standard bank group financial results presentation for the … financial results presentation for...
TRANSCRIPT
Notes
FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2017
Standard Bank Group
standardbank.com
Notes
FINANCIAL RESULTS
STANDARD BANK GROUP
PRESENTATION 2017
STRATEGY DELIVERING
We measure our progress using five strategic value drivers
SEEimpact
Group Purposeit all starts with being more thana bank – the reason we exist
Group Visiona picture of what we wouldlike to be in five years
Africa is our home, we drive her growth
To be the leading financial services organisation in, for and across Africa, delivering exceptional client experiences and superior value
In executing our group strategy our key focus areas are
Digitisation
Universal financial services organisation
Client centricity We want to do valuablethings for clients
Via digitalplatforms
Delivering a seamless universal financial services proposition
SEE = Social, economic and environmental2
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 1
Notes
West Africa: Recovery• Uneventful election in Angola and transition to new
President• Political event risk due to delayed elections in DRC• Interest rates and inflation remained at elevated levels• Foreign currency liquidity constraints eased in
Nigeria but continued in Angola• Devaluation of Nigerian naira• Strong economic growth in Ghana and Côte d’Ivoire
OPERATING CONTEXT
3
KEY EXTERNAL DRIVERS
South Africa: Low confidence and growth• Political uncertainty• Low confidence and subdued growth• Ratings downgrades• Supportive EM risk-on trade continued
– Equity market rallied and ZAR strengthened– Inflation moderated and the rate cycle turned
• Increasingly competitive banking environment
West – Angola, Cote d’Ivoire, DRC, Ghana, Nigeria South & Central – Botswana, Lesotho, Malawi, Mauritius, Mozambique,Namibia, Swaziland, Zambia, Zimbabwe
East – Ethiopia, Kenya, South Sudan, Tanzania, Uganda
East Africa: Political upheaval• Extended and disputed election process in Kenya• Continued civil war in South Sudan• Moderating inflation provided scope for rate cuts• Low credit demand in Uganda despite monetary
stimulus• Interest rate caps and floors in Kenya impacted
credit supply• Pressure on margins
• Sovereign debt concerns in Mozambique, Zambia and Zimbabwe
• Political event risk in Lesotho• Higher commodity prices, in particular coal and
copper• IMF discussions in Zambia and Mozambique• Severe cash shortages in Zimbabwe• Weaker growth and ratings downgrade in Namibia
South & Central: Sovereign debt concerns
FINANCIALOUTCOME
RESULTS PRESENTATION
2
Notes
ROBUST RESULTS
GROUP HEADLINE EARNINGS
FY17: R26 270mFY16: R23 009m
BANKING HEADLINE EARNINGS
FY17: R24 268mFY16: R22 062m
DIVIDEND PER SHARE
FY17: 910 centsFY16: 780 cents
CREDIT LOSS RATIO JAWSROE
+14% +10% +17%
86
86
2016
2017
26
104
2016
2017
15.3
17.1
2016
2017
5
% bps bps
INCOME STATEMENT
2017Rm
change%
change CCY%
2016Rm
Net interest income 60 125 6 10 56 892
Non-interest revenue 43 037 0 7 42 965
Total income 103 162 3 9 99 857
Operating expenses 57 512 2 8 56 235
Pre-provision profit 45 650 5 10 43 622
Credit impairment charges 9 410 (1) 5 9 533
Taxation 9 493 (0) 5 9 496
Attributable to minorities and other equity instrument holders 2 800 17 39 2 383
Banking activities headline earnings 24 268 10 14 22 062
Other banking interests 567 >100 >100 (8)
Liberty attributable to the group 1 435 50 50 955
SBG headline earnings 26 270 14 18 23 009
6
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 3
Notes
SEGMENTAL VIEW
2017Rm
change%
change CCY%
2016Rm
PBB 14 008 10 12 12 724
South Africa 13 176 11 11 11 824
Africa Regions 202 (41) 9 342
International 630 13 32 558
CIB 11 506 11 17 10 339
Central & other (1 246) 24 22 (1 001)
Banking activities 24 268 10 14 22 062
Other banking interests 567 >100 >100 (8)
ICBCS 152 >100 >100 (591)
ICBC Argentina 415 (29) (11) 583
Liberty attributable to the group 1 435 50 50 955
SBG headline earnings 26 270 14 18 23 009
7
GEOGRAPHIC VIEW
Strong performance*
Moderate performance *
Focus to improve*
Single representation/development phase
* Determined based on various inputs,including growth, resilience and returns
8
Headline earningsFY17
Rmchange
%
change CCY
%FY16
Rm
SBSA 16 078 10 10 14 599
Africa Regions 6 751 19 35 5 676
East 1 033 (13) 0 1 192
South & Central 3 512 21 29 2 912
West 2 206 40 76 1 572
ROEFY17
%FY16
%SBSA 16.6 15.8Africa Regions 23.8 20.6East 16.0 20.1
South & Central 26.3 20.2
West 26.0 21.5
Banking activities 18.0 16.8
Offshore financial services:• Isle of Man• Jersey• Mauritius
Presence in international markets:• Beijing• Dubai• Hong Kong
• London• New York• São Paulo
RESULTS PRESENTATION
4
Notes
DRIVERS OFPERFORMANCE
DRIVING SHAREHOLDER VALUE IN 2017GROWTH
NII +6%
NIR 0%
Impairmentcharge -1%
Operatingexpenses +2%
OBI >100%
Liberty +50%
Average interestearning assets 0%
Average depositsand funding +3%
NIM +26bps
Headline earnings +14%
ROE Dividendper share17.1% +17%
RETURNS
10
`NSFR >100%LCR >100%
RESILIENCECET1 13.5% Average
equity +2%
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 5
Notes
INTEREST EARNING ASSETSGROWTH IN TARGETED SEGMENTS
0 100 200 300 400
Mortgages
VAF
Card
Overdraft
Term loans
Property
Financialinvestments
INTEREST EARNING ASSETS (AVG. BALANCES)
FY16FY17
Rbn
Average IEA growth 0%
+3%
-1%
-1%
+10%
-3%
+6%
VOLUME CHANGE YOY (AVG.BALANCES)
Approved lines and increased limits to support businesses and corporates
Retained leading market share in an increasingly
competitive market
IB loans granted were offset by early repayments in SA
+12% Placement of additional liquidity from SA and Africa
Regions
11
GROWTH
RESILIENCE RETURNS
DEPOSIT & FUNDING GROWTH FOCUSED GROWTH SUBJECT TO PRICING
0 100 200 300 400
Banks
Current
Cashman
Call
Savings
Term
NCD
DEPOSITS & FUNDING (AVG. BALANCES)
FY16FY17
Rbn
Average depositgrowth +3%
Term funding grew to support NSFR in the run
up to the regulatory compliance deadline
Successfully grew term deposits; in particular
in retail
VOLUME CHANGE YOY (AVG. BALANCES)
+4%
+9%
+1%
+4%
+17%
12
-23%
-2%
Increases in wholesale and franchise funding resulted in decreased reliance on
interbank funding
Wholesale priced call deposits in PBB grew 14%
YOY
GROWTH
RESILIENCE RETURNS
RESULTS PRESENTATION
6
Notes
8%
4%
4%
15%
6%
AfricaRegions
International
GROWTH IN RETAIL PRICED DEPOSITS
GrowthGrowth CCY
426
740
92
FY17
DEPOSITS AND FUNDING, R1 258bn
Wholesale priced - banksWholesale priced - customersRetail priced
Rbn
Retail priced deposits
-23%
+4%
+6%
RETAIL DEPOSIT GROWTH GAINING MOMENTUM IN AFRICA REGIONS AND INTERNATIONAL
Wholesale priced funding growing slower than
retail, supporting NIM
13
GBP 5.1bn
R76bn
R266bn
Driven by increased number of accounts
and balances
South Africa
GROWTH
RESILIENCE RETURNS
11% growth in number of
customers in PBB Africa Regions
NET INTEREST MARGIN PRICING DOMINATING AS ENDOWMENT FADES
448 474
6 1 27 3
3
FY16 Client yield onlending book
Client yield onfunding book
Endowment Treasury Other FY17bps
• Impact moderated in 2H17• Average SA rates flat YOY• Africa Regions mixed
• In SA, better pricing on mortgages, personal unsecured and business lending
• In Africa Regions, switch to LCY lending
Higher cost associated with extending term, FCY funding and defending SA retail deposits
Favourable returns on excess liquidity in Africa Regions
14
GROWTH
RESILIENCE RETURNS
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 7
Notes
• Pricing – rate increases in Mozambique vs cuts in Malawi and Zambia
• Volume – supported by liquidity in Mozambique
Africa Regions NII
-11%
15%
11%
1%
21%
47%
South &Central
West
NII MOVEMENT, % GrowthGrowth CCY
East
42
18
FY17
NET INTEREST INCOME, R60.1BN
SBSA Africa Regions Other
+7%CCY +25%
+5%
NET INTEREST INCOMEMIXTURE OF RATE & REGULATORY CHANGES
• Pricing – impact of Kenya caps and floors & lower rates in Uganda
• Volume – low demand
• Pricing – margin expansion on the back of rate increases in Nigeria and Angola
• Volume – customer gains and liquidity
15
Rbn
+6%CCY +10%
GROWTH
RESILIENCE RETURNS
GROWTH DRIVEN BY AFRICA REGIONSNON-INTEREST REVENUE
NET FEE AND COMMISSION REVENUE, R29.1BN
Account transaction
fees
Card-based commission
Electronic banking
Knowledge-based fees
Insurance feesOther
+1%
+3%
+7%
+2%
Documentation and admin fees +12%
+3%-37%
16
Driven by fixed income revenue growth in Ghana and Nigeria
Driven by fixed income revenue growth partly offset by declines in
equities and currency trading on lower
volatility
FY16 FY17
TRADING REVENUE, R10.7BN
SBSA Africa Regions Other
-6%CCY +17%
+8%
GROWTH
RESILIENCE RETURNS
RESULTS PRESENTATION
8
Notes
112100
87 86 86
147141
127 125 120
41
22 2430 33
FY13 FY14 FY15 FY16 FY17bps
CREDIT LOSS RATIOS
Group PBB CIB
FLAT GROUP CLR MASKS UNDERLYING MOVEMENTSCREDIT PERFORMANCE
Through-the-cycle group CLR, 80bps – 100bps
17
20169.0 9.1 8.1 8.4 9.1
0.1
1.3 1.20.4
FY13 FY14 FY15 FY16 FY17Rbn
CREDIT IMPAIRMENT CHARGES
Specific impairments Portfolio impairments
GROWTH
RESILIENCE RETURNS
DRIVING OPERATIONAL LEVERAGECOST GROWTH
56.355.7
40
42
44
46
48
50
52
54
56
58
60
0
2
4
6
8
10
12
14
16
FY16 FY17 %%
Income growth Cost growth Cost-to-income ratio
FY17Rm
change%
CCY change
%FY16
RmStaff costs 31 672 2 8 30 976Other operating expenses 25 840 2 9 25 259
IT 6 073 3 6 5 880
Premises 3 994 3 9 3 870
Depreciation 2 471 (9) (4) 2 725
Amortisation of intangibles 2 371 18 18 2 015
Marketing 1 967 19 25 1 653
Professional fees 1 636 (1) 7 1 658
Other 7 328 (2) 9 7 458
Total operating expenses 57 512 2 8 56 235
Positive jaws, 26bps
Positive jaws, 104bps
18
GROWTH
RESILIENCE RETURNS
%
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 9
Notes
SBG PROFIT ATTRIBUTABLE IMPACTED BY IFRS ADJUSTMENTSLIBERTY PERFORMANCE
19
1 804 1 435
369
SBG share ofIFRS headline
earnings
Treasury shareadjustment
Headline earningsattributable to SBG
HEADLINE EARNINGS ATTRIBUTABLE TO SBGx 55.5%
Rm1 412 2 719 3 252
236
1 224
376
481 307
533
Insurance LibFinMarkets
STANLIB Central Normalisedoperatingearnings
SIP Normalisedheadlineearnings
IFRSadjustments
(REIT)
IFRSheadlineearnings
LIBERTY
Rm
50%
GROWTH
RESILIENCE RETURNS
OTHER BANKING INTERESTSBOTH INDIVIDUALLY POSITIVE, DAMPENED BY CURRENCY
20
(235)
48
(356)
104
FY17
ICBCS (40% STAKE)
1H 2H
FY16
UK consortium tax relief, c.R100m
YOY change + R743m
Rm
358 164
225
251
FY16 FY17
ICBC ARGENTINA (20% STAKE)
1H 2H
YOY change (R132m)
Rm
-29%-11% CCY
GROWTH
RESILIENCE RETURNS
RESULTS PRESENTATION
10
Notes
POSITIONED FOR DOWNGRADE RISK AND REGULATORY REFORMSBALANCE SHEET RESILIENCE
12.6 12.412.9
13.913.5
13.2 12.913.3
14.3 14.2
16.215.5 15.7
16.616.0
FY13 FY14 FY15 FY16 FY17%
CAPITAL ADEQUACY RATIOS
CET 1 Tier 1 Total
Capital• AT1 issued - R3.5bn• Estimated IFRS 9 impact
Balance sheet provisions ~ +32%Fully-loaded CET1 impact of ~ 70 bpsElected 3 year phase-in
• Finalisation of Basel III – evaluating the impact
Liquidity • LCR >100%• NSFR >100% as at 1 January 2018• Term funding raised - R57bn
CET113.5%
21
GROWTH
RESILIENCE RETURNS
CET 1 target range 11.0% - 12.5%
2.1 2.1
2.7 2.7
3.1
FY13 FY14 FY15 FY16 FY17%
SBG RETURN ON RWA
17.0 17.1 22.2 23.0 26.3
FY13 FY14 FY15 FY16 FY17Rbn
HEADLINE EARNINGS
803 821 819 839 846
FY13 FY14 FY15 FY16 FY17Rbn
AVERAGE RWA
EXPANDING RETURN ON RWARETURN ON RWA
+14%
+1%
RoRWA expanded 40bps
22
GROWTH
RESILIENCE RETURNS
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 11
Notes
14.2 13.0 15.6 15.3 17.1
13.212.3
16.316.8
18.0
19.7
21.5 21.8
20.6
23.8
FY13 FY14 FY15 FY16 FY17%
ROE
SBG ROE Banking activities ROE Africa Regions ROE
STRONG EARNINGS GROWTH AND CAR SUPPORTING HIGHER DIVIDEND PAYOUTSHAREHOLDER RETURNS
SBG ROE target range 15% – 18%
23
533 598 674 780 910
49.2
55.3
48.5
54.2 55.5
0.0
10.0
20.0
30.0
40.0
50.0
60.0
0
200
400
600
800
1 000
1 200
FY13 FY14 FY15 FY16 FY17%cps
DIVIDEND PER SHARE AND PAYOUT RATIOS
Dividend per share Dividend payout ratio
+17%
GROWTH
RESILIENCE RETURNS
24
ROE 18% – 20%CET1 11.0% – 12.5%
Africa Regions contribution to
banking HE > 30%
Revenue growth > cost growth CLR 80bps – 100bps
LCR & NSFR >100%
IN THE MEDIUM TERM
GROWTHGrowing our client franchise
Delivering sustainable earnings growth
RESILIENCEMaintaining a resilient balance sheet
and diversified earnings streams across products and geographies
RETURNSIncreasing return on equity
LOOKING FORWARD
RESULTS PRESENTATION
12
Notes
CORPORATE & INVESTMENT
BANKING
25
CIB HIGHLIGHTS
REVENUEGROWTH
CLIENT REVENUE GROWTH
HEADLINEEARNINGS GROWTH
CREDIT LOSS RATIO TO CUSTOMERS JAWS ROE
+5% +6% +11%
44
44
FY16
FY17
264
455
FY16
FY17
19.5
22.2
FY16
FY17
26
bps bps %
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 13
Notes
CIB HIGHLIGHTS
• Committed and delivering on strategy
• Sustainable growth through regional, sector, client and product diversification
• Effective use of the balance sheet to support clients
• Responsive risk management strategy to market realities
• Continued focus on cost discipline and productivity gains
• ROE of 22.2% with headline earnings of R11.5bn
27
CIB SUMMARISED INCOME STATEMENT
FY17Rm
change%
change CCY%
FY16Rm
Net interest income 20 747 10 17 18 796
Non-interest revenue 16 504 (1) 9 16 624
Total income 37 251 5 13 35 420
Operating expenses 19 436 1 8 19 317
Pre-provision profit 17 815 11 19 16 103
Credit impairment charges 1 625 1 28 1 603
CIB headline earnings 11 506 11 17 10 339
Jaws (bps) 455 264
Cost-to-income ratio (%) 52.2 54.5
ROE (%) 22.2 19.5
28
RESULTS PRESENTATION
14
Notes
CIB CLIENT FRANCHISESUSTAINABILITY THROUGH DIVERSIFICATION
TPS
GM
IB
FI CONS IND P&I O&G M&M T&M REAL ESTATE Other
2016 2017
12%MNC AR
+30%
41%Large
Domestic+13%
Geographic
Client Revenue
+6%
Sector
Client Segment Product
62%MNC
Clients+5%
48%MNC SA
0%
South Africa+4%
S&C+6%
CCY +13%
East Africa+3%
CCY +14%
+8%CCY +18%
40%MNC Int.
+7%
59%Other
Domestic+4%
+3%CCY +6%
+4%CCY +13%
Size of the bubble is indicative of the comparative revenue
Analysis based on client revenues
Size of the bubble is indicative of the comparative revenue
+14%CCY +18%
-3%CCY +3% -5%
CCY -2% -4%CCY -2%
+16%CCY +29%
+10%CCY +22%
+6%CCY +11%
+6%CCY +9%
+18%CCY +23%
West Africa+16%
CCY + >30%
38%DomesticClients+8%
29
CIB BUSINESS UNITS
Total income Headline earnings
FY17 change changeCCY FY17 change change
CCYRbn % % Rbn % %
Transactional Products and Services 14.7 8 18 3.7 24 32
Global Markets 14.0 4 13 4.6 3 13
Investment Banking* 8.6 3 6 3.2 11 7
CIB 37.3 5 13 11.5 11 17
57% 56% 51% 51% 49%
43%45% 49%
49% 51%
FY13 FY14 FY15 FY16 FY17Rm
South Africa Africa Regions
REGIONAL REVENUE TREND
30
11%CAGR
* Includes Real Estate and PIM
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 15
Notes
PARTNERING OUR CLIENTS AS THEY GROW
Coral FLNG
2017USD 8 billion
Commercial Facility Agent and Onshore Bank
ICBC : Pathfinder Bank
(Mozambique)
Banque Ouest Africaine de Dévelopement
2017Eurobond
USD 850 million5% Bond due 2027
Joint Lead arranger Long dated currency hedge
provider
(Ivory Coast)
City Lodge
2017ZAR 800 million
BEE RefinanceSole Debt Funder
(South Africa)
AFCONS Infrastructure Ltd
2017USD 398m
Issuance of Performance Guarantee
(Ghana)
Sea Harvest Group
2017R 1.3bn IPO
Sole Advisor Sole Bookrunner
Sole Transaction Sponsor
(South Africa)
31
- 400
- 200
0
200
400
600
800
1 000
1 200
1 400
1 600
SA AR SA AR SA AR SA AR SA AR
CREDIT IMPAIRMENTS
Specific impairments Portfolio impairments
PRUDENT RISK MANAGEMENTIN A STRESSED ENVIRONMENT
32
6.0 5.9 7.4 5.6 5.6
65
5356 56
60
0
10
20
30
40
50
60
70
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
FY13 FY14 FY15 FY16 FY17 %
NPLs AND COVERAGE RATIO
NPLs Coverage ratio
%
Rm
FY13 FY14 FY15 FY16 FY17
59
32
7333
15
151
219
13
24
143
Credit loss ratio
1.7 1.4 1.4 1.1 1.2
NPL ratio
RESULTS PRESENTATION
16
Notes
COST DISCIPLINE & PRODUCTIVITY GAINS
33
58.2 53.7 55.8 54.5 52.2
-1.8
3.8
-3.1
2.6
4.6
-5%
-3%
-1%
1%
3%
5%
7%
9%
48.00%
50.00%
52.00%
54.00%
56.00%
58.00%
60.00%
FY13 FY14 FY15 FY16 FY17%%
CTI Jaws
MOVING FORWARD
34
• Africa is transforming and offers great opportunities for growth
• Our strategy remains relevant and we will continue to focus on execution
• Manage costs through productivity and improved efficiencies to achieve consistently positive jaws ratio and lower cost-to-income ratio
• Create an environment that encourages innovation and rewarding careers for our staff
• Maintain our commitment to partner our existing and new clients as they grow
• Strive to continuously improve client experience and relevance
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 17
Notes
PERSONAL & BUSINESS
BANKING
PBB HIGHLIGHTSSTRONG PORTFOLIO PERFORMANCE WITH HEADLINE EARNINGS OF R14bn, UP 10%
SOUTH AFRICAHEADLINE EARNINGS
FY17: R13 176mFY16: R11 824m
AFRICA REGIONSHEADLINE EARNINGS
FY17: R202mFY16: R342m
WEALTH INTLHEADLINE EARNINGS
FY17: R630mFY16: R558m
ROE
+11% +9% CCY
+32%CCY
18.8
20.0
FY16
FY17
36
CREDIT LOSS RATIO
125
120
FY16
FY17
bps
NIM
627
633
FY16
FY17
bps %
RESULTS PRESENTATION
18
Notes
3.9 4.4 5.9 7.3 8.4 9.8 11.3 12.7 14.0
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17Rbn
SUSTAINED GROWTH IN HEADLINE EARNINGSOFF A HIGH BASE, WHILE INVESTING FOR THE FUTURE
Includes R1.7bn amortisation charge for IT
assets
37
CAGR 17%
PBB SUMMARISED INCOME STATEMENT
FY17Rm
change%
change CCY%
FY16Rm
Net interest income 41 432 3 7 40 067
Non-interest revenue 28 094 2 8 27 568
Total income 69 526 3 7 67 635Operating expenses 41 926 3 8 40 616
Pre-provision profit 27 600 2 6 27 019Credit impairment charges 7 785 (3) (0) 8 030
Net income after credit impairments 19 815 4 8 18 989Share of profit from associates and joint ventures 241 43 43 169
Attributable to non-controlling interest 153 (74) (61) 586
PBB headline earnings 14 008 10 12 12 724Jaws (bps) (43) 51
Cost-to-income ratio (%) 60.3 60.1
ROE (%) 20.0 18.8
38
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 19
Notes
PBB SUMMARISED BALANCE SHEET
FY17Rbn
change%
change CCY
%FY16
RmLoans and advances to customers 605 3 4 588
Mortgage loans 347 3 3 336
Vehicle and asset finance 82 1 2 81
Card debtors 32 3 3 31
Other loans and advances 144 4 6 140
FY17Rm
change%
change CCY
%FY16
Rm
Deposits and current accounts from customers 535 8 10 498
Current accounts 146 7 9 137
Savings and investments 389 8 10 361Retail priced deposits up 6% to R427bn, with
Africa Regions, up 15% (CCY)
~70% of mortgages in SA written post 2008
39
Dealer sales up 24% despite the market in
South Africa only growing 2%
#1 MARKET SHARE IN RETAIL DEPOSITS, MORTGAGE LOANS AND CARD DEBTORS IN SOUTH AFRICA
DEPOSIT-LED STRATEGY CONTINUES TO SHOW HEALTHY RESULTSPBB SA FRANCHISE
40
100
150
200
250
300
350
400
450
500
550
FY13 FY14 FY15 FY16 FY17
Loans to customers Deposits from customers
Reduced expensive treasury funding by R50bn
from FY13 to FY17
Rbn
Loans to customers CAGR 4%Deposits from customers CAGR 9%
RESULTS PRESENTATION
20
Notes
247 255 266 276 289
3.43.7
4.0
4.34.6
2.0
2.5
3.0
3.5
4.0
4.5
5.0
220
230
240
250
260
270
280
290
300
FY13 FY14 FY15 FY16 FY17 %Rbn
RETURN ON RWA
Average RWA PBB SA return on RWA
23.0 22.0 22.1 22.8 24.4 19
20
21
22
23
24
25
FY13 FY14 FY15 FY16 FY17%
ROE
41
IMPROVEMENT DESPITE INCREASE IN INTANGIBLE ASSETSPBB SA RETURNS
Return on tangible equity
33.1%
PBB AFRICA REGIONSENCOURAGING MOMENTUM CONTINUES
53.4 58.7
FY16 CCY FY17Rbn
GROSS LOANS AND ADVANCES TO CUSTOMERS
66.1 76.2
FY16 CCY FY17Rbn
DEPOSITS AND CURRENT ACCOUNTS FROM CUSTOMERS
42
10% CCY growth
15% CCY growth
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 21
Notes
PBB AFRICA REGIONSROBUST OPERATIONAL IMPROVEMENTS
157
225
245487
342 202
FY16 Strong ZAR Operationalimprovements
Regulatory impacts Credit FY17Rm
43
Accelerated write-offs in Nigeria and a
single name impairment in Malawi
Includes impact of caps and floors in
Kenya and high cash reserving costs in
Nigeria
PBB income comprises 47% of
total Africa Regions legal entity income
PBB PRODUCTS
Total income Headline earnings
FY17Rbn
change%
change CCY
%
FY17Rbn
change%
change CCY
%
Transactional products 30.4 4 8 4.1 15 22
Mortgage lending 8.4 2 3 3.3 11 11
Card products 6.9 (1) 3 1.5 (3) 3
Lending products 12.2 7 11 2.0 24 5
Vehicle and asset finance 3.9 3 5 0.5 11 11
Wealth (including bancassurance) 7.7 (4) 8 2.5 1 10
PBB 69.5 3 7 14.0 10 12
CONTRIBUTION TO HEADLINE EARNINGS BY PRODUCT
Transactional products Mortgage lendingCard products Lending productsVehicle and asset finance Wealth (including bancassurance)
18%
29%
24%11%
14%
4%
FY16
FY17
44
ALL DELIVERED GROWTH IN CCY
VAF SA pretax profit
> R900m
RESULTS PRESENTATION
22
Notes
FY17%
FY16%
Mortgage loans 0.46 0.58
Vehicle and asset finance 1.09 1.24
Card debtors 4.33 4.70
Other loans and advances 2.01 1.84
Personal unsecured lending 4.10 4.39
Access loans 8.86 9.98
Business lending and other 1.15 0.77
PBB credit loss ratio 1.20 1.25
By geography
South Africa 1.19 1.29
Africa Regions 2.53 2.28
PBB credit loss ratio 1.20 1.25
PBB GROUP STRONG CREDIT PERFORMANCE
7.8 8.2 7.8 8.0 7.8
1.47 1.41
1.27 1.25 1.20
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
4
5
6
7
8
9
10
FY13 FY 14 FY 15 FY 16 FY 17Rbn
CREDIT PERFORMANCE
Credit impairment charges Credit loss ratio
45
bps
PBB GROUP NPLs INCREASED SLIGHTLY, COVERAGE RATIOS MAINTAINED
Non-performing loans ratio FY17%
FY16%
Mortgage loans 4.5 4.3
Vehicle and asset finance 3.8 3.8
Card debtors 6.6 7.1
Other loans and advances 4.4 4.1
Personal unsecured lending 7.8 9.0
Access loans 13.5 12.5
Business lending and other 3.0 2.2
PBB 4.5 4.3
By geography
South Africa 4.7 4.7
Africa Regions 6.7 5.9
PBB 4.5 4.3
Coverage ratio FY17%
FY16%
Mortgage loans 26 25
Vehicle and asset finance 44 46
Card debtors 75 72
Other loans and advances 61 64
Personal unsecured lending 75 73
Access loans 89 84
Business lending and other 46 49
PBB 41 42
By geography
South Africa 41 42
Africa Regions 42 47
PBB 41 42
46Early arrears reduced by R1.8bn to 4.7% of advances
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 23
Notes
PBB FRANCHISE
47
MOBILE TRANSACTION
VOLUMES
South Africa +32%Africa Regions >150%
CUSTOMER ACCOUNTS
South Africa +2%*Africa Regions +24%
INSTANT MONEYTRANSACTION
VOLUMES
South Africa > +50%
HEALTHY AND GROWING
CUSTOMERSERVICE
South Africa – highest NPS since 2014
Africa Regions – highest in most markets
* Targeted current accounts
41 35 30
1 3121 438
1 580
FY15 FY16 FY17millions
PBB SA
Face to Face Digital*
40 42 39
113
145
209
FY15 FY16 FY17millions
PBB AFRICA REGIONS
Face to Face Digital*
10% YoY44% YoY
* Digital includes ATM 48
PBB TRANSACTION VOLUMESDIGITAL CHANNELS DOMINATING
Mobile volumes up 32%
RESULTS PRESENTATION
24
Notes
CORE BANKING COMPLETED AS A FORMAL PROGRAM, BUSINESS AS USUAL
Migration of remaining 700k personal
transactional accounts
Core Banking journey
93% of transactional accounts on new SA core banking platform
Migration of Commercial Banking
and CIB accounts
BENEFITS INCLUDE
Total capital consumed peaked in
2017
March 2018 2018 - 2019
Product rationalisation
Improved customer
experience
Improved staff experience
Account origination time
decreased
New products time to market
reduced
Improved credit management
Automation of income recovery
49
Africa Regions completed
IMPROVING OUTLOOK
50
• Momentum in customer franchise and improved service levels
• Confidence in the team
• Core banking largely complete• Improved capabilities• Accelerating digital journey• Real focus on value extraction
on new platforms
• Renewed sense of optimism in economic outlook
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 25
Notes
LOOKINGFORWARD
STRATEGY UNCHANGED
We measure our progress using five strategic value drivers
SEEimpact
Group Purposeit all starts with being more thana bank – the reason we exist
Group Visiona picture of what we wouldlike to be in five years
Africa is our home, we drive her growth
To be the leading financial services organisation in, for and across Africa, delivering exceptional client experiences and superior value
In executing our group strategy our key focus areas are
Digitisation
Universal financial services organisation
Client centricity We want to do valuablethings for clients
Via digitalplatforms
Delivering a seamless universal financial services proposition
SEE = Social, economic and environmental52
RESULTS PRESENTATION
26
Notes
128.7 11.7
9.4
36.6
39.0
13.0 3.9
15.1
Clients Cost of risk Employees Suppliers Taxes Minorities Distributions ReinvestedRbn
DISTRIBUTION OF VALUEOUR KEY STAKEHOLDERS
Reinvested for growth
Client focus Employee engagement
Risk & conduct SEE impact
Reward for capital
providers
Used to support broader society
Supporting the economy
Recognising and rewarding employees for
their role
Losses absorbed by the business
Value provided for customers
53
LOOKING FORWARDSUPPORTIVE BACKDROP
• Global macros point to synchronised growth
• Commodities on a firmer footing, supported by China demand
• Sub-Saharan Africa recovery accelerating
Oil-reliant West
Commodity-reliant South & Central
Trade-driven East
• Sentiment-driven momentum in South Africa underpinned by
Political change that has created the prospect of policy progress
An opportunity for real wage growth as inflation subsides
Expected uptick in household consumption and private investment supported by pent up demand, a decade of deleveraging and policy easing
Outlook moderated by endowment headwinds in SA and Africa Regions, IFRS 9 impact and ongoing regulatory changes
3.7
2.7
1.3
0.9
3.9
3.3
1.5
2.1
3.9
3.5
2.1
2.5
Global
SSA
SA
Nigeria
REAL GDP GROWTH
FY17FY18FY19
Source: IMF, SBG Research54
Standard Bank Group Analysis of financial results for the year ended 31 December 2017 27
Notes
55
LOOKING FORWARD
SOUTH AFRICA• Grow in our targeted segments• Keep our promises to our clients• Leverage our brand, skills, data and IT capabilities to remain
relevant and competitive
AFRICA REGIONS• Leverage our deep local understanding and unrivalled network • Grow our customer base – retail, business and corporate
To deliver on our new medium term ROE target range of 18% – 20% we will look to
Never compromise on risk or conduct – we will always do the right business the right way
Support faster, more inclusive and more sustainable economic growth and human development in South Africa and throughout the continent we are proud to call our home
INTERNATIONAL• Leverage our network to drive global connections• Collaborate with ICBC in Africa and across our networks
STANDARD BANK – DRIVING SUSTAINABLE VALUE CREATION
56
LOOKING FORWARDOUR TOP PRIORITIES FOR 2018
CLIENT DIGITAL UNIVERSAL FINANCIAL SERVICES ORGANISATION
• Continue to improve client experience
• Develop and deliver relevant, reliable, safe products and services
• Continue to accelerate the digitisation of the group for the benefit of clients and employees
• Explore new technologies
• Clarify and simplify the group’s architecture
• Deepen and extend our collaboration with Liberty
RESULTS PRESENTATION
28