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Interim financial resultsInterim financial results for the six months tofor the six months to
30 June 200130 June 2001
2
Presentation structurePresentation structure
Financial highlightsFinancial highlights Alan van BiljonAlan van Biljon Retail BankingRetail Banking Peter Wharton-Hood Peter Wharton-Hood
SCMBSCMB Myles RuckMyles Ruck Commercial BankingCommercial Banking Private Banking Private Banking International OperationsInternational Operations Jacko MareeJacko Maree Stanbic AfricaStanbic Africa Liberty GroupLiberty Group Conclusion Conclusion
3
Key financial statisticsKey financial statisticsHeadline earnings per share 21% up Headline earnings per share 21% up
June ‘01 % change June ‘00
Headline earnings Rm 2 020 24 1 632
Headline EPS cents 154 21 127
Cost-to-income ratio % 57.8 60.9
RoE % 21.2 21.4
NAV per share cents 1 503 22 1 229
Adjusted NAV per share cents 1 741 21 1 433
Total assets Rbn 310 18 262
4
Income statement highlightsIncome statement highlightsHeadline earnings 24% upHeadline earnings 24% up
June ‘01(Rm)
% change June ‘00(Rm)
Total income 7 911 13 7 006
Provision for credit losses (747) 13 (661)
Operating expenses (4 570) 7 (4 270)
Operating profit 2 594 25 2 075
Taxation (806) 24 (652)Effective tax rate 31.1% 31.8%
Net income after tax 1 806 26 1 433
Liberty 220 8 204
Headline earnings 2 020 24 1 632
5
Headline earnings per business unitHeadline earnings per business unitIncreased contribution from Retail BankingIncreased contribution from Retail Banking
Stanbic Africa9%
(9%)
International Operations
13%(14%)
Commercial Banking
13%(13%)
SCMB23%
(23%)
Retail Banking31%
(29%)
Liberty11%
(12%)
( ) 30 June ‘00
6
Summarised balance sheetSummarised balance sheetTotal assets 18% higherTotal assets 18% higher
June ‘01(Rbn)
% change June ‘00(Rbn)
Cash and short-term funds 34.8 7 32.6
Advances 136.7 15 119.2
Other assets 59.7 48 40.5
Total banking assets 231.2 20 192.3
Liberty 78.5 13 69.3
Total assets 309.7 18 261.6
Shareholders' funds 19.9 24 16.0
Minority interests 5.3 (19) 6.5
Deposits 185.0 18 156.9
Other liabilities 28.5 29 22.1
Liberty 71.0 18 60.1
Total liabilities 309.7 18 261.6
7
Net interest marginNet interest marginSlight reduction in lending marginsSlight reduction in lending margins
%
Average funds margin 2000 3.71
Domestic operations (0.06)
Endowment effect -
Higher group resources 0.06
Higher branch deposits 0.11
Lending (0.15)
Treasury activities (0.08)
Stanbic Africa (0.08)
International Operations (0.07)
Centralised funding 0.04
Average funds margin 2001 3.54
8
Net interest incomeNet interest incomeGood growth despite adverse conditions, +12%Good growth despite adverse conditions, +12%
Domestic operations +8%Domestic operations +8% Low advances growth, 7%Low advances growth, 7% Stable interest rates, pressure on funding costsStable interest rates, pressure on funding costs Competitive pressure on lending marginsCompetitive pressure on lending margins Growth in savingsGrowth in savings
Stanbic Africa +3%Stanbic Africa +3% Solid lending growth, 18%Solid lending growth, 18% ZimbabweZimbabwe
International Operations +20%International Operations +20% Strong advances growthStrong advances growth Devaluation of the RandDevaluation of the Rand Lower margins - improved asset qualityLower margins - improved asset quality
9
Non-interest incomeNon-interest income51% of total income51% of total income
0
500
1000
1500
2000
2500
3000
Feeincome
Trading Other
Rm
June 00 June 01
Fees and commissions +15%Fees and commissions +15% Domestic operations +20%Domestic operations +20% New service chargesNew service charges Transactional volume growth in new Transactional volume growth in new
channels - Internet +82%channels - Internet +82% SCMB +31%SCMB +31% Stanbic Africa - volume growth and Stanbic Africa - volume growth and
repricingrepricing International Operations - decline in International Operations - decline in
advisory feesadvisory fees Trading income +13%Trading income +13% International Operations +22%International Operations +22% Volatility in emerging marketsVolatility in emerging markets Favourable spreads in foreign exchange Favourable spreads in foreign exchange
tradingtrading Other income +15%Other income +15% Improvement in short-term insurance Improvement in short-term insurance
activitiesactivities Volume growth in CATS and BEST +33%Volume growth in CATS and BEST +33%
10
Provision for credit lossesProvision for credit lossesImproving domestic environmentImproving domestic environment
Domestic operations +4%Domestic operations +4%
Aggressive provisioning in Commercial Aggressive provisioning in Commercial
Banking - provisions +R54mBanking - provisions +R54m
Retail 2% lowerRetail 2% lower
SCMB 10% lowerSCMB 10% lower
Stanbic Africa +R15m Stanbic Africa +R15m
Prudent provisioningPrudent provisioning
International Operations +R45mInternational Operations +R45m
Higher general debt and Mining Finance Higher general debt and Mining Finance
provisionsprovisions
1.14%
0.02%
Stanbic
2000
International
Operations
StanbicAfrica
Domestic operations
Stanbic
2001
0.06% (0.09%)
1.13%
Credit provisions to average advances
11
Non-performing loansNon-performing loansImproving bookImproving book
June ’01
(Rm)
% Dec ’00
(Rm)
Gross NPLs 5 250 (1) 5 278
Less : Specific provision (1 679) (20) (2 100)
: Security ( 3 456) 13 (3 062)
Net NPLs 115 (1) 116
Coverage (Gross) 54% 60%
Coverage (Net) 159% 144%
Gross NPLs to averageadvances
4.0% 4.4%
Higher gross NPLs in Africa, Higher gross NPLs in Africa,
London and in Commercial London and in Commercial
Property loansProperty loans
R400m provisions written off R400m provisions written off
against old NPLs in SCMBagainst old NPLs in SCMB
Higher security values in Higher security values in
SCMB, Commercial Property, SCMB, Commercial Property,
Home loans and InternationalHome loans and International
Branch net NPL situation has Branch net NPL situation has
improvedimproved
12
Operating expensesOperating expensesCosts under control, +7%Costs under control, +7%
2,237 2,364
2,033 2,206
0
1,000
2,000
3,000
4,000
5,000
June '00 June '01
Rm
Staff Other
Domestic operations +8%Domestic operations +8% Inflationary increases Inflationary increases
Higher IT and processing spendHigher IT and processing spend
Partly offset by:Partly offset by: Lower staff complement, 546Lower staff complement, 546
Focus on sustainable cost managementFocus on sustainable cost management
Stanbic Africa +4%Stanbic Africa +4% Cost containment across the boardCost containment across the board
International Operations +9%International Operations +9% Currency effectCurrency effect
Increased staffing, 91Increased staffing, 91
9%
6%
13
Cost-to-income ratioCost-to-income ratioConsistent improvementConsistent improvement
64.9
63.162.0 61.6
59.057.8
54
56
58
60
62
64
66
1996 1997 1998 1999 2000 HY2001
%
14
10.6 11.1
2.72.9
02468
10121416
Dec '00 June '01
%
Primary capital Secondary capital
Required capital
13.5* 13.8
Surplus capital primarily in Surplus capital primarily in
hard currencyhard currency
Higher capital requirement in Higher capital requirement in
International OperationsInternational Operations
International acquisition International acquisition
possibilitiespossibilities
Capital adequacyCapital adequacyWell capitalisedWell capitalised
* Restated in line with new regulations
15
Headline earningsHeadline earningsStrong domestic performanceStrong domestic performance
June '01Rm % change
June ‘00Rm
Domestic operations 1 377 25 1 100
Retail Banking 646 30 498
SCMB 490 25 391
Commercial Banking 273 25 219
Central services (32) - (8)
Stanbic Africa 184 20 153
International Operations 276 13 244
Centralised funding (37) - (69)
Standard Bank operations 1 800 26 1 428
Liberty* 220 8 204
Stanbic group 2 020 24 1 632*15% growth in continuing operations
16
Cost-to-income ratioCost-to-income ratioFocus on efficienciesFocus on efficiencies
June ‘01 June ‘00
Domestic operations 57.2% 59.3%
Retail Banking 65.5% 67.9%
SCMB 48.1% 49.1%
Commercial Banking 38.4% 43.9%
Stanbic Africa 54.2% 58.2%
International Operations 62.4% 63.0%
Stanbic group 57.8% 60.9%
17
Capital allocation and returnsCapital allocation and returnsCreating value for shareholdersCreating value for shareholders
June ‘01
Average
equity
Rm
RoE
June ‘00
RoE
Domestic operations 10 440 26% 27%
Retail Banking 5 036 26% 28%
SCMB 3 100 32% 35%
Commercial Banking 2 304 24% 19%
Stanbic Africa 1 136 32% 32%
International Operations 4 508 12% 14%
Centralised funding & Liberty 3 001 12% 10%
Stanbic group 19 085 21% 21%
18
Retail BankingRetail Banking
19
Retail Banking - results highlightsRetail Banking - results highlightsHeadline earningsHeadline earnings up 30% up 30%
Transactional banking businessTransactional banking business Strong revenue streamsStrong revenue streams
New fee structures to influence customer behaviourNew fee structures to influence customer behaviour
Home loansHome loans New business showing stronger growthNew business showing stronger growth
Card businessCard business Re-emerging as core capabilityRe-emerging as core capability
Cost efficienciesCost efficiencies Benefit of cost rationalisation in 2000Benefit of cost rationalisation in 2000
20
Retail BankingRetail BankingBancassurance portfolio showed mixed resultsBancassurance portfolio showed mixed results
Simple productsSimple products Number of policies in force up 53%Number of policies in force up 53%
- Credit life policies 290 000 (+19%)- Credit life policies 290 000 (+19%)
- Funeral policies 260 000 (+125%)- Funeral policies 260 000 (+125%)
Funeral penetration now 10.8% (from 4.5%)Funeral penetration now 10.8% (from 4.5%)
Complex productsComplex products Business 7% up but below budget Business 7% up but below budget
Focus on sales force managementFocus on sales force management
Investment in IT based selling tools Investment in IT based selling tools
21
Retail BankingRetail BankingE-plan and ABIL JV well positionedE-plan and ABIL JV well positioned
Mass market number of transactions and average balances Mass market number of transactions and average balances increaseincrease
Annual E-plan transactions per account up from 35 to 38Annual E-plan transactions per account up from 35 to 38
Average balance up from R717 to R872Average balance up from R717 to R872
African Bank JVAfrican Bank JV 20 000 accounts opened during first 6 months20 000 accounts opened during first 6 months
Gross advances book R88m Gross advances book R88m
Working closely togetherWorking closely together
22
Retail BankingRetail BankingSustained demand for virtual bankingSustained demand for virtual banking
Virtual banking developmentVirtual banking development Majority of home loans originated outside of branch infrastructureMajority of home loans originated outside of branch infrastructure
Auto-E transactions increased by 19% Auto-E transactions increased by 19%
Internet banking customers up 43% to 186 000 Internet banking customers up 43% to 186 000
Internet transaction volumes up 82%Internet transaction volumes up 82%
Internet fee based transactions up 74%Internet fee based transactions up 74%
Call centre volumes up 24%Call centre volumes up 24%
Virtual transactions account for 65% of total volumesVirtual transactions account for 65% of total volumes
bluebean.com being repositionedbluebean.com being repositioned
23
Retail Banking - priorities Retail Banking - priorities
Revenue growthRevenue growth Establish optimal balance between near and long term portfolioEstablish optimal balance between near and long term portfolio
Improve under-performing businessesImprove under-performing businesses
Leverage revenues from partnershipsLeverage revenues from partnerships
- ABIL JV- ABIL JV
- FIHRST payroll intermediary with Alexander Forbes- FIHRST payroll intermediary with Alexander Forbes
- SA Homeloans- SA Homeloans
- Edgars initiative- Edgars initiative
- E-plan expansion with Orlando Pirates and Kaizer Chiefs- E-plan expansion with Orlando Pirates and Kaizer Chiefs
Comprehensive payment product strategyComprehensive payment product strategy
24
Retail Banking - priorities continuedRetail Banking - priorities continued
Cost managementCost management Best Bank Enhancement ProgrammeBest Bank Enhancement Programme
Roll out of Bank at Any CentreRoll out of Bank at Any Centre
Optimisation of channel, product and customer mixOptimisation of channel, product and customer mix
Project execution disciplines extended to non-IT projectsProject execution disciplines extended to non-IT projects
End-to-end process management rules to extract efficienciesEnd-to-end process management rules to extract efficiencies
Customer focusCustomer focus
InvestmentInvestment
25
Retail BankingRetail BankingRated by external groupsRated by external groups
PricewaterhouseCoopers banking surveyPricewaterhouseCoopers banking survey Ranked first by peers in:Ranked first by peers in:
- Retail Lending and Deposits- Retail Lending and Deposits
- Internet Banking- Internet Banking
Euromoney awardsEuromoney awards Standard Bank rated Best Bank in South Africa Standard Bank rated Best Bank in South Africa “…“…, the bank is a match for foreign entrants in retail banking , the bank is a match for foreign entrants in retail banking
technology as well as wholesale payments, clearing and custody...”technology as well as wholesale payments, clearing and custody...”
26
SCMBSCMB
27
SCMB - results highlightsSCMB - results highlightsAll-round contributionAll-round contribution
Headline earnings 25% higherHeadline earnings 25% higher
Costs well contained, +4% Costs well contained, +4%
Retained strong position in chosen markets Retained strong position in chosen markets
Attracted a number of high calibre peopleAttracted a number of high calibre people
28
SCMBSCMBRated by external groupsRated by external groups
PricewaterhouseCoopers banking surveyPricewaterhouseCoopers banking survey SCMB ranked first by its peers in:SCMB ranked first by its peers in:
- Corporate Banking- Corporate Banking
- Foreign Exchange Trading - Foreign Exchange Trading
- Capital Markets, Bonds and Derivatives- Capital Markets, Bonds and Derivatives
- Money Markets- Money Markets
29
SCMBSCMBSuccessful turnaround of under performersSuccessful turnaround of under performers
% change
June 01/00
Revenue
Electronic Banking 73
Custody 30
International Business Centres 35
Total NPBT contribution +R56mTotal NPBT contribution +R56m
30
SCMB SCMB Diversified revenue streamDiversified revenue stream
Corporate and Investment Banking
Structured Finance
Asset Management
Foreign Banking
Treasury (Interest Rate, Gold, Equities)
Other
21% (20%)
20% (25%)
12% (10%)
3% (3%)
14% (14%)
30% (28%)
( ) 30 June ‘00
31
SCMB - prioritiesSCMB - priorities
Developing global product focus with Standard Bank Developing global product focus with Standard Bank LondonLondon
Cost containmentCost containment
Focus on e-CommerceFocus on e-Commerce
Private equity / Leveraged buy outsPrivate equity / Leveraged buy outs
Sustained improvement of equities broking businessSustained improvement of equities broking business
32
Commercial BankingCommercial Banking
33
Commercial Banking - results highlightsCommercial Banking - results highlightsHeadline earnings 25% upHeadline earnings 25% up
Commercial SuitesCommercial Suites More conservative provisioningMore conservative provisioning
Lending flat, but improved asset qualityLending flat, but improved asset quality
Deposit base growingDeposit base growing
StannicStannic Turnover growth in line with market growthTurnover growth in line with market growth
Declining bad debtsDeclining bad debts
CostsCosts Restricted to 2% increaseRestricted to 2% increase
34
Commercial Banking - priorities Commercial Banking - priorities
Commercial SuitesCommercial Suites Forecasting lower bad debts in the second halfForecasting lower bad debts in the second half
Improvement in lending book boosted by lower interest ratesImprovement in lending book boosted by lower interest rates
Continued focus on cross sell opportunitiesContinued focus on cross sell opportunities
Leverage off market leadership in electronic bankingLeverage off market leadership in electronic banking
Continued improvement in customer serviceContinued improvement in customer service
StannicStannic Selective market share gainsSelective market share gains
35
Private BankingPrivate Banking
36
Private Banking - introductionPrivate Banking - introductionNew business opportunityNew business opportunity
Five cornerstonesFive cornerstones
InternationalInternational
Wealth managementWealth management
Melville DouglasMelville Douglas
Consolidated lendingConsolidated lending
Transactional bankingTransactional banking
37
Private BankingPrivate BankingIntegrated offeringIntegrated offering
Standard Bank - Retail
Liberty GroupStandard Bank - Offshore Group
Melville Douglas
Standard EquitiesStandard Private Standard Private
BankBank
SCMB Third party suppliers
Stanbic Africa
38
Private Banking - prioritiesPrivate Banking - priorities
Integrated product offeringIntegrated product offering
Pace of product roll-out and client acquisitionPace of product roll-out and client acquisition
Systems roll-outSystems roll-out
Achieving first class service levelsAchieving first class service levels
Co-ordinating offshore offeringCo-ordinating offshore offering
Contain start-up lossesContain start-up losses
39
International OperationsInternational Operations
40
International Operations - results highlightsInternational Operations - results highlightsDifficult market conditionsDifficult market conditions
Headline earnings 13% upHeadline earnings 13% up
Excellent client driven performanceExcellent client driven performance
Disappointing performance in fixed income activitiesDisappointing performance in fixed income activities
Strong unsettled dealing balance growthStrong unsettled dealing balance growth
Increased ability to hold margin assets on balance sheetIncreased ability to hold margin assets on balance sheet
41
International OperationsInternational OperationsDebt capital marketsDebt capital markets
Client Client businessbusiness Contribution up 74%Contribution up 74%
Key driver - sales Key driver - sales
Strengthened management Strengthened management
TradingTrading Profits down Profits down
Continued uncertainty in emerging marketsContinued uncertainty in emerging markets
Sell-off in US high yield marketSell-off in US high yield market
42
International OperationsInternational OperationsResource bankingResource banking
Earnings stableEarnings stable
Strong growth in precious metals (up 15%) offset by Strong growth in precious metals (up 15%) offset by low activity in base metals and project financelow activity in base metals and project finance
Core energy team, including electricity, now in placeCore energy team, including electricity, now in place
Commodity trade finance contribution up 64% Commodity trade finance contribution up 64%
43
International OperationsInternational OperationsPrivate BankingPrivate Banking
Strong growth in deposit business Strong growth in deposit business
Banking earnings increased 8%Banking earnings increased 8%
Weaker stock broking/investment management/trust Weaker stock broking/investment management/trust and advisory activity in line with the market and advisory activity in line with the market
44
Weather the slowdown in major economies and Weather the slowdown in major economies and uncertainty in emerging economiesuncertainty in emerging economies
Take advantage of widening spreadsTake advantage of widening spreads
Complete the integration of JF Bank Complete the integration of JF Bank
Selective acquisitionsSelective acquisitions
Expand regional focus by adding to current teams and Expand regional focus by adding to current teams and expanding business mixexpanding business mix
International Operations - prioritiesInternational Operations - priorities
45
Stanbic AfricaStanbic Africa
46
Stanbic Africa - results highlightsStanbic Africa - results highlightsChallenging environmentChallenging environment
Headline earnings up 20%Headline earnings up 20%
Modest asset growthModest asset growth
Higher provisionsHigher provisions
Good non-funds income growthGood non-funds income growth
Costs well managed, +4%Costs well managed, +4%
Zimbabwe, Kenya performing poorlyZimbabwe, Kenya performing poorly
47
Stanbic Africa - prioritiesStanbic Africa - priorities
Selective acquisitionsSelective acquisitions
Strategic relationshipsStrategic relationships
New productsNew products
48
Liberty GroupLiberty Group
49
Headline return on equity increased to 24%*Headline return on equity increased to 24%*
Headline earnings up 15%*Headline earnings up 15%*
Embedded value up 13% since DecemberEmbedded value up 13% since December
Total new business increased by 18%Total new business increased by 18%
*On continuing operations
Liberty Group - results highlights Liberty Group - results highlights Performed well over the periodPerformed well over the period
50
StanbicStanbic
51
Stanbic - strategic imperativesStanbic - strategic imperatives
No change since last presentationNo change since last presentation
Move Retail Banking to a higher levelMove Retail Banking to a higher level
New headNew head
Strong resultsStrong results
Develop Standard/Liberty axis furtherDevelop Standard/Liberty axis further
Private BankPrivate Bank
Re-engineering StanfinRe-engineering Stanfin
52
StanbicStanbic
International RoEInternational RoE
Tough conditions - solid performanceTough conditions - solid performance
Selective acquisitions will helpSelective acquisitions will help
Capitalise on complementary capabilities of SCMB, Capitalise on complementary capabilities of SCMB, International, AfricaInternational, Africa
Good progressGood progress
Global business linesGlobal business lines
Attract, retain and deploy the right peopleAttract, retain and deploy the right people