simone MacLeod-Nairn,PhilipHurleyandMarkGheerbrant.

Themajorexecutivesub-committees,supportingtheExecutive

Committee in ullling its responsibilities, are the CreditCommittee, the Capital Management Committee and theBusinessInrastructureCommittee.

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Audit CommitteeThis non-executive Board committee monitors the processoridentiying,evaluatingandmanagingrisksandcontrols.Inparticular, thisincludesthequality, integrityandreliabilityocompliance,nancialandaccountingcontrolsystems.Itsotherresponsibilitiesaretoreviewthescopeoexternalandinternalaudit,toreceiveregularreportsromInternalAuditandKPMGAuditPlc, and to review the nancialstatements ocusinginparticularonaccountingpolicies,areasomanagementjudgmentandestimates.Thecommitteemeetsquarterly.

Membership:HenryStaunton(Chairman),MarkAusten,Patrick

Burgess,DerekCooperandChristopherSheridan.

Risk Management CommitteeThe objective o this Board Committee is to provide anindependentreviewandchallengetothegroupsriskpoliciesandthecompositionotheriskportolio,itsconcentrationsandtherisk-takingdecisionsothegroup,coveringallaspectsorisk and include market, credit, country and operational risk.ItcomplementstheAuditCommitteewhichalsostudies,interalia, risk controls and their operation, but rom a dierentperspective.Thecommitteemeetsquarterly.

Membership: Ben Kruger (Chairman), Mark Austen, PatrickBurgess, Derek Cooper, Jacko Maree, Christopher SheridanandHenryStaunton.

Remuneration CommitteeThis non-executive committee approves remuneration policyandlong-termincentiveschemesorsta,setstheremunerationoexecutivedirectorsandotherseniorexecutivesandapprovesguidelines or the companys annual salary and incentivereviews.

Membership:ChristopherSheridan(Chairman),DerekCooper,JackoMareeandHenryStaunton.

Transactions with directors and related partiesTherearenoloans,arrangementsoragreementsthatrequiredisclosure under the Companies Act 1985 or InternationalAccounting Standard IAS24 regarding transactions withrelated parties, other than those shown in the notes to thenancialstatements.

Directors liability insuranceThegroupmaintaineddirectorsandocersliabilityinsuranceduringthetwelvemonths.

EmployeesIt isthe groups policy toensure that all employees and jobapplicantsaregivenequalopportunitiesandthattheydonotace discrimination on the grounds o ethnic origin, colour,religion,sexordisability.Shouldanemployeebecomedisabledduring his or her career with the group every eort will bemade to ensure continued employment, with appropriatetraininginecessary.

Employeeinvolvementinthegroupsbusinessisencouragedandinormationdisseminatedthroughcommunicationmeetings,andaninternalstapublication.

The group recognises its responsibilities to provide a saeworkingenvironmentorallitsstaandmeasuresareinplaceto ensure that the Health and Saety at Work regulationsareobserved.

Charitable DonationsThegroupmadecharitabledonationsoUS$134243duringtheyear.

Payment o Suppliers PolicyThe group does not ollow a ormal policy with respecttopayments to suppliers but will negotiate specic termswhenapplicable.

AuditorsKPMGAuditPlchasindicatedtheirwillingnesstocontinueasauditorsothegroup.Accordingly,aresolutionistobeproposedatthenextannualgeneralmeetingorthere-appointmentoKPMGAuditPlcasauditorsothegroup.

Byorderotheboard

SCSmollettSecretary25February2009

CannonBridgeHouse25DowgateHillLondonEC4R2SBRegisteredinEnglandNo.2130447

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Directors responsibility or nancialreporting

ThedirectorsareresponsibleorpreparingtheDirectorsReportandthenancialstatementsinaccordancewithapplicablelawandregulations.

Company law requires the directors to prepare group andparentcompanynancialstatementsoreachnancial year.Underthatlawtheyhaveelectedtoprepareboththegroupandtheparent companynancialstatements inaccordancewithIFRSsasadoptedbytheEUandapplicablelaw.

The group and parent company nancial statements arerequiredbylawandIFRSsasadoptedbytheEUtopresent

airly the nancial position o the group and the parentcompanyandtheperormanceorthatperiod;theCompaniesAct 1985 provides in relation to such nancial statementsthat reerences inthe relevantparto that Act tonancialstatementsgivingatrueandairviewarereerencestotheirachievingaairpresentation.

Inpreparingeachothegroupandparentcompanynancialstatements,thedirectorsarerequiredto:

select suitable accounting policies and then apply themconsistently;

make judgements and estimates that are reasonableandprudent;

statewhethertheyhavebeenpreparedinaccordancewithIFRSsasadoptedbytheEU;and

preparethenancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethatthegroupandtheparentcompanywillcontinueinbusiness.

Thedirectorsare responsibleorkeepingproperaccountingrecords that disclose with reasonable accuracy at any timethe nancial position o the parent company and enablethemtoensurethatitsnancialstatementscomplywiththeCompaniesAct1985.Theyhaveageneralresponsibilityortakingsuchstepsasarereasonablyopentothemtosaeguardtheassetsothegroupandtopreventanddetectraudandotherirregularities.

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Independent auditors report to themembers o Standard Bank Plc

We have audited the group and parent company nancialstatements(the nancialstatements)oStandardBankPlcortheyearended31December2008whichcomprisethegroup Income Statement, the group and parent companyBalance Sheets, thegroup Cash Flow Statement, thegroupandparentcompanyStatementsoChangesinShareholdersEquityandtherelatednotes.Thesenancialstatementshavebeenpreparedundertheaccountingpoliciessetouttherein.

Thisreportismadesolelytothecompanysmembers,asabody,inaccordancewithsection235otheCompaniesAct1985.Ourauditworkhasbeenundertakensothatwemightstate

tothecompanysmembersthosematterswearerequiredtostatetotheminanauditorsreportandornootherpurpose.Totheullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompanysmembersasabody,orourauditwork,orthisreport,orortheopinionswehaveormed.

Respective responsibilities o directors and auditorsThe directors responsibilities or preparing the DirectorsReportandthegroupnancialstatementsinaccordancewithapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEUaresetoutintheStatemento

DirectorsResponsibilitiesonpage9.

Our responsibility is to audit the nancial statements inaccordance with relevant legal and regulatory requirementsandInternationalStandardsonAuditing(UKandIreland).

We report to you our opinion as to whether the nancialstatementsgiveatrueandairviewandwhetherthenancialstatements have been properly prepared in accordancewith the Companies Act 1985 and Article 4 o the IASRegulation.WealsoreporttoyouwhetherinouropiniontheinormationgivenintheDirectorsReportisconsistentwiththenancialstatements.Inadditionwereporttoyoui,inouropinion,thecompanyhas not kept proper accounting records, i we have notreceived all the inormation and explanations we requireor our audit, or i inormation specied by lawregarding directors remuneration and other transactionsisnotdisclosed.WereadtheotherinormationcontainedintheconsolidatedAnnual Report and consider whether it is consistentwith the audited nancial statements. We consider theimplications or our report i we become aware o any

apparentmisstatementsor materialinconsistencieswith thenancial statements. Our responsibilities do not extend toanyotherinormation.

Basis o audit opinionWe conducted our audit in accordance with InternationalStandardsonAuditing(UKandIreland)issuedbytheAuditingPractices Board. An audit includes examination, on a testbasis, o evidence relevant to the amounts and disclosuresin the nancial statements. It also includes an assessmento the signicant estimates and judgements made by thedirectors in the preparation o the nancial statements, ando whether the accounting policies are appropriate to thegroupsandcompanyscircumstances,consistentlyappliedandadequatelydisclosed.

We planned and perormed our audit so as to obtain all theinormationandexplanationswhichweconsiderednecessaryinordertoprovideuswithsucientevidencetogivereasonableassurancethat the nancialstatementsareree rom materialmisstatement, whether caused by raud or other irregularityor error. In orming our opinion we also evaluated theoverall adequacy o the presentation o inormation in thenancialstatements.

OpinionInouropinion:

thegroupnancialstatementsgiveatrueandairview,inaccordancewithIFRSsasadoptedbytheEU,othestateothegroupsaairsasat31December2008andoitsprotortheyearthenended;

the parent company nancial statements givea trueandairview,inaccordancewithIFRSsasadoptedbytheEUasappliedinaccordancewiththeprovisionsotheCompaniesAct1985,othestateotheparentcompanysaairsasat31December2008;

the nancial statements have been properly prepared inaccordancewiththeCompaniesAct1985andArticle4otheIASregulation;

theinormationgivenintheDirectorsReport isconsistentwiththenancialstatements.

KPMG Audit PlcCharteredAccountantsLondonRegisteredAuditor25February2009

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Consolidated balance sheetat31December2008

2008 2007

Note $m $m

Assets

Derivativeassets 3 2. 7111.5

Tradingassets 4 0. 8667.3

Pledgedassets 5 20. 26.2

Financialinvestments 6 8.0 44.8

Loansandadvances 7 . 16002.5

Loansandadvancestobanks 7 8 0. 6515.8

Loansandadvancestocustomers 7 . 9486.7

Otherassets 9 . 340.2

Currenttaxasset 10 - 9.2Deerredtaxasset 10 2. 12.2

Intangibleassets 12 .0 49.1

Propertyandequipment 13 8. 9.1

Total assets . 32272.1

Liabilities and equity

Liabilities 0. 31353.8

Derivativeliabilities 3 02.2 8057.8

Tradingliabilities 14 2 02. 3492.6

Depositandcurrentaccounts 15 2. 18216.5

Depositsrombanks 15 8.0 15057.6Depositsromcustomers 15 . 3158.9

Otherliabilities 16 2. 681.2

Currenttaxliability 17 0. 30.2

Deerredtaxliability 17 2. 0.8

Subordinateddebt 18 . 874.7

Equity 0.8 918.3

Equityattributabletoordinaryshareholders . 913.8

Ordinarysharecapital 23 08. 645.5

Ordinarysharepremium 2. 78.8

Reserves 20. 189.5

Minorityinterest . 4.5

Total liabilities and equity . 32272.1

Theaccountingpoliciesandnotesonpages18to79shouldbereadaspartothenancialstatements.

ApprovedbytheBoardoDirectorsandsignedonitsbehalon25February2009.

B.J.Kruger,Chairman D.J.Duy,ChieExecutive

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Ordinaryshare capital Cash fow Long-term Ordinary

and share hedging incentive Translation Retained shareholder Minority Totalpremium reserve reserve 2 reserve earnings unds interest equity

$m $m $m $m $m $m $m $m

Balanceat1January2007 524.3 8.6 14.4 (0.1) 124.8 672.0 - 672.0

Totalrecognisedincomeortheyear - (9.4) 2.1 1.5 47.6 41.8 4.5 46.3

Protattributabletoequityshareholders - - - - 47.6 47.6 1.7 49.3

Itemsrecogniseddirectlyinreserves - (9.4) 2.1 1.5 - (5.8) 2.8 (3.0)

-Cashfowhedgeairvaluechange - 2.5 - - - 2.5 - 2.5

-Cashfowhedgetransertoincomestatement - (15.9) - - - (15.9) - (15.9)

-Deerredtaxonhedges - 4.0 - - - 4.0 - 4.0

-Directreservemovements - - - - - - 2.8 2.8

-Long-termincentivetransactions - - 2.1 - - 2.1 - 2.1

-Translationosubsidiarycompanies - - - 1.5 - 1.5 - 1.5

Issueosharecapitalandpremium 200.0 - - - - 200.0 - 200.0

Balanceat31December2007 724.3 (0.8) 16.5 1.4 172.4 913.8 4.5 918.3

Balance at January 2008 2. ( 0.8) . . 2. .8 . 8.

Totalrecognisedincomeortheyear - ( .) ( .) . .8 . 2. .

Protattributabletoequityshareholders - - - - .8 .8 0.2 8.0

Itemsrecogniseddirectlyinreserves - ( .) ( .) . - ( 2.) 2.2 (0.)

-Cashfowhedgeairvaluechange - ( .2) - - - ( .2) - (.2)

-Cashfowhedgetransertoincomestatement - 2.0 - - - 2.0 - 2.0

-Deerredtaxonhedges - . - - - . - .

-Directreservemovements - - - - - - 2.2 2.2

-Long-termincentivetransactions - - ( .) - - ( .) - ( .)

-Translationosubsidiarycompanies - - - . - . - .

Issueosharecapitalandpremium .0 - - - - .0 - .0

Balance at December 2008 2. ( .) .8 2. 20.2 . . 0.8

1DuringtheyearthecompanyraisedUS$571.0millionsharecapitalby wayothreeseparateshare issuesto itsholdingcompanyStandardBankLondonHoldingsPlc.

2Thisreserveormspartothecapitalcontributionromtheultimateparentandisincludedasacomponentoordinaryshareholderunds.

3ThisminorityinterestarisesontheconsolidationoentitiesrelatedtotheNPLbusinessasdescribedinnote2.4.

Consolidated statement o changes in shareholders equityortheyearended31December2008

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Consolidated cash low statementortheyearended31December2008

2008 2007

Note $m $m

Cash fows rom operating activities

Protortheperiod 0. 80.4

Adjustedor:

Amortisationointangibleassets . 3.1

Cash-settledshare-basedpayments ( .) 1.9

Creditimpairmentchargesagainstloansandadvances .2 17.9

Depreciation-propertyandequipment 2. 1.3

Discountelementrecognisedromcreditimpairmentsagainstloansandadvances ( 2.) (0.4)

Equity-settledshare-basedpayments .0 6.2

Impairmentopropertyandequipment . -

Provisionorleavepay ( 0.) 1.6Changesinoperatingunds 8.0 358.6

Decrease/(increase)inincome-earningassets 27.2 0.2 (4808.2)

(Decrease)/increaseindepositsandotherliabilities 27.3 ( .2) 5166.8

Taxpaid 27.4 ( 2.) (30.6)

Net cash fows rom operating activities 2 08. 440.0

Investing activities

Capitalexpenditureon -intangibleassets ( .) (28.5)

-propertyandequipment ( .) (2.7)

Proceedsondisposal -intangibleassets 0. -

Net cash fows used in investing activities ( 0.) (31.2)

Financing activities

Proceedsromissueoordinarysharecapitaltoshareholders .0 200.0

(Redemption)/issueosubordinateddebt 18 ( 2.) 330.9

RedemptionoSubordinatedFloatingRateEURLoanStock2008 ( 8.) -

IssueoSubordinatedFloatingRateNotes2009 - 50.0

IssueoSubordinatedUnsecuredFloatingRateLoanStock2009 - 35.0


RedemptionoStep-UpSubordinatedFloatingRateNotes2015 ( 0.) -

(Redemption)/issueoSubordinatedFloatingRateLoan2017 ( 00.0) 100.0

RedemptionoStep-UpPerpetualSubordinatedNotes ( 8.) -

Net cash fows generated rom nancing activities . 530.9

Eects o exchange rate changes on cash and cash equivalents 0. 7.5

Net increase in cash and cash equivalents 2 8. 947.2

Cash and cash equivalents at beginning o the year 0.0 992.8

Cash and cash equivalents at end o the year 27.5 2. 1940.0

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Company balance sheetat31December2008

2008 2007

Note $m $m

Assets

Derivativeassets 3 .0 7111.5

Tradingassets 4 02.2 8665.2

Pledgedassets 5 20. 26.2

Financialinvestments 6 8.0 44.8

Loansandadvances 7 .0 15988.3

Loansandadvancestobanks 7 8 0.0 6511.6

Loansandadvancestocustomers 7 20.0 9476.7

Otherassets 9 2. 337.4

Currenttaxasset 10 - 8.6Deerredtaxasset 10 2. 12.2

Investmentsingroupcompanies 11 0.8 1.2

Intangibleassets 12 .0 49.1

Propertyandequipment 13 . 8.3

Total assets . 32252.8

Liabilities and equity

Liabilities . 31347.6

Derivativeliabilities 3 0. 8057.8

Tradingliabilities 14 2 02. 3492.6

Depositandcurrentaccounts 15 2. 18216.5

Depositsrombanks 15 8. 15057.6

Depositsromcustomers 15 0.0 3158.9

Otherliabilities 16 0. 678.8

Currenttaxliability 17 0. 27.2

Deerredtaxliability 17 2. -

Subordinateddebt 18 . 874.7

Equity

Equityattributabletoordinaryshareholders 8. 905.2

Ordinarysharecapital 23 08. 645.5

Ordinarysharepremium 2. 78.8Reserves 20. 180.9

Total liabilities and equity . 32252.8

Theaccountingpoliciesandnotesonpages18to79shouldbereadaspartothenancialstatements.

ApprovedbytheBoardoDirectorsandsignedonitsbehalon25February2009.

B.J.Kruger,Chairman D.J.Duy,ChieExecutive

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Company statement o changes in shareholders equityortheyearended31December2008

Ordinaryshare capital Cash fow Long-term

and share hedging incentive Retained Totalpremium reserve reserve 2 earnings equity

$m $m $m $m $m

Balanceat1January2007 524.3 8.6 14.4 119.0 666.3

Totalrecognisedincome - (9.4) 2.1 46.2 38.9

Protattributabletoequityshareholders - - - 45.8 45.8

Itemsrecogniseddirectlyinreserves - (9.4) 2.1 0.4 (6.9)

-Cashfowhedgeairvaluechange - 2.5 - - 2.5

-Cashfowhedgetransertoincomestatement - (15.9) - - (15.9)

-Deerredtaxonhedges - 4.0 - - 4.0

-Long-termincentivetransactions - - 2.1 - 2.1

-Otherdirectreservemovements - - - 0.4 0.4

Issuesosharecapitalandpremium 200.0 - - - 200.0

Balanceat31December2007 724.3 (0.8) 16.5 165.2 905.2

Balance at January 2008 2. ( 0.8) . .2 0.2

Totalrecognisedincome - ( .) ( .) . 22.

Protattributabletoequityshareholders - - - . .

Itemsrecogniseddirectlyinreserves - ( .) ( .) 0.2 ( .)

-Cashfowhedgeairvaluechange - ( .2) - - ( .2)

-Cashfowhedgetransertoincomestatement - 2.0 - - 2.0

-Deerredtaxonhedges - . - - .-Long-termincentivetransactions - - ( .) - ( .)

-Otherdirectreservemovements - - - 0.2 0.2

Issuesosharecapitalandpremium .0 - - - .0

Balance at December 2008 2. ( .) .8 2. 8.

1DuringtheyearthecompanyraisedUS$571.0millionsharecapitalbywayoshareissuestoitsholdingcompanyStandardBankLondonHoldingsPlc.

2Thisreserveormspartothecapitalcontributionromtheultimateparentandisincludedasacomponentoequity.

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Company cash low statementortheyearended31December2008

2008 2007

Note $m $m

Cash fows rom operating activities

Protortheperiod .2 75.2

Adjustedor:

Amortisationointangibleassets . 3.1

Cash-settledshare-basedpayments ( .) 1.9

Creditimpairmentchargesagainstloansandadvances .2 17.9

Depreciation-propertyandequipment 2. 1.1

Discountelementrecognisedromcreditimpairmentsagainstloansandadvances ( 2.) (0.4)

Equity-settledshare-basedpayments .0 6.2

Impairmentopropertyandequipment . -

Provisionorleavepay ( 0.) 1.6Changesinoperatingunds . 380.5

Decrease/(increase)inincome-earningassets 27.2 .8 (4782.9)

(Decrease)/increaseindepositsandotherliabilities 27.3 ( .2) 5163.4

Taxpaid 27.4 ( 22.) (29.0)

Net cash fows rom operating activities 2 0. 458.1

Investing activities

Capitalexpenditureon -intangibleassets ( .8) (28.5)

-propertyandequipment ( .) (1.8)

Proceedsonsaleointangibles 0. -

Investmentinsubsidiary 0. (0.5)Net cash fows used in investing activities ( .) (30.8)

Financing activities

Proceedsromissueoordinarysharecapitaltoshareholders .0 200.0

(Redemption)/issueosubordinateddebt 18 ( 2.) 330.9

RedemptionoSubordinatedFloatingRateEURLoanStock2008 ( 8.) -


IssueoSubordinatedUnsecuredFloatingRateLoanStock2009 - 35.0


RedemptionoStep-UpSubordinatedFloatingRateNotes2015 ( 0.) -

(Redemption)/issueoSubordinatedFloatingRateLoan2017 ( 00.0) 100.0

RedemptionoStep-UpPerpetualSubordinatedNotes ( 8.) -

Net cash fows generated rom nancing activities . 530.9

Eects o exchange rate changes on cash and cash equivalents ( 0.) 6.0

Net increase in cash and cash equivalents 2 0. 964.2

Cash and cash equivalents at beginning o the year . 988.9

Cash and cash equivalents at end o the year 27.5 .0 1953.1

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Theprincipalaccountingpoliciesappliedinthepresentationothenancialstatementsaresetoutbelow.

Basis o preparation

BoththeparentcompanynancialstatementsandthegroupnancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEUandtheinterpretationsotheInternationalFinancialReporting Interpretations Committee (IFRIC). In publishingtheparentcompanynancialstatementsheretogetherwiththe group nancial statements, the company has takenadvantage o the exemption in s230 o the Companies

Act1985nottopresentitsindividualincomestatementandrelatednotesthatormapartothesenancialstatements.

The consolidated nancial statements are prepared inaccordance with the going concern principle under thehistoricalcostbasisexceptasmodiedby therevaluationo:

nancialassetsandliabilitiesheldatairvaluethroughprotorloss;and

liabilitiesorcash-settledshare-basedpaymentarrangements.

The consolidated nancial statements include the parentcompanyandallsubsidiarycompanies.

Theultimateparentcompany,StandardBankGroup(SBG)hasmadecertainaccountingpolicyelectionsintermsoIFRS,inthepreparationotheSBGconsolidatednancialstatements.AccordinglyStandardBankPlchasmadetheollowingelectionsin terms o IFRS with reerence to the detailed accountingpoliciesshowninbrackets:

transactions with minority shareholders are treated astransactionswithequityownersandaccountedordirectlyinequity(accountingpolicy2);

purchase or sale o nancial assets are recognised andderecognised using trade date accounting (accountingpolicy5);

jointlycontrolledentitiesareaccountedorusingtheequitymethod(accountingpolicy6);and

propertyandequipment are accounted orusing thecostmodel(accountingpolicy8).

Theaccountingpoliciesareconsistentwiththoseadopted inthepreviousyear,exceptortheollowing:

Adoption o new interpretation eective or the currentnancial yearIFRIC - IFRS 2 Group and Treasury Share TransactionsThe group has adopted IFRIC 11, an interpretation whichprovidesguidanceon applyingIFRS2 Share-basedPayment.Thegroupspreviousaccountingtreatmentcomplieswiththisinterpretationandithasthereorenotimpactedthegroupsresults or position. Reer to accounting policy 14 or thedetailedpolicyrelatingtolong-termincentiveschemes.

IFRIC 2 - Service Concession ArrangementsThestandardisnotapplicabletothegroup.

IFRIC - IAS 19 - The limit on a Defned Beneft Asset,Minimum Funding Requirements and their Interaction.

Thestandardisnotapplicabletothegroup.

IAS Amendment - Reclassifcation o Financial AssetsDuring October 2008, the IASB issued amendments to IAS39, Financial Instruments: Recognition and Measurement,and IFRS 7, Financial Instruments: Disclosures, titledReclassicationoFinancialAssets.TheamendmentstoIAS39 allow reclassications o non-derivative nancial assets(otherthanthosedesignatedundertheairvalueoption)outotheairvaluethroughprotorlosscategorytotheloansandreceivablescategory,applicabletoassetswithxedanddeterminablerepayments,notactivelyquotedortradedinthemarket,wheretheintentandabilityistoholdtheassetortheoreseeableutureoruntilmaturity.

The amendment is eective retrospectively rom 1 July2008providedthedecisiontoreclassiywasmadepriorto1November2008.Allotherreclassicationsshallbeeectiverom the date o reclassication. This amendment has hadanimpactontheresultsothegroup,buthashadnoeect

onthecomparativeperiod.Reertonote20andaccountingpolicy5orthedetailedpolicyrelatingtothereclassicationonancialassets.

Early adoption o standardIFRS 8 - Operating SegmentsThegrouphaschosentoearlyadoptIFRS8in2008.Thisstandardiseectiveorannualperiodsbeginningonorater1January2009,withearlyadoptionpermitted.IFRS8replacesIAS14SegmentReporting.Thisstandardrequiresanentitytoadoptthemanagementapproachwhenreportingonthenancialperormanceoitsoperatingsegments.Thereportingisbasedontheinormationthatmanagementusesinternally

orevaluatingsegmentperormanceandwhendecidinghowto allocate resources to operating segments. The standardhasnoimpactontheresultsothegroupbuthasimpactedtheormatodisclosureandmeasurementotheresultsoreportablesegmentsorthecurrentandcomparativeperiod.Reertoaccountingpolicy17orthedetailedpolicyrelatingtosegmentreporting.

IAS 2 - Borrowing costsTherevisionoIAS23requiresthecapitalisationoborrowingcosts that relate toqualiyingassets,i.e.assetsthatnecessarilytakeasubstantialperiodotimetogetreadyortheirintendeduseorsale.Previouslythegroupapplied

thealternative treatment o expensing the borrowing costsontheseassets.Theamendmenthasbeenearlyadoptedbythegroupanditdidnothaveamaterialeectonthecurrentyearsresults.

Accounting policies

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2 Basis o consolidation

SubsidiariesThenancialstatementsosubsidiariesareconsolidatedromthedateonwhichthegroupacquiresthepowertocontrol,uptothedatethatsuchcontrolceases.Forthispurpose,subsidiariesarecompaniesoverwhichthegroup,directlyorindirectly,hasthepower to govern thenancialand operating policiestoobtainthebenetsromitsactivities.Theexistenceandeecto potential voting rights that are currently exercisable orconvertibleareconsideredwhenassessingwhetherthegroupcontrolsanotherentity.

The purchase method oaccounting isusedtoaccount ortheacquisitionosubsidiariesbythegroup.Thecostoanacquisitionismeasuredastheairvalueotheassetsgiven,equityinstrumentsissuedandliabilities incurred orassumedat the date o exchange, plus costs directlyattributable totheacquisition.Identiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirairvaluesattheacquisitiondate,irrespectiveotheextentoanyminorityinterest.Theexcessothecostoanacquisitionoverthegroupsshareotheairvalueoidentiablenetassetsacquiredisrecordedasgoodwillandaccountedorintermsoaccountingpolicy7.Ithecostotheacquisitionislessthantheairvalueothenetassetso

thesubsidiaryacquired,thedierence,reerredtoasnegativegoodwill,isrecogniseddirectlyintheincomestatement.

Inter-company transactions and balances are eliminated onconsolidation and consistent accounting policies are usedthroughoutthegrouporthepurposeoconsolidation.

Special purpose entitiesSpecial purpose entitiesareentities created to accomplish anarrowandwell-denedobjectivesuchasthesecuritisationonancialassets.Theseentitiesmaytakedierentlegalorms.Aspecialpurposeentityisconsolidatedwhenthesubstanceotherelationshipbetweenthegroupandthespecialpurposeentitysrisksandrewardsindicatethatthegroupeectivelycontrolstheentityandisre-assessedinresponsetomarketconditions.

Transactions with minority shareholdersThegroupappliesapolicyotreatingtransactionswithminorityshareholdersthatdonotresultinthegainorlossocontrol,astransactionswithequityownersothegroup.Forpurchasesoadditionalinterestsromminorityshareholders,theexcessothepurchaseconsiderationoverthegroupsproportionateshare o the additional net asset value o the subsidiaryacquiredisaccountedordirectlyinequity.Fordisposalstominority shareholders, the prot or loss on partial disposalothe groupsinterest ina subsidiary isalsoaccountedordirectlyinequity.

Foreign currency translations

Functional and presentation currencyItems included in the nancial statements o each o thegroups entities are measured using the currency o theprimaryeconomicenvironmentinwhichtheentityoperates(unctionalcurrency).StandardBankPlcsunctionalandthegroup consolidated presentation currency is US dollars andallamounts,unlessotherwiseindicated,arestatedinmillionsodollars($m).

Group companiesThe results and nancial position o all oreign operations

that have a unctional currency dierent rom the groupspresentation currency are translated into the presentationcurrencyasollows:

assetsandliabilitiesaretranslatedattheclosingrateonthebalancesheetdate;and

income andexpensesare translated at average exchangerates or the year, to the extent that such average ratesapproximateactualrates.

On consolidation, exchange dierences arising rom thetranslation o the net investment inoreign operations areaccounted or directly in a separate component o equity.Onthepartialdisposaloaoreignoperation,aproportionate

shareothebalanceotheoreigncurrencytranslationreserveistranserredtothesamereserveinwhichtheprotorlossonpartialdisposalisrecognised,i.e.thistranserismadedirectlytoretainedearnings.Ondisposaloaoreignoperation,anygainsandlossesthatremaindeerredinequityarerecognisedintheincomestatementatthetimeatwhichtheprotorlossondisposalotheoreignoperationisrecognised.

Goodwillandairvalueadjustmentsarisingontheacquisitionooreignoperationsaretreatedasassetsandliabilitiesotheoreignoperation andtranslated at closing rates at balancesheetdate.

Transactions and balancesForeigncurrencytransactionsaretranslatedintotheunctionalcurrencyusingtheexchangeratesprevailingatthedateothetransactions.Foreignexchangegainsandlossesresultingromthesettlementosuchtransactionsandromthetranslationatyear-endexchangeratesomonetaryassetsandliabilitiesdenominated in oreign currencies, are recognised in theincomestatementexceptwhendeerredinequityasqualiyingcashfowhedgesandqualiyingnetinvestmenthedges.

Non-monetary assets and liabilities denominated in oreigncurrenciesthataremeasuredathistoricalcostaretranslatedusing the exchange rate at the transaction date. Foreign

exchangegainsandlossesonequitiesclassiedasavailable-or-salenancialassetsareincludedintheavailable-or-salereserveinequitywhereastheexchangedierencesonequitiesheldatairvaluethroughprotorlossarereportedaspartotheairvaluegainorloss.

Accounting policies continued

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Interestearnedanddividendsreceivedwhileholdingtradingassets at air value through prot or loss are included intradingrevenue.

Persuant to the amendments to IAS39 issued in October2008, thegroupreclassiedcertainnon-derivativenancialassetsoutotradingassetsandintoloansandadvances(reertonote20).

Financial assets and liabilities designated at air valuethrough prot or lossThegrouphasdesignatednancialassetsandliabilities,otherthanthoseheldortrading,asatairvaluethroughprotorlosswhen:doingsoeliminatesorsignicantlyreducesmeasurementor

recognitioninconsistenciesthatwouldotherwiseariserommeasuringnancialassetsorliabilities,orrecognisinggainsandlossesonthemondierentbases.Underthiscriterion,themain class o nancial instruments designated by thegroup are loans and advances to customers where doingso signicantly reduces measurement inconsistencies thatwouldariseitherelatedderivativesweretreatedasheldor tradingandthe underlying nancial instruments werecarriedatamortisedcost;and

groups o nancial assets, nancial liabilities or both aremanaged,andtheirperormanceevaluated,onaairvaluebasisinaccordancewithadocumentedriskmanagementorinvestmentstrategy,andinormationaboutgroupsonancialinstruments is reported to the groups key managementpersonnelonthatbasis.Underthiscriterion,certainprivateequity,acquired non-perorming loan portolios andotherinvestment portolios have been designated at air valuethrough prot or loss. The group has documented riskmanagementandinvestmentstrategiesdesignedtomanagesuchassetsatairvalue.

The air value designation, once made, is irrevocable.Subsequent to initial recognition, the air values areremeasured,andgainsandlossesarisingromchangesthereinarerecognisedininterestincomeoralldatednancialassetsand in other revenue within non-interest revenue or allundatednancialassets.

Loans and receivablesLoans and receivables are non-derivative nancial assetswithxedordeterminablepaymentsthatarenotquotedinanactivemarket,otherthanthoseclassiedbythegroupasatairvaluethroughprotorlossoravailable-or-sale.Thiscategoryincludespurchasedloans.

Loansandreceivablesaremeasuredatamortisedcostusingthe eective interest method, less any impairment losses.Origination transaction costs and origination ees receivedarecapitalisedtothevalueotheloanandamortisedthroughinterest income. The majority o the groups advances areincludedintheloansandreceivablescategory.

Cash and cash equivalents

Cashandcashequivalentsdisclosedinthecashfowstatementconsistocashandbalanceswithcentralbanks,alongwithotherhighly liquid short-term placements. Cash fows arising romoperatingundsarestatedaterexcludingtheimpactooreigncurrencytranslationdierencesonassetandliabilityclasses.

Cashandbalanceswithcentralbankscomprisecoinsandbanknotesandbalanceswithcentralbanks,whereasothershort-term placements are disclosed under loans and advances.These balances are subject to insignicant changes in airvalueandarereportedatamortisedcost.

Financial instruments

Initial recognition and measurementFinancialinstrumentsincludeallnancialassetsandliabilitiesheld or liquidity, investment, trading or hedgingpurposes.Allnancialinstrumentsareinitiallyrecognisedatairvalueplus transaction costs, except those carried at air valuethroughprotorlosswheretransactioncostsarerecognisedimmediately through the income statement. Financialinstrumentsarerecognisedonthedatethegroupcommitstopurchaseorselltheinstruments(tradedate).

Subsequent measurement

Subsequenttoinitialmeasurement,nancialinstrumentsaremeasuredateitherairvalueoramortisedcost,dependingontheirclassication:

Held-to-maturityHeld-to-maturityinvestmentsarenon-derivativenancialassetswithxedordeterminablepaymentsandxedmaturitiesthatmanagementhasboththepositiveintentandabilitytoholdtomaturity.Werethegrouptosellmorethananinsignicantamountoheld-to-maturityassets,theentirecategorywouldbe tainted and reclassied as available-or-sale assets andthedierencebetween amortisedcost andair valuewillbeaccountedorinequity.

Held-to-maturity investments are carried at amortisedcost,using the eective interest method, less any provisionsorimpairment.

Trading assets and liabilitiesTrading assets and liabilities are those nancial assets andliabilitiesthatthegrouphasacquiredorincurredprincipallyorthepurposeosellingorrepurchasinginthenearterm,ortheyormpartoaportoliooidentiednancialinstrumentsthataremanagedtogetherandorwhichthereisevidenceoarecentactualpatternoshort-termprot-taking.Derivativesare also categorised as held or trading unless they are

designatedashedginginstruments.

Subsequenttoinitialrecognition,theairvaluesareremeasured,and all gains and losses arising rom changes therein arerecognisedintheincomestatementintradingrevenueundernon-interestrevenue.


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Standard Bank Plc annual report 2008 2

Available-or-saleFinancial assets classied by thegroup as available-or-salenancialassetsarestrategiccapitalinvestmentsheldoranindeniteperiodotime,whichmaybesoldinresponsetoneedsorliquidityorchangesininterestrates,exchangeratesorequityprices.

Available-or-salenancialassetsaresubsequentlycarriedatairvalue.Unrealisedgainsorlossesarisingromchangesintheairvalueoavailable-or-salenancialassetsarerecogniseddirectlyintheavailable-or-salereserveuntilthenancialassetisderecognisedorimpaired.Whenavailable-or-salenancialassetsaredisposedo,theairvalueadjustmentsaccumulatedinequityarerecognisedintheincomestatement.

Interestincome,calculatedusingtheeectiveinterestmethod,isrecognisedintheincomestatement.Dividendsreceivedonavailable-or-sale instruments are recognised in the incomestatementwhenthegroupsrighttoreceivepaymenthasbeenestablished.Foreignexchangegainsorlossesonavailable-or-saledebtinstrumentsarerecognisedintheincomestatement.

Fair valueFairvalueistheamountorwhichanassetcouldbeexchanged,or liability settled,betweenknowledgeablewillingparties in

an arms length transaction on the measurement date. Thebest evidenceo the airvalueo anancialinstrument oninitialrecognitionisthetransactionprice,i.e.theairvalueotheconsiderationpaidorreceived,unlesstheairvalueisevidencedbycomparisonwithotherobservablecurrentmarkettransactionsin thesameinstrument,withoutmodicationorrepackaging, orbasedondiscounted cash fow models andoption pricing valuation techniques whose variables includeonlydataromobservablemarkets.

When such valuation models, with only observable marketdata as input, indicate that the air value diers rom thetransactionprice,thisinitialdierence,commonlyreerredto

asdayoneprotorloss,isrecognisedintheincomestatementimmediately.Inon-observablemarketdataisusedaspartothe input to the valuation models, any resulting dierencebetweenthetransactionpriceandthemodelvalueisdeerred.Thetimingorecognitionodeerreddayoneprotorlossisdeterminedindividually.It iseitheramortisedoverthe lieothetransaction,deerreduntiltheinstrumentsairvaluecanbedeterminedusingmarketobservableinputs,orrealisedthroughsettlement,dependingonthenatureotheinstrumentandavailabilityomarketobservableinputs.

Subsequent to initial recognition, theair valueso nancialassets and liabilities are based on quoted market prices or

dealer price quotations or nancial instruments traded inactivemarkets.Ithemarketoranancialassetisnotactiveortheinstrumentisanunlistedinstrument,theairvalueisdetermined by using applicable valuation techniques. Theseincludetheuseorecentarmslengthtransactions,discounted

cash fow analysis, pricing models and valuation techniquescommonlyusedbymarketparticipants.Assetsandlongpositionsaremeasuredatabidprice;liabilitiesandshortpositionsaremeasuredatanaskingprice.Wherethegrouphaspositionswith osettingrisks,mid-marketpricesare usedtomeasuretheosettingriskpositionsandabidoraskingpriceadjustmentisappliedonlytothenetopenpositionsasappropriate.

Wherediscountedcashfowanalysisareused,estimateduturecashfowsarebasedonmanagementsbestestimatesandthediscountrateisamarket-relatedrateatthebalancesheetdateoranancialassetwithsimilartermsandconditions.Wherepricingmodelsareused,inputsarebasedonobservablemarketindicatorsatthebalancesheetdateandprotsor lossesareonlyrecognisedtotheextentthattheyrelatetochangesinactorsthatmarketparticipantswillconsiderinsettingaprice.

Impairment o nancial assetsAssets carried at amortised costThegroupassessesateachbalancesheetdatewhetherthereisobjectiveevidencethatanancialassetorgrouponancialassetsisimpaired.Anancialassetorgrouponancialassetsisimpairedandimpairmentlossesareincurredonlyithereisobjectiveevidenceoimpairment,resultingromoneormoreeventsthathaveoccurredatertheinitial recognitionotheasset(alossevent)andthatlosseventhasanimpactontheestimateduturecashfowsothenancialassetorgrouponancialassetsthatcanbereliablyestimated.

Thegrouprstassesseswhetherthereisobjectiveevidenceoimpairmentindividuallyornancialassetsthatareindividuallysignicant,andindividuallyorcollectivelyornancialassetsthatarenotindividuallysignicant.

Non-perorming loans are impaired or doubtul debtsidentied during periodic evaluations o advances. Retailloans and advances are considered non-perorming whenamounts are due and unpaid or three months. Corporate

loans are analysed on a case-by-case basis taking intoaccountbreachesokeyloanconditions.Theimpairmentonon-perormingloanstakesaccountopastlossexperienceadjusted or changes in economic conditions and thenatureandleveloriskexposuresincetherecordingothehistoric losses. The methodology and assumptions usedor estimating uture cash fows are reviewed regularly toreduce any dierences between loss estimates and actuallossexperience.

Whena loancarriedatamortisedcosthasbeenidentiedasimpaired the carrying amount o the loan is reduced to anamountequaltothepresentvalueoestimateduturecash

fows, including the recoverable amount o any collateral,discountedatthenancialassetsoriginaleectiveinterestrate. The carrying amount o the asset is reduced throughtheuseoanallowanceaccountandtheamountothelossisrecognisedasacreditimpairmentintheincomestatement.


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Themethodorecognisingairvaluegainsorlossesdependsonwhetherderivativesareheldortradingoraredesignatedashedginginstruments,andiso,thenatureothehedgeditem.Allgainsandlossesromchangesintheairvalueoderivativesheld or trading are recognised inthe income statement intradingrevenue.Whenderivativesaredesignatedinahedgingrelationship,thegroupdesignatesthemaseither:

hedgesotheairvalueorecognisedassetsorliabilitiesorrmcommitments(airvaluehedge);

hedgesohighlyprobableuturecashfowsattributabletoarecognisedassetorliability,oraorecasttransaction(cashfowhedge);or

hedges o net investments in a oreign operation (netinvestmenthedge).

Hedgeaccountingisappliedtoderivativesdesignatedinthiswayprovidedcertaincriteriaaremetandhedgeeectivenessisestablished.

The group documents, at the inception o the hedgingrelationship, the relationship between hedged itemsand hedging instruments, as well as its risk managementobjective and strategy or undertaking various hedgingrelationships.Thegroupalsodocumentsitsassessment,bothathedgeinceptionandonanongoingbasis,owhetherthe

derivativesthatareusedinhedgingrelationshipsarehighlyeective in osetting changes in air values or cash fowsohedgeditems.

Fair value hedgesWhere a hedging relationship is designated as a air valuehedge, the hedged item is adjusted or the change in airvalueinrespectotheriskbeinghedged.Gainsor lossesonthe remeasurementoboth the derivative and the hedgeditem are recognised in the income statement. Fair valueadjustmentsrelatingtothehedginginstrumentareallocatedtothesameincomestatementcategoryastherelatedhedgeditem.Anyineectivenessisalsorecognisedinthesameincome

statementcategoryastherelatedhedgeditem.

I the derivative expires, is sold, terminated, exercised, nolongermeetsthecriteriaorairvaluehedgeaccounting,orthedesignationisrevoked,hedgeaccountingisdiscontinued.Anyadjustmentuptothatpoint,toahedgeditemorwhichthe eective interest method is used, is amortised to theincomestatementaspartotherecalculatedeectiveinterestrateovertheperiodtomaturity.

Cash fow hedgesTheeectiveportionochangesintheairvalueoderivativesthat are designated and qualiy as cash fow hedges are

recognisedinthecashfowhedgingreserve.Theineectivepartoanygainorlossisrecognisedimmediatelyintheincomestatementastradingrevenue.

Amountsaccumulatedinequityaretranserredtotheincomestatement in the periods inwhich the hedged item aectsprot or loss. However, when the orecast transaction thatishedgedresultsintherecognitionoanon-nancialassetor a non-nancial liability, the cumulative gains or lossespreviously deerred in equity are transerred rom equityandincludedintheinitialmeasurementothecostotheassetorliability.

When a hedging instrument expires or is sold, or when ahedge no longer meets the criteria or hedge accounting,the cumulative gains or losses recognised in equity remain

inequity until the orecast transactionis recognised intheincome statement. I the orecast transaction is no longerexpectedtooccur,thecumulativegainsorlossesrecognisedinequityareimmediatelytranserredtotheincomestatementandclassiedastradingrevenue.

Net investment hedgeWhere considered appropriate, the group hedges netinvestmentsinoreignoperationsusingderivativeinstruments.Forsuchhedges,theoreignexchangedierencearisingonthehedginginstrumentandrelatingtotheeectiveportionothehedge,isrecogniseddirectlyintheoreigncurrencyhedgeonetinvestmentreserve.Anyineectiveportionisimmediately

recognised in the income statement in non-interestrevenue.Onthepartialdisposaloaoreignoperation,theproportionateshare o those deerred gains and losses is recogniseddirectlyinprotorloss.Ondisposaloaoreignoperation,allremainingdeerredgainsandlossesarerecogniseddirectlyinprotorloss.

Derivatives that do not qualiy or hedge accountingAllgainsandlossesromchangesintheairvaluesoderivativesthat do not qualiy or hedge accounting are recognisedimmediately in the income statement as trading revenue.However,thegainsandlossesarisingromchangesintheairvalues o derivatives that are managed in conjunction with

nancialinstrumentsdesignatedatairvalueare included innetincomeromnancialinstrumentsdesignatedatairvalueunderothernon-interestrevenue.

BorrowingsBorrowings are recognised initially at air value, generallybeingtheirissueproceeds,netotransactioncostsincurred.Borrowings are subsequently stated at amortised cost andinterestisrecognisedovertheperiodotheborrowingusingtheeectiveinterestmethod.


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Financial guarantee contractsAnancialguaranteecontractisacontractthatrequiresthegroup(issuer)tomakespeciedpaymentstoreimbursetheholderoralossitincursbecauseaspecieddebtorailstomakepaymentwhendueinaccordancewiththeoriginalormodiedtermsoadebtinstrument.

Financial guarantee liabilities are initially recognised at airvalue, which is the premium received, and then amortisedoverthelieothenancialguarantee.Subsequenttoinitialrecognition,thenancialguaranteeliabilityismeasuredatthehigherothepresentvalueoanyexpectedpayment,whena

paymentundertheguaranteehasbecomeprobable,andtheunamortisedpremium.

Derecognition o nancial instrumentsFinancialassetsarederecognisedwhenthecontractualrightstoreceivecashfowsromthenancialassetshaveexpired,or where the group has transerred its contractual rightstoreceivecashfows onthenancialasset suchthatithastranserredsubstantiallyalltherisksandrewardsoownershipo the nancial asset. Any interest in transerred nancialassetsthatiscreatedorretainedbythegroupisrecognisedasaseparateasset.

Financialliabilitiesarederecognisedwhentheyareextinguished,thatiswhentheobligationisdischarged,cancelledorexpires.

Thegroupentersintotransactionswherebyittransersassetsrecognised on its balance sheet, but retains either all risksandrewardsothetranserredassetsoraportionothem.Iallorsubstantiallyallrisksandrewardsareretained,thenthetranserredassetsarenotderecognisedromthebalancesheet.Transersoassetswithretentionoallorsubstantiallyallrisksandrewardsinclude,orexamplesecuritieslendingandrepurchaseagreements.

Whenassetsaresoldtoathirdpartywithaconcurrenttotal

rateoreturnswaponthetranserredassets,thetransactionis accounted or as a secured nancing transaction similarto repurchase transactions.In transactionswhere thegroupneither retains nor transers substantially all the risks andrewardsoownershipoanancialasset,itderecognisestheasseticontrolovertheassetislost.

The rights and obligations retained in the transer arerecognisedseparatelyasassetsandliabilitiesasappropriate.Intranserswherecontrolovertheassetisretained,thegroupcontinuestorecognisetheassettotheextentoitscontinuinginvolvement,determinedbytheextenttowhichitisexposedtochangesinthevalueothetranserredasset.

Sale and repurchase agreements and lending o securitiesSecuritiessoldsubjecttolinkedrepurchaseagreements(repos)arereclassiedinthenancialstatementsas pledgedassetswhenthetransereehastherightbycontractorcustomtosell

orrepledgethecollateral.Theliabilitytothecounterpartyisincludedunderdepositandcurrentaccounts.

Securities purchased under agreements to resell (reverserepos)arerecordedasloansgrantedunderresaleagreementsand included under loans and advances to other banks orcustomersasappropriate.Thedierencebetweenthesaleandrepurchasepriceistreatedasinterestandamortisedoverthelieotherepurchaseagreementusingtheeectiveinterestmethod.

Securities lent to counterpartiesare retained inthe nancial

statements and are classied and measured in accordancewiththemeasurement policy above. Securitiesborrowed arenot recognised in the nancial statements unless these aresold to thirdparties. Inthesecases, the obligation to returnthe securities borrowed is recorded at air value as atradingliability.

Incomeandexpensesarisingromthesecuritiesborrowingandlendingbusinessare recognisedonanaccrualbasisovertheperiodothetransactions.

Interest in associates and joint ventures

Associates and jointly controlled entities

Anassociateisanentity,notbeingasubsidiary,inwhichaninvestment is held and over whose nancial and operatingpoliciesthegroupisabletoexercisesignicantinfuencebutnotcontrol,generallyaccompanyingashareholdingobetween20%and50%othevotingrights.

A jointly controlled entity is one where a contractualarrangement establishes joint control over the economicactivityotheentity.

Interestinassociatesandjointlycontrolledentitiesareaccountedorusingtheequitymethodandarecarriedinthebalancesheetatanamountthatrefectsthegroupsshareothenetassetsotheassociateorjointlycontrolledentityandincludesgoodwill.Equityaccountinginvolvesrecognisingtheinvestmentinitiallyat cost, including goodwill, and subsequently adjusting thecarryingvalueorthegroupsshareotheassociatesprotorlossortheyear,recognisedintheincomestatement,andotherdirectreservemovements.Equityaccountingolossesinassociatesorjointventuresisrestrictedtotheinterestsintheseentities,includingunsecuredreceivablesorothercommitments.Inter-companyprotsandlossesareeliminatedindeterminingthe groups share o equity accounted prots. This methodisappliedromthedateonwhichtheenterprisebecomesanassociate,uptothedateonwhichitceasestobeanassociate.

Accountingpoliciesoassociatesandjointventureshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesothegroup.


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Jointly controlled operationsJointly controlled operations exist where two or moreventurerscombinetheiroperations,resourcesorexpertisetomarketordistributejointlyaparticularproduct.Eachventurerrecognisestheassetsitcontrols,theliabilitiesandexpensesthatitincurs,anditsshareotheincomeinrespectoitsinterestinthejointventure.

Intangible assets

GoodwillGoodwill represents the excess o the cost o anacquisitionover the groups interest in the net air value o the

identiable assets, liabilities and contingent liabilities o theacquiredsubsidiary,associate or jointventure at the date oacquisition. Acquisition costs include any directly attributabletransactioncosts.

Goodwillarisingontheacquisitionosubsidiariesisreportedin the balance sheet as an intangible asset, and goodwillarising on the acquisition o associates or joint ventures isincluded in interest in associates and joint ventures on thebalance sheet. Goodwill arising on acquisitions beore or on31 December 2003 has been amortised using the straight-line method over its estimated useul lie and is carried atcost less any accumulated amortisation recognised up to

31December2003.

Goodwillarisingonacquisitionsater31December2003andthecarryingvaluesogoodwillthatexistedonthisdatearenotamortised,butallocatedtocashgeneratingunitsandaretestedannuallyorimpairment.Negativegoodwillisrecognisedasincomeintheperiodinwhichitarises.Gainsorlossesonthedisposaloanentityincludethecarryingamountogoodwillrelatingtotheentitysold.

Computer sotwareGenerally, costs associated with developing or maintainingcomputer sotware programs and the acquisition o sotwarelicensesarerecognisedasanexpenseasincurred.However,directcomputersotwaredevelopmentcoststhatareclearlyassociatedwithanidentiablesystem,whichwillbecontrolledbythegroupandhaveaprobableutureeconomicbenetbeyondoneyear,arerecognisedasintangibleassets.Capitalisationisurtherlimitedtodevelopmentcostwherethegroupisabletodemonstrateitsintentionandabilitytocompleteandusethesotwareandcanreliablymeasurethecoststocompletethedevelopment.Directcosts include sotware development, employee costs and anappropriateportionorelevantoverheads.

Subsequentexpenditureoncomputersotwareiscapitalisedonlywhenitincreasestheutureeconomicbenetsembodiedinthespecicassettowhichitrelates.

Direct computer sotware development costs recognised asintangible assets areamortisedon thestraight-line basis atratesappropriatetotheexpecteduseullivesotheassets

(twotoveyears),andarecarriedatcostlessanyaccumulatedamortisation and any accumulated impairment losses. Thecarryingamountocapitalisedcomputersotwareisreviewedannuallyandiswrittendownwhenthecarryingamountexceedstherecoverableamount.

8 Property and equipment

Equipment, urniture, vehicles and other tangible assetsare stated at historic cost less accumulated depreciationand accumulated impairment losses. Historic cost includesexpenditurethatis directlyattributabletotheacquisitionopropertyandequipment.

Subsequentcostsareincludedintheassetscarryingamountor are recognised as a separate asset, as appropriate, onlywhenitisprobablethatutureeconomicbenetswillfowtothegroupandthecostotheitemcanbemeasuredreliably.Maintenanceandrepairs,whichdonotmeetthesecriteria,arechargedagainstincomeasincurred.Depreciation,impairmentlossesandgainsorlossesondisposaloassetsareincludedintheincomestatement.

Owner-occupiedpropertiesareheldoruseinthesupplyoservicesororadministrativepurposes.

Property and equipment are depreciated on the straight-linebasisovertheestimateduseullivesotheassetstothecurrentvaluesotheirexpectedresidualvalues.Landisnotdepreciated.Theassetsresidualvaluesanduseullivesarereviewed,andadjustediappropriate,at eachbalancesheetdateandthedepreciationmethodisreviewedannually.

Freehold buildings, comprising mainly oces andbranches,are generally classied as owner-occupied properties andaccountedorintermsothecostmethod.Thesebuildingsaredepreciatedonthestraight-linebasisovertheirestimateduseul lives to thecurrentvalue o their estimatedresidualvalue.Thereeholdlandportionisnotdepreciated.

Theestimateduseullivesotangibleassetsorthecurrentnancialyearareasollows:

Property 50yearsComputerequipment 2to5yearsOceequipment 5to7yearsMotorVehicles 5yearsFurnitureandttings 5to7years

Therehasbeennochangetouseullivesromthoseappliedinthepreviousnancialyear.

Impairment o non-nancial assets

Intangibleassetsthathaveanindeniteuseullieandgoodwillare not subject to amortisation and are tested annually orimpairment.Intangibleassetsthataresubjecttoamortisationandother non-nancialassets are reviewedor impairment


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whenever events or changes in circumstances indicate thatthecarryingamountmaynotberecoverable.Animpairmentloss is recognised in the income statement or the amountbywhichtheassetscarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigheroanassetsairvaluelesscoststosellandvalueinuse.Fairvaluelesscoststosellisdeterminedbyascertainingthecurrentmarketvalueoanassetanddeductinganycostsrelatedtotherealisationotheasset.Inassessingvalueinuse,theestimateduturecashfowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatrefectscurrentmarketassessmentsothetimevalueomoneyandtherisksspecictotheasset.

Forthepurposesoassessingimpairment,assetsaregroupedatthelowestlevelsorwhichthereareseparatelyidentiablecashfowsromcontinuinguse(cashgeneratingunits).

0 Leases

Group as lesseeLeases,wherethegroupassumessubstantiallyalltherisksandrewardsoownership,areclassiedasnanceleases.Financeleases are capitalisedat the leases inception atthe lowerotheairvalueotheleasedassetandthepresentvalueotheminimumleasepayments.Leasepaymentsareseparatedusingthe interest rate implicit in the lease to identiythe nancecost,which ischargedagainst income over the leaseperiod,

and the capital repayment, which reduces the liability tothelessor.

Leasesoassetsareclassiedasoperatingleasesithelessoreectively retains all the risks and rewards o ownership.Paymentsmadeunderoperatingleases,netoanyincentivesreceivedromthelessor,arechargedtotheincomestatementona straight-line basis over the period o the lease. Whenanoperating lease isterminated beoretheleaseperiodhasexpired,anypaymentrequiredtobemadetothelessorbywayopenaltyisrecognisedasanexpenseintheperiodinwhichterminationtakesplace.

Group as lessorLease and instalment sale contracts are primarily nancingtransactionsinbankingactivities,withrentalsandinstalmentsreceivable, lessunearnednancecharges,beingincluded inloansandadvancesonthebalancesheet.

Finance charges earned are computed using the eectiveinterestmethodwhichrefectsaconstantperiodic returnonthe investment in thenance lease. Initial direct costs paidare capitalised to the value o the lease amount receivableandaccountedorovertheleasetermasanadjustmenttotheeectiverateoreturn.Thebenetsarisingrominvestmentallowancesonassetsleasedtoclientsareaccountedorintax.

Provisions

Provisionsarerecognisedwhenthegrouphasapresentlegalorconstructiveobligationasaresultopasteventsanditisprobablethatanoutfoworesourcesembodyingeconomic

benetswillberequiredtosettletheobligationandareliableestimate o the amount o the obligation can be made.Provisionsaredeterminedbydiscountingtheexpecteduturecashfowsusingapre-taxdiscountratethatrefectscurrentmarketassessmentsothetimevalueomoneyand,whereappropriate,therisksspecictotheliability.

Contingent liabilities, which include certain guarantees andletters o credit pledged as collateral security, are possibleobligationsthatariserompasteventswhoseexistencewillbe conrmed only by the occurrence, or non-occurrence,o one or more uncertain uture events not wholly withinthe groups control. Contingent liabilities are not

recognisedinthenancialstatementsbutaredisclosedunlesstheyareremote.

2 Tax

Incometaxontheprotorlossortheyearcomprisescurrentand deerred tax. Current tax represents the expectedtax payable ontaxableincome or the year,using tax ratesenacted, or substantively enacted at the balance sheetdate,andanyadjustmentstotaxpayableinrespectopreviousyears.

Deerredincometaxisprovidedoronthecomprehensivebasis

usingthebalancesheetmethod,oralltemporarydierencesarisingbetweenthetaxbasesoassetsandliabilitiesandtheircarryingvaluesornancialreportingpurposes.Deerredtaxismeasuredatthetaxratesthatareexpectedtobeappliedto the temporary dierences when they reverse, based onthelawsthathavebeenenactedorsubstantiallyenactedatthebalancesheetdate.Deerredtaxisnotrecognisedortheollowingtemporarydierences:

theinitialrecognitionogoodwill;theinitialrecognitionoassetsandliabilities(outsideoa

businesscombination)whichaectneitheraccountingnortaxableprotsorlosses;and

investments in subsidiaries and joint ventures where thegroup controls the timing o the reversal o temporarydierencesanditisprobablethatthesedierenceswillnotreverseintheoreseeableuture.

Deerred tax assets are recognised to the extent that it isprobable that uture taxable incomewill beavailable againstwhich the unused tax losses can be utilised. The amount odeerred tax provided is based on the expected manner orealisationorsettlementothecarryingamountotheassetorliabilityandisnotdiscounted.Deerredtaxassetsarereviewedat each balance sheet date and are reduced to the extentthatitisnolongerprobablethattherelatedtaxbenetwillberealised.

Currentanddeerredtaxrelatingtoitemswhicharechargedorcrediteddirectlytoequity,arealsochargedorcrediteddirectlyto equity and are subsequently recognised in the incomestatementwhentherelateddeerredgainorlossisrecognised.


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Equity

Share issue costIncrementalexternalcostsdirectlyattributabletoatransactionthatincreasesordecreasesequityaredeductedromequity,netorelatedtax.Allothershareissuecostsareexpensedimmediately.

Dividends on ordinary sharesDividends are recognised in the period in which they aredeclared.Dividendsdeclaredaterthebalancesheetdatearedisclosedinthedividendsnote.

Long-term incentive scheme

The group operates both cash-settled and equity-settledshare-basedcompensationplans.

Thecash-settledincentiveschemegrantemployeesnotionalshadowshareoptions, the valueo which is derived romthe SIHs current and uture perormance. Throughout thelieothescheme,theliabilityisvaluedattheendoeachperiod based on a dened ormula.Thechanges in liabilityareaccountedorthroughtheincomestatementoverthelieotheshadowshareoptionsandincludesassumptionsaboututureperormanceandleavers.

TheStandardBankGroupQuantoStockschemeawardsanumberoQuantoStockunitsdenominatedinUS$andisacashsettledincentive scheme. The value is based on the Standard BankGroupsharepriceandmovesinparalleltothechangeinpriceotheSBGshareslistedontheJohannesburgStockexchange.Theawardsvestattheendoathreeyearperioddependentontheemployeebeinginserviceortheperiodandareaccruedoverthevestingperiod.Theschemeprovidesoranincrementalamounttobepaiditheemployeeisinserviceorouryears.Theamountotheaccruedliabilityisvaluedattheendoeachperiod,takingintoaccountassumptionsaboutleavers.Thechangesinliabilityareaccountedorthroughtheincomestatementoverthelieo

theQuantoStockunits.Thechangesintheliabilityarisingromsharepricemovementshavebeenhedged.

The equity-settled share-based compensation plan awardsoptionsovertheStandardBankGroupLtdshares.Throughoutthelieothescheme,theobligationisvaluedattheendoeachperiodbasedonavaluationotheoption.Thechangesinliabilityareaccountedorthroughtheincomestatementoverthevestingperiodotheshareoptionswithacorrespondingincrease in the long-term incentive reserve. Non-marketvestingconditionsarenotconsideredinthevaluationbutareincludedintheestimateothenumberooptionsexpectedtovest.Ateachbalancesheetdatetheestimateothenumber

ooptionsexpectedtovestisreassessedandadjustedagainstincomeandequityoverthevestingperiod.

Revenue

Revenues described below represent the most appropriateequivalentoturnover.Revenueisderivedsubstantiallyromthebusinessobankingandrelatedactivitiesandcomprisesnetinterestincomeandnon-interestrevenue.

Net interest incomeInterestincomeandexpensesarerecognisedintheincomestatementonanaccrualbasisusingtheeectiveinterestmethod or all interest-bearing instruments, except orthoseclassiedasheldortrading.Intermsotheeectiveinterestmethod,interestisrecognisedataratethatexactly

discountsestimateduturecashpaymentsorreceiptsthroughthe expected lie o the nancial instrument or, whereappropriate, a shorter period, to the net carryingamountothenancialassetornancialliability.Directincrementaltransactioncostsincurredandoriginationeesreceivedasaresultobringingmargin-yieldingassetsorliabilitiesonbalance sheet, are capitalised to the carrying amount onancialinstruments,excludingnancialinstrumentsatairvaluethroughprotorloss,andamortisedthroughinterestincomeorexpenseoverthelieotheassetaspartotheeectiveinterestrate.

Interest income and expense presented in the income

statementinclude:intereston nancialassets andliabilitiesat amortisedcost

onaneectiveinterestratebasis;and

interestandairvaluechangesoninterestbearingnancialinstrumentsdesignatedasheldatairvalue.

Where nancial assets havebeen impaired, interest incomecontinuestoberecognisedontheimpairedvaluebasedontheoriginaleectiveinterestrate.

Gainsandlossesonthedisposalodatednancialinstruments,includingamountsremovedromequityinrespectoavailable-or-salenancialassets,andexcludingthoseclassiedasheldortrading,areincludedinnetinterestincome.

Dividends received on preerence share investments ormpart o the groups lending activities and are included ininterestincome.

Non-interest revenueNet ee and commission revenueFee and commission revenue, including transactional ees,account servicing ees, investment management ees,sales commission, placement ees and syndication eesarerecognisedastherelatedservicesareperormed.Loan

commitment ees or loans that are not expected to bedrawndownarerecognisedonastraightlinebasisoverthecommitmentperiod.Loansyndicationees,wherethegroupdoesnotparticipateinthesyndicationorparticipateatthesame eective interest rate or comparable risk as other


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participants,arerecognisedasrevenuewhenthesyndicationhasbeencompleted.

The air value o issued nancial guarantee contracts oninitialrecognitionisamortisedasincomeoverthetermothecontract.

Othereeandcommissionexpenseincludedinneteeandcommissionrevenuearemainlytransactionandserviceeesrelatingtonancialinstruments,whichareexpensedastheservicesarereceived.

Trading revenueTradingrevenuecomprisesallgainsandlossesromchangesintheairvalueonancialassetsandnancialliabilitiesheldortrading,togetherwithrelatedinterestincome,expenseanddividends.

Other revenueOtherrevenueincludesgainsandlossesonequityinstrumentsdesignatedatairvaluethroughprotorloss,gainsandlosseson realised undated available-or-sale nancial assets anddividendsrelatingtothesenancialinstruments.

Netincomeromnancialinstrumentsdesignatedatairvalue

includesallgainsandlossesromchangesintheairvalueonancialassetsandliabilitiesdesignatedatairvaluethroughprot or loss, including dividend income arising on thesenancialinstruments.

Gains and losses on undated available-or-sale nancialassetsareremovedromequityandincludedintheincomestatement on realisation o the investments. Dividends ontheseinstrumentsarerecognisedintheincomestatement.

Gainsandlossesonallotherundatednancialinstruments,excludingthoseclassiedasheldortrading,arerecognisedinotherrevenue.

Dividend incomeDividends are recognised in the income statement in theperiodinwhichrighttoreceiptisestablished.

Post-retirement benets

Thegroupoperatesadenedcontributionplan,basedonapercentageopensionableearningsundedbybothemployercompanies and employees, the assets o which are held inseparatetrustee-administered unds. Contributions to theseplansarechargedtotheincomestatementintheperiodtowhichtheyrelate.

Segment reporting

Anoperatingsegmentisacomponentothegroupengagedinbusinessactivities,whoseoperatingresultsareregularlyreviewedbymanagementinordertomakedecisionsaboutresourcestobeallocatedtosegmentsandassessingsegmentperormance.The groupsidentication osegments andthemeasurementosegmentresultsarebasedonthegroupsinternalreportingtomanagement.Itrepresentstheclassicationothegroupsactivitiesinsegmentsthatrefecttheriskandreturnothegroupsproduct oerings in dierent product markets. Transactionsbetweensegmentsarepricedatmarket-relatedrates.


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Standards and interpretations not yet eective

Standard / interpretation Eective date

IFRS2amendment Share-based Payment Vesting Conditions and CancellationsTheamendmenttoIFRS2clariesthatvestingconditionsareserviceconditionsandperormanceconditionsonly.Othereaturesoashare-basedpaymentagreementshouldbetreatedasnon-vestingconditionsandshouldbeincludedinthegrantdateairvalueotheshare-basedpayment.Italsospeciesthatcancellationsbypartiesotherthantheentityshouldbeaccountedorinthesamewayascancellationsbytheentity.Thisamendmentisnotexpectedtoimpactthegroupsresultssignicantly.

Annualperiodscommencingonorater1January2009

IFRS3 Business Combinations

TheprincipalamendmentstoIFRS3include:

therequirementtoexpenseallacquisition-relatedcosts;recognitionoairvaluegainsandlossesintheincomestatementon

interestsinanacquireeatthetimeatwhichcontrolislost;

recognitionoallincreasesanddecreasesinownershipinterestsoveranacquireewithinequitywhilstcontrolisheld;

theoptiontorecogniseanynon-controllinginterestintheacquireeeitheratairvalueoratthenon-controllinginterestsproportionateshareothenetidentiableassetsotheentityacquired;

restrictionoadjustmentstotheinitialmeasurementocontingentconsiderationsonabusinesscombination,withsubsequentmeasurementosuchitemsbeingrecognisedintheincomestatement;and

therequirementatacquisitiontoreclassiyandredesignateallcontractualarrangements,excludingleasesandinsurancecontracts.

Theamendmentsareexpectedtoaectthegroupsaccountingorbusinesscombinationsthatariseaterthedateonwhichtheamendmentsareadopted.Theeectonthenancialstatementswillbeaunctionothenumberandvalueoanybusinesscombinationstransactedatertheeectivedate.

Annualperiodscommencingonorater1July2009

IAS1 Presentation o Financial StatementsTherevisedIAS1supersedesthe2003versionoIAS1.ThemainchangeintherevisedIAS1istherequirementtopresentallnon-ownerchanges

inequityineither:asinglestatementocomprehensiveincomewhichincludesincome

statementlineitems;or

astatementocomprehensiveincomewhichincludesonlynon-ownerequitychanges.Inaddition,anincomestatementisalsodisclosed.

Astatementonancialposition,preerredtermorbalancesheet,alsohastobepresentedatthebeginningothecomparativeperiodwhentheentityrestatesthecomparativesasaresultoachangeinaccountingpolicy,thecorrectionoanerror,orthereclassicationoitemsinthenancial

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