standard bank group financial results …...standard bank group fy18 financial results presentation...

Standard Bank Group

FINANCIAL RESULTS PRESENTATION

FOR THE YEAR ENDED 31 DECEMBER 2018

standardbank.com

Notes

STANDARD BANK GROUPFY18 FINANCIAL RESULTS

PRESENTATION

We measure our progress using five strategic value drivers

Group Purposethe reason we exist

Group Visionwhat we aspire to be

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

Integration

Client centricity Do valuable things for clients

Digitise front to back

Seamlessly deliver relevant, holistic solutions

SEE = Social, economic and environmental

STANDARD BANK GROUPSTRATEGIC FOCUS IS UNCHANGED

2

Standard Bank Group Analysis of financial results for the year ended 31 December 2018 1

Notes

FINANCIAL OUTCOME

13.015.6 15.3

17.118.0

10

12

14

16

18

20

FY14 FY15 FY16 FY17 FY18

RETURN ON EQUITY

15-18% TARGET RANGE

18-20% TARGET RANGE

DISCIPLINED EXECUTION OF STRATEGY DELIVERING ROE

We delight our clients through personalised

client journeys…

… and have a culture of caring and growing, and

of learning and innovation…

… and we do the right business the

right way…

… will result in increased

shareholder returns…

… and deliver shared value.

3

%

RESULTS PRESENTATION

2

Notes

GEOGRAPHY

South Africa Africa Regions International

PRODUCT

Transactional Banking Lending

Markets Insurance

OVERVIEW OF RESULTS STRENGTH AND BREADTH OF THE FRANCHISE

6Analysis reflects banking revenue

CLIENT

Retail BusinessCommercial Multinational corporateDomestic corporate HNW

87

56

FY17

FY18

bps

17.1

18.0

FY17

FY18

%

OVERVIEW OF RESULTSDELIVERING SUSTAINABLE EARNINGS GROWTH AND IMPROVING RETURNS

GROUP HEADLINE EARNINGS

FY18: R27.9bnFY17: R26.3bn

BANKING HEADLINE EARNINGS

FY18: R25.8bnFY17: R24.3bn

DIVIDEND PER SHARE

FY18: 970 centsFY17: 910 cents

CREDIT LOSS RATIOROE

+6% +7% +7%

111

(276)

FY17

FY18

bps

5

FY18

------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact

71 bps (108) bps

JAWS


Notes

0

5

10

15

20

25

%

SOUTH AND CENTRAL AFRICA

Botswana Mauritius NamibiaZambia Mozambique

2017 2H181H18

0

5

10

15

20

25

30

%

WEST AFRICA

Ghana Nigeria

17.0%14.0%

2017 1H18 2H180

2

4

6

8

10

12

14

%

EAST AFRICA

Kenya Uganda

10.0%9.0%

2H181H182017

INTEREST RATE TRENDS

8

0

2

4

6

8

%

SOUTH AFRICA

South Africa2H181H182017

6.75%

14.3%

9.8%6.8%

3.5%5.0%

70

80

90

100

110

120

130EAST AFRICA

ZAR/KES ZAR/UGX

80

100

120

140

160

180

200WEST AFRICA

ZAR/NGN ZAR/GHS ZAR/AOA

Avg:0.3

Avg:12.5

70

80

90

100

110

120SOUTH AFRICA

USD/ZAR

70

80

90

100

110

120

130SOUTH AND CENTRAL AFRICA

ZAR/MZN ZAR/ZMW

Avg:9.5

FOREIGN CURRENCY TRENDS

7

Avg:13.3

Avg:13.2

Avg:4.6

Avg:7.8

Avg:7.7

Avg:25.8

Avg:18.8

Avg:0.4

Avg:27.2

Note: Currency rebased at 1 January 2017, average exchange rate calculated as daily average over 12-month period and expressed relative to ZAR

Avg:10.5

Avg:4.8

2017 1H18 2H182017 1H18 2H18

2017 1H18 2H18 2017 1H18 2H18

Avg:272 Avg:282


4

Notes

IFRS 9-RELATED ACCOUNTING IMPACT DAMPENED INCOME AND LOWERED CREDIT IMPAIRMENT CHARGES

10

FY18Rbn

IFRS 9-related IIS

impactRbn*

FY18 adjusted

Rbn

FY18 vs FY17

%

FY18 adjusted vs

FY17%

FY17Rbn

Net interest income 59.6 1.7 61.3 (1) 2 60.1

Non-interest revenue 45.7 45.7 7 7 42.6

Total income 105.3 1.7 107.0 3 4 102.7

Credit impairment charges (6.5) (1.7) (8.2) (31) (13) (9.4)

Operating expenses (60.1) (60.1) 5 5 (57.0)

SBG headline earnings 27.9 - 27.9 6 6 26.3

Credit loss ratio (bps) 56 71 87

Jaws (bps) (276) (108) 111

Cost-to-income ratio (%) 57.0 56.1 55.5

*IFRS 9-related accounting impact of R1 722m (PBB SA R1 617m, CIB SA R40m and CIB AR R65m)

INCOME STATEMENT

9

FY18Rbn

change%

change CCY%

FY17Rbn

Net interest income 59.6 (1) 1 60.1

Non-interest revenue 45.7 7 9 42.6

Total income 105.3 3 4 102.7

Credit impairment charges (6.5) (31) (32) (9.4)

Income before operating expenses 98.8 6 8 93.3

Operating expenses (60.1) 5 6 (57.0)

Banking activities headline earnings 25.8 7 8 24.3

Other banking interests 0.4 (26) - 0.6

Liberty attributable to the group 1.6 11 11 1.4

SBG headline earnings 27.9 6 8 26.3


Notes

REGIONAL PERFORMANCE

12

Headline earnings

FY18Rm

change%

change CCY

%FY17

RmSBSA 15 971 (1) (1) 16 078Africa Regions 8 025 19 26 6 751East 1 228 19 21 1 033South & Central 3 858 10 9 3 512West 2 939 33 60 2 206

* Determined based on various inputs,including growth, resilience and returns

Strong performance*

Moderate performance*

Focus to improve*

Single representation/development phase

The group increased its stake in Stanbic Holdings Plc (Kenya) from 60% to 68% in July 2018 and Stanbic IBTC PLC (Nigeria) from 53% to 65% in May 2018

ROEFY18

%FY17

%SBSA 16.7 16.6Africa Regions 24.0 23.8East 21.1 16.0South & Central 24.5 26.3West 30.4 26.0

FY18Rbn

change%

change CCY%

FY17Rbn

PBB 15.5 10 10 14.1South Africa 13.7 3 3 13.3

Africa Regions 0.8 >100 >100 0.2

International 1.0 60 56 0.6CIB 11.2 (2) 1 11.4Central & other (0.9) (28) (32) (1.2)

Banking activities 25.8 7 8 24.3

Other banking interests 0.4 (26) - 0.6

ICBCS (0.1) (>100) (>100) 0.2

ICBC Argentina 0.5 19 95 0.4

Liberty attributable to the group 1.6 11 11 1.4

SBG headline earnings 27.9 6 8 26.3

SEGMENTAL PERFORMANCE

11


6

Notes

DRIVERS OF PERFORMANCE

SBSA

FY18Rbn

change%

FY17Rbn

Net interest income 39.8 (4) 41.5

Non-interest revenue 30.0 5 28.5

Total income 69.8 - 70.0

Credit impairment charges (5.6) (22) (7.1)

Income before operating expenses 63.5 2 62.1

Operating expenses (41.7) 3 (40.4)

SBSA headline earnings 16.0 (1) 16.1

Credit loss ratio (bps) 59 77

Jaws (bps) (345) 30

Cost-to-income ratio (%) 60.3 58.3

ROE (%) 16.7 16.6

535 314560 351

PBB CIB (incl HQLA)Rbn

GROSS LOANS TO CUSTOMERS +7%

FY17 FY18

13

+5%

+12%

77

59

FY17

FY18

bps

CREDIT LOSS RATIO

30

(345)

FY17

bpsJAWS

FY18

------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact of R1 657m

75 bps (108) bps


7

Notes

513 594560 654

PBB CIBRbn

AVERAGE DEPOSITS FROM CUSTOMERS BY BUSINESS UNIT

FY17 FY18

817 123823 164

SA Africa RegionsRbn

AVERAGE GROSS LOANS TO CUSTOMERS BY REGION*

FY17 FY18

599 360626 375

PBB CIBRbn

AVERAGE GROSS LOANS TO CUSTOMERS BY BUSINESS UNIT*

FY17 FY18

BALANCE SHEETDEPOSIT GROWTH CONTINUED TO OUTPACE LOAN GROWTH

+5%

+4%

+10%

+9%

+1%

+33%

16* Average gross loans and advances by Business Unit exclude Centre and by region exclude International balances

`CET1 13.5%

DRIVING SHAREHOLDER VALUE

GROWTH

NII -1% Impairmentcharge -31%

Operatingexpenses +5%

OBI -26%

Liberty +11%Average interest-bearing liabilities +9%

NIM -16bps

Headline earnings +6%

Dividendper share

+7%

RETURNSNSFR 119%LCR 117%

RESILIENCE

NIR +7%

Average interest-earning assets +3%

15

÷ ROE 18%Averageequity

+1%


8

Notes

• Net fee and commission revenue

– Digital transaction volumes and values driving growth in SA and Africa Regions

– Softer traditional account fee growth

• Trading revenue

– Impacted by subdued demand

– Equities provided support and FIC underperformed

• Other revenue supported by bancassurance

• Other gains and losses on financial instruments - driven

by IFRS 9

18

NON-INTEREST REVENUEGROWTH UNDERPINNED BY DIVERSIFIED REVENUE STREAMS

FY17 FY18Rbn

NON-INTEREST REVENUE +7%

Other gains and losses on financial instrumentsOther revenueTrading revenueNet fee and commission revenue

+6%

+4%

+11%

17

NET INTEREST INCOMENEGATIVE ENDOWMENT AND COMPETITIVE PRICING OFFSET BY FAVOURABLE MIX

474 471 458

7

8 137

2 3

FY17 Endow-ment

Client yieldon lending

book

Client yieldon funding

book

Treasury Mixand

other

FY18adjusted

IFRS 9-related

accountingimpact

FY18bps

NET INTEREST MARGIN -16BPS

60.1 61.3 59.6

0.9

1.0

1.7

0.9

0.30.4

1.5

FY17 Endow-ment

Client yieldon lending

book

Client yieldon funding

book

Treasury Mixand

other

Volumechanges

FY18adjusted

IFRS 9-related

accountingimpact

FY18Rbn

NET INTEREST INCOME -1%


Notes

20

15.321.0

23.8

7.2

14.112.9

22.4

35.036.7

31 Dec 17 1 Jan 18 31 Dec 18Rbn

LOANS AND ADVANCES PROVISIONS

Stage 1&2 Stage 3

IFRS 9IAS 39

0.74

1.81 1.74 1.61

0.48 0.62 0.44 0.43 0.69

1.36 1.27 1.16

31 Dec 17 1 Jan 18 30 Jun 18 31 Dec 18%

STAGE 1&2 COVERAGE

PBB CIB Group+96%

+37%

+13%

-8%

+56%+5%

41

50 51 50

60

68 66 67

44

53 54 54

31 Dec 17 1 Jan 18 30 Jun 18 31 Dec 18%

STAGE 3 COVERAGE

PBB CIB GroupIFRS 9IAS 39

IFRS 9IAS 39

LOANS AND ADVANCES PROVISIONS & COVERAGEADEQUATE COVERAGE MAINTAINED

21.8 22.4 35.0 36.7

10.24.8

6.9

0.9

9.0

9.6

1.7

5.6

Totalprovisions

31 Dec 2016

Netprovisions

raised

Write offs andother

Totalprovisions

31 Dec 2017

IIS gross up Additionalprovisions

Additional IISpreviouslyincluded inprovisions

Totalprovisions1 Jan 2018

Netprovisions

raisedadjusted for

IIS

IIS Write offs andother

Totalprovisions

31 Dec 2018

Rbn

LOANS AND ADVANCES PROVISIONSUPLIFT IN BALANCE SHEET PROVISIONS DRIVEN BY IFRS 9

19

IFRS 9IAS 39 TRANSITION

2017 credit impairmentsNet provisions raised R10.2bnLess recoveries on amounts written off R0.8bnEquals income statement charge of R9.4bn

2018 credit impairmentsNet provisions raised R9.0bnLess recoveries on amounts written off R1.0bnPlus financial investment charges R0.2bnEquals adjusted income statement charge of R8.2bn


10

Notes

101 104 117 125

4169

116123

5035

8482

10

85

75 38

FY15 FY16 FY17 FY18$m

REVENUE

Flow Financing Other* Risk Aluminium recovery

22

ICBC STANDARD BANK PLC INTEGRATION REMAINS KEY TO UNLOCKING SUSTAINABLE PROFITABILITY

152

(74)FY17 FY18

Rm

HEADLINE EARNINGS (40% SHAREHOLDING)

• Continued revenue growth in underlying business

• Opportunities in risk limited due to difficult markets

• Ongoing review of operations and cost base

• Sustainable profitability subject to further integration with ICBC client base

*Other includes structured transactions net of credit impairments

Operating costs

Includes aluminum

recovery of R238m

FY18Rbn

change%

change CCY

%FY17Rbn

Staff costs 33.8 7 8 31.7

Fixed remuneration 23.5 8 10 21.7Variable remuneration 7.7 1 2 7.6Other staff cost 2.6 10 12 2.3

Other operating expenses 26.3 4 5 25.4

IT 6.4 5 5 6.1Premises 4.1 1 3 4.0Depreciation 2.5 3 4 2.5Amortisation of intangibles 2.4 3 3 2.4Marketing 2.0 (1) - 2.0Professional fees 2.0 23 22 1.6Other 6.9 1 3 6.8

Total operating expenses 60.1 5 6 57.0

21

OPERATING EXPENSESCOST GROWTH SLOWED IN 2H18

• Staff costs

– Net headcount down ~900 yoy

– Costs up due to strategic hires and upskilling of the PBB frontline

– IT separation costs

– Salary adjustments to take into account high inflation rates in Ghana and Angola

• Other operating expenses

– Sub-inflationary increases on the back of tight cost control and management actions in 2H18

– Professional fees related to specific projects focusing on customer experience and regulatory changes


Notes

LIBERTYEXECUTING TURNAROUND STRATEGY

24

FY18Rm

change %

FY17Rm

SA insurance operations 2 009 21 1 665

SA asset management – STANLIB 355 41 252

Africa Regions 8 14 7Other (366) (29) (512)

Normalised operating earnings 2 006 42 1 412

LibFin investments - SIP 250 (81) 1 307

Normalised headline earnings 2 256 (17) 2 719

IFRS adjustments 389 (27) 533IFRS headline earnings 2 645 (19) 3 252

SBG share of IFRS headline earnings 1 471 (18) 1 804

Treasury share adjustment 129 (>100) (369)

Headline earnings attributable to SBG 1 600 11 1 435

23

ICBC ARGENTINASTRONG PERFORMANCE IN VOLATILE MARKET

415 492

FY17 FY18Rm

ICBC ARGENTINA (20% SHAREHOLDING) • Strong growth in net interest income driven by margin expansion

• Non-interest revenue growth mainly due to increased volumes and fees in trading related revenue

• Challenging operating environment resulted in higher impairments

• Inflationary linked operating expenses

+19%+95% CCY


12

Notes

MEASURING OUR FINANCIAL PROGRESS

Africa Regions contribution*

Cost-to-income ratio

Credit loss ratio**

LCR and NSFR

Dividend

ROE

MEDIUM TERM TARGETS FY18

GROWTH

RESILIENCE

RETURNS

CET 1 ratio

31%

57.0%

56 bps

> 100%

7%

18.0%

13.5%

> 30%

Approaching 50%

80 – 100bps

> 100%

Sustainable growth

18% - 20%

11.0% - 12.5%

* Contribution to banking headline earnings

26** Target ratio to be reviewed following the introduction of IFRS 9

Group HE growth 6%Sustainable growth

13.0

15.615.3

17.1

18.0

12.3

16.316.8

18.0

18.8

FY14 FY15 FY16 FY17 FY18%

ROE +85 bps

SBG Banking activities

25

RETURN ON EQUITY AND DIVIDENDS

598 674 780 910 970

55.3

48.5 54.2 55.5 55.5

FY14 FY15 FY16 FY17 FY18cents %

DIVIDENDS +7%

Dividend (LHS) Payout ratio (RHS)

CAGR+13%


Notes

44

20

FY17

FY18

bps

22.0

19.3

FY17

FY18

%

CIB HIGHLIGHTSMIXED RESULTS REFLECTING A TOUGH OPERATING ENVIRONMENT

28

CUSTOMER CREDIT LOSS RATIO COST-TO-INCOME RATIOROE

HEADLINE EARNINGS

FY18: R11.2bnFY17: R11.4bn -2%

TOTAL REVENUE

FY18: R37.0bnFY17: R36.8bn +1%

51.9

54.0

FY17

FY18

%

CLIENT REVENUE

+8%

CORPORATE AND INVESTMENT BANKING


14

Notes

NBFI Banks CONS IND P&I M&M O&G TMT S&PS RealEstate

Other

CIB CLIENT REVENUESDIVERSIFIED AND SUSTAINABLE FRANCHISE

GM

TPS

IB

FY18 FY17

SA+5%

S&C+11%

CCY +10%

West Africa+8%

CCY +26%

East Africa+15%

CCY +17%

Sector

Client segment

Client revenue

+8%

Multi-NationalCorporates

(MNCs)

+8%

Domesticclients

+10%

Large domestic

+2%

MNCs Africa Regions

-2%

Other domestic

+23%

MNCs South Africa

+6%

MNCs International

+13%

-2%CCY -2%

RegionClient revenue

Total income

+12%CCY +12%

+17%CCY +19%

+13%CCY +19%

+13%CCY +17%

+5%CCY +11%

+6%CCY +20%

+43%CCY +40%

+11%CCY +14%

+12%CCY +16%

+4%CCY +5%

-2%CCY +0%

+1%CCY +6%

Product

Client revenue

Client revenue

-5%CCY -3%

30

CIB HIGHLIGHTS IN CONTEXTCOMMITTED TO EXECUTING OUR STRATEGY

29

Challenging operating

environment

Focusing on clients

Driving efficiencies

Modernising the bank

• Results impacted by a challenging and dynamic environment across our markets

– Strengthening of the Rand against other African currencies had a dilutive effect on revenue performance

– Recovery of commodity prices positively impacted some of our sectors

– Decreasing interest rate environment in key African markets

• Client revenue increase of 8% year-on-year with strong diversification through region, sector, client and product

• 13% growth in customer loans and advances

• Achieved our highest client satisfaction index (CSI) result of 8.0 out of 10, up from 7.8 in 2017

• Acquired notable clients and partnered our clients on landmark transactions

• Significant progress in improving and simplifying core processes – real-time account opening in South Africa for our existing clients

• Progress in transitioning to digital channels, with more than 20% increase in online channel usage in cash, trade and foreign exchange

Investing in our people

• Continuing with programmes to drive shifts in our culture

• Relooking at our skills for the future – established a CIB Digital team focused on creating new ventures and enhancing client experiences

• Doing the right business the right way evidenced by a customer credit loss ratio reduction to 20bps and no major market conduct issues

• Cost discipline and drive for productivity gains resulted in a 1% headcount reduction and a below weighted average inflation cost increase


Notes

CIB RESULTSSUMMARISED FINANCIAL PERFORMANCE

32

FY18Rbn

change%

change CCY%

FY17Rbn

Net interest income 19.2 (6) (2) 20.4Non-interest revenue 17.8 9 11 16.3Total income 37.0 1 3 36.7Credit impairment charges (1.0) (35) (35) (1.6)Income before operating expenses 36.0 2 5 35.1Operating expenses (20.0) 5 7 (19.1)

CIB headline earnings 11.2 (2) 1 11.4

Jaws (bps) (414) 456

Cost-to-income ratio (%) 54.0 51.9

ROE (%) 19.3 22.0

Gross loans and advance to customers 398.4 13 9 352.2

Deposits from customers 667.8 5 4 635.8

CIB – PARTNERING OUR CLIENTSFRANCHISE DEFINING DEALS

31

Vivo Energy Pan Africa

2018USD 745m

Initial Public Offering

Joint Bookrunner

2018ZAR3bn

Joint Global Coordinator / BookrunnerStabilisation Agent

Transaction Sponsor

Libstar

BEE structured deal: Sale of 25% of SA Taxi Finance

Holdings to SANTACO consortium

2018ZAR 1.7bn

Lead arranger & joint funder

Round 4 REIPPP

2018ZAR 7,59bn

Mandated lead arrangerHedge Provider

Co-MLA and underwriterAccount Bank and Agent

2018

USD115m

Term Loan & Overdraft FacilityFunding in USD & GHS

Sole Lender

AirtelTigoGhana

Acquisition Term Loan

2018USD 1.7bn

Exclusive mandated lead arranger UnderwriterBook Runner


16

Notes

34

• We see opportunities for growth across the continent at the back of client activities

• We will continue to modernise our business in order to improve client and employee experiences

• Continued commitment to cost management has not changed

• Challenging trading conditions expected to continue with elections in key markets

• Momentum from Q4 2018 provides a solid base for improved performance into 2019

CIB OUTLOOKLOOKING FORWARD

CIB BUSINESS UNITSBUSINESS UNIT AND REGIONAL CONTRIBUTION

FY18Rbn

change%

changeCCY

%FY18Rbn

change%

changeCCY

%Total income Headline earnings

Investment Banking* 9.1 5 5 3.6 16 16

Transactional Products and Services

14.3 1 6 3.5 (5) 2

Global Markets 13.6 (2) - 4.1 (12) (10)

CIB 37.0 1 3 11.2 (2) 1

33

55% 51% 51% 49% 46%

45% 49%49% 51% 54%

FY14 FY15 FY16 FY17 FY18Rm

REGIONAL REVENUE TREND

South Africa Africa Regions* Includes Real Estate and PIM

CAGR+6%


Notes

120

81

FY17

FY18

bps

20.0

21.9

FY17

FY18

%

PBB HIGHLIGHTSSTRONG PORTFOLIO PERFORMANCE

PBB GROUP Headline Earnings

FY18: R15.5bnFY17: R14.1bn

SOUTH AFRICA Headline Earnings

FY18: R13.7bnFY17: R13.3bn

CREDIT LOSS RATIOROE

+10% +3%

100

(265)

FY17

bps

36

AFRICA REGIONSHeadline Earnings

FY18: R0.8bnFY17: R0.2bn

>100%INTERNATIONALHeadline Earnings

FY18: R1.0bnFY17: R0.6bn

+60%

------ Credit loss ratio and jaws adjusted for IFRS 9-related accounting impact

105 bps (26) bps

JAWS

FY18

PERSONAL AND BUSINESS BANKING


18

Notes

PBB RESULTS MOMENTUM DRIVING UNDERLYING OPERATIONAL PERFORMANCE

38

FY18Rbn

IFRS 9-related IIS

impactRbn

FY18 adjusted

Rbn

FY18 vs FY17

%

FY18 adjusted vs

FY17%

FY17Rbn

Net interest income 41.8 1.6 43.4 2 6 41.0

Non-interest revenue 28.0 28.0 5 5 26.7

Total income 69 8 1.6 71.4 3 5 67.7

Credit impairment charges (5.4) (1.6) (7.1) (30) (9) (7.8)

Operating expenses (42.3) (42.3) 6 6 (40.0)

PBB headline earnings 15.5 - 15.5 10 10 14.1

Credit loss ratio (bps) 81 105 120

Jaws (bps) (265) (26) 100

Cost-to-income ratio (%) 60.6 59.2 59.0

PBB HIGHLIGHTSCONTRIBUTION FROM ALL 3 REGIONS

634

380

431

14 103 15 548 12 000.00

12 500.00

13 000.00

13 500.00

14 000.00

14 500.00

15 000.00

15 500.00

16 000.00

FY17 AR WIN SA FY18Rm

+3%

>100%

+60%

+10%

37


Notes

PBB RETURNSSTRONG IMPROVEMENT WHILST REPLACING CORE SYSTEMS

40

298 330 352 369 382 396

2.8

3.0

3.2

3.5

3.7

3.9

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

3.6

3.8

4.0

200

250

300

350

400

450

500

550

FY13 FY14 FY15 FY16 FY17 FY18 %Rbn

RETURN ON RWA +20 bps

Average RWA (LHS) PBB return on RWA (RHS)

18.618.1 18.2

18.8

20.0

21.9

14

15

16

17

18

19

20

21

22

23

FY13 FY14 FY15 FY16 FY17 FY18%

RETURN ON EQUITY +191 bps

39

PBB SUMMARISED BALANCE SHEETPBB AR MAKING GOOD PROGRESS

17% and 19% CCY growth in Africa Regions

and Wealth International respectively

FY18Rbn

change%

change CCY

%FY17Rbn

Loans and advances to customers 650 7 6 605

Mortgage loans 362 4 4 346

Vehicle and asset finance 89 10 9 82

Card debtors 33 3 3 32

Other loans and advances 165 14 11 145

14% CCY growth in current

accounts in Africa Regions

FY18Rbn

change%

change CCY

%FY17Rbn

Deposits from customers 591 10 7 535

Current accounts 159 9 7 146

Savings and investments 432 11 8 389


20

Notes

467

367

FY10 FY17 FY18‘000sqm

BRANCH SQR METERAGE

296 405

FY14 FY15 FY16 FY17 FY18Rbn

DEPOSITS FROM CUSTOMERS

PBB SOUTH AFRICAGAINING MOMENTUM, SUPPORTED BY NEW CLIENT-CENTRIC MODEL

42

FY16/17 FY17/18

+13 +4

DigitalFace-to-Face

+26%-13%

-13%

NET PROMOTER SCORE, YOY CHANGE

TRANSACTION VOLUMES, YOY CHANGE

-21%

705 640 629

FY10 FY17 FY18

NUMBER OF BRANCHES

-11%

CAGR+8%

RetailLending

VAF HomeLoans

BusinessLending

Rbn

DISBURSEMENTS1Q182Q183Q184Q18

41

PBB PRODUCTSALL PRODUCTS DELIVERED HEADLINE EARNINGS GROWTH

FY18Rbn

change%

change CCY

%FY18Rbn

change%

change CCY

%

Total income Headline earnings

Transactional products 30.1 4 5 4.3 2 2

Mortgage lending 8.3 (2) (2) 3.6 8 8

Card products 6.8 - 1 1.7 11 11

Lending products 12.1 - - 2.3 16 16

Vehicle and asset finance 3.6 (4) (4) 0.5 2 1

Wealth (including bancassurance) 8.9 16 17 3.1 24 24

PBB 69.8 3 4 15.5 10 10

30%

23%18%

14%

11%4% 28%

23%20%

15%

11%3%

CONTRIBUTION TO HEADLINE EARNINGS BY PRODUCT

Transactional products Mortgage lending

Wealth (including bancassurance) Lending products

Card products Vehicle and asset finance

FY18

FY17


Notes

PBB AFRICA REGIONSSTRATEGY DELIVERING ACCELERATED GROWTH

44

FY16/17 FY17/18

+1 +9

+34%

-13%

DigitalFace-to-Face

+34%-12%

NET PROMOTER SCORE, YOY CHANGE TRANSACTION VOLUMES, YOY CHANGE

59 74

FY17 FY18Rbn

LOANS AND ADVANCES TO CUSTOMERS

76 92

FY17 FY18Rbn

DEPOSITS FROM CUSTOMERS

21%CCY 11%

454 570 572 571

FY10 FY16 FY17 FY18

NUMBER OF BRANCHES

4.6 5.1

FY17 FY18millions

NUMBER OF ACTIVE CUSTOMERS

+11%

26%CCY 17%

WHAT WE HAVE DELIVERED:• VAF dealer integration• Launch of SBG Mobile Network Operator• Significant reduction in Ombudsman complaints• Reduction in digital fraud losses for clients and bank• Strong growth of Instant Money volumes• Acceleration of digitisation

43

PBB SOUTH AFRICA TRANSITION YEARRE-ORIENTATE BANK AROUND THE CUSTOMER – MUTLI DISCIPLINARY TEAMS

Service clients in their local context

Deliver fully integrated financial services

Increase speed of execution and customer experience


22

Notes

PBB WEALTH INTERNATIONAL ROBUST, GROWING FRANCHISE

70 86 92 122

33

39

45

50

FY15 FY16 FY17 FY18 `000s£'m

# CLIENT AND REVENUE

Revenue (LHS) Client numbers (RHS)

CAGR+20%

23.6 27.9 36.8 57.0

14.7 15.016.5

20.8

FY15 FY16 FY17 FY18 %£'m

HEADLINE EARNINGS AND ROE

Headline earnings (LHS) ROE (RHS)

CAGR+34%

3 711 4 325 4 949 5 148

FY15 FY16 FY17 FY18£'m

DEPOSITS FROM CUSTOMERS +4%

Deposits

CAGR+12%

46

PBB AFRICA REGIONSSTRATEGY REMAINS UNCHANGED, ACCELERATED EXECUTION

45

-365

104 182 342 183 817

FY13 FY14 FY15 FY16 FY17 FY18

Rm

HEADLINE EARNINGS

Business Banking Ecosystem led

Enterprise Banking

Self funded

Sustainable revenue growth

11% growth in active customers

Improvement in NPS

Loan to deposit ratio of 80%

NIR increased across all fee lines


Notes

LOOKING FORWARD

ACCELERATION OF EXECUTION IN THE FOLLOWING KEY FOCUS AREAS

• Client Journeys and Personalisation

• Proactive customer relationship management for mass-affluent market and small enterprises

• Africa China Banking

• Sharpening our local market-facing capabilities to grow the franchise

• Banking the ecosystem

• Judicious cost management

• Building and acquiring skills required to win in the 4th industrial revolution era

PBB OUTLOOKSTRATEGY REMAINS THE SAME, FOCUS IS ON EXECUTION

47


24

Notes

STANDARD BANK GROUPLIVING OUR PURPOSE

50

127.1 120.6

6.5

33.8

47.2

11.7

15.1

12.8

Total income Impairments Remuneration Suppliers andoperational

charges

Taxation Distributed asdividends

ReinvestedRbn

Reinvested for growth

Generating savings and supporting

retired people

Used to generate

public goods and services

Supporting the

economy

Rewarding our

employees

Bad debts

Value provided to

our customers

Income after

impairments

We measure our progress using five strategic value drivers

Group Purposethe reason we exist

Group Visionwhat we aspire to be

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

Integration

Client centricity Do valuable things for clients

Digitise front to back

Seamlessly deliver relevant, holistic solutions

SEE = Social, economic and environmental

STANDARD BANK GROUPOUR STRATEGIC PROGRESS

49


Notes

• Continue to make progress against our medium-term financial targets

• Continue to reduce cost growth and increase efficiency; permanently reshape the group’s cost structure

• Continue to accelerate digitisation to meet our clients’ needs and enhance competitiveness and efficiency; reconfigure distribution capabilities

• Continue to improve client experience

• Pursue growth opportunities, including

– PBB: VAF, client journeys, ecosystems

– CIB: good AR opportunities, SA gradual recovery

• Continue to support Liberty’s recovery and expand our relationship

• Find lasting solutions for Other Banking Interests

STANDARD BANK GROUPTOP PRIORITIES FOR 2019

52

STANDARD BANK GROUPDELIVERING SEE

Deliver shared value

FINANCIAL INCLUSIONA home provides shelter & dignity & an opportunity to build wealthIn 2018, we registered R20.5 billion in home loans for previously disadvantaged customers, 16% up on 2017

ENTERPRISE DEVELOPMENT & ENTREPRENEURSHIPSmall businesses are key drivers of growth & job creationIn 2018, we worked with more than 12 000 SMEs to grow and develop, through finance, access to value chains and business development support

INFRASTRUCTURE DEVELOPMENTReliable infrastructure is crucial to grow trade and export capacityDuring 2018, in Ghana, we financed the first phase of Tema Port Development, and provided finance for Nacala railway and port corridor which crosses Mozambique and Malawi

AFRICA TRADE AND INVESTMENTFacilitating trade and investment flows drives growth

In 2018, we celebrated the 10-year anniversary of our strategic partnership with ICBC. The partnership has provided US$10 billion in financing support to over 40 projects, leveraging investment of around US$30 billion

EDUCATION & SKILLS DEVELOPMENT

Africa’s growth depends on quality educationIn 2017 we launched crowdfunding platform Feenix enabling

individuals and companies to donate money directly to universities on behalf of a student. To date over R22 million

has been raised and 800 students have been fully funded

EMPLOYEE DEVELOPMENT & TRAININGWe encourage continuous learning to ensure our people are future-ready

We have launched the careers of 1 800 university graduates since 1997 through our graduate programmes across the continent

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