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UBS Annual Financial Services Conference A new playing field – what is the game plan for growth

Standard Bank GroupJacko Maree

20 October 2009

2Standard Bank Group

Strategy

To build a leading emerging markets financial services organisation using all our

competitive advantages to the full

We focus on delivering superior sustainable shareholder value by serving the needs of

our customers and where appropriate connecting them globally

The key differentiator in achieving our strategy is our people

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3Trends shaping the global economy

1. Financial markets and the world economy are globalising

We are connecting our platforms to participate in global capital and investment flows

2. Emerging markets are growing faster than the developed world

3. Trade flows increasing exponentially reflecting the impact of globalisation

Our strategy incorporates faster growing emerging markets, as apposed to the more mature developed markets

We are connecting our platforms to optimise the opportunities presented by increasing trade flows

4. High population growth and per capita increase in wealth in emerging markets

Population growth as well as the per capita increase in wealth in emerging markets, provides an

opportunity for us to leverage our Wealth Management and Personal and Business Banking business

and capture the synergistic benefits between our three business units

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FT Global 500 – Number of companies by country - 1996

USA203

10Canada

Mexico 1

46UK

Spain 6

14

Netherlands

Belgium3

France18

Sweden5Norway1 Finland 1

20 Germany

Switzerland11

Italy6

Russia 1

Saudi Arabia 1

Japan110

Hong Kong 11

Taiwan 4

Malaysia 5Thailand 1

South Korea1

Emerging markets are growing faster than the developed world

Canada Norway 127

2 Finland

FT Global 500 – Number of companies by country – May 2009

e co

Brazil 4Argentina1

South Africa 5

Thailand 1

Singapore 5

Indonesia 2Philippines 1

Australia 8New Zealand 1

5Sweden

Japan

20USA181

Mexico

Brazil

Chile Argentina 1

Ireland 1 UK 32

Portugal 1

Spain

14

Morocco 1

Netherlands8

France

9

37Italy

South Africa

Greece 1UAE1

Saudi Arabia

2

2

Finland

RussiaPoland

Czech Republic 1Austria 1

India

27

Hong Kong

Taiwan4

Thailand 1

Singapore Indonesia1

Australia

South Korea5

49

Source: Financial Times

2

6

13

3 Belgium

23

Germany

3

2Denmark

10Switzerland

5

Israel 2

6

Kuwait1Turkey 1

10

China

16

3

5Emerging market trade with Africa

BRIC trade with Africa; share of each country's GDP - 1980

BRIC trade with Africa; share of each country's GDP - 2008

6Real - economy investment in Africa (2003-2009)

160180200

020406080

100120140160

one

ddle

as

t

rth rica

RIC

Asi

a

fric

a

ther

US

Dbn

Sources: FDI Intelligence from Financial Times Ltd.

Eur

o-zo

Mid Ea

Nor

Am

e BR A

Af

Ot

4

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Harmonising shareholders needs over time

Strategy formulation

Return on equity (ROE) Sustainable growth

South Africa High Medium

Rest of Africa Medium / High High

Outside of Africa Low High

8Why we can compete in emerging markets

o We have a unique African footprint

o South Africa is an emerging market with well developed, leading edge and highly competitive

financial markets. We have a successful business with exportable and replicable

– Products and solutions

– Risk and capital management practices

o High service ethic in dealing with customers underscored by independent surveys

o We understand the needs of both international customers where connectivity is critical; and local

customers, where product and service offering benefit from scale advantages and local knowledge

o Our commitment to emerging markets attract quality people in the major financial centres who want

to be involved and work in emerging markets, augmenting a strong pool of skills we already have in

the various domestic markets.

o Our shareholders are emerging market investors

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9

o Our strategic relationship with ICBC provides us with one of the strongest partners in the future global

superpower economy, with a keen desire to participate inter alia in the next phase of development on the

African continent

Why we can compete in emerging markets continued

o Life Insurance model that can be exported, and particularly relevant in growing populations and per capita

increase in wealth in most developing markets

o Track record in building some businesses on a global scale as evidenced by our Commodities and

Resources business

o Proven community relevance particularly given the complex socio-economic environment of South Africa

o Experience in taking banking to the unbanked, which is a key requirement in most emerging markets

battling with the eradication of poverty

o Successful track record in growing businesses organically in new markets and geographies

o Proven experience in making and integrating acquisitions in foreign markets as evidenced by Argentina,

Nigeria and Kenya in recent times

10Connecting the emerging markets to each other…..

CHINA / ASIA LATAM

RUSSIA / CIS TURKEY

AFRICA INDIA

MIDDLE EAST

Capital Flows

Trade Flows

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11Business Model and Connectivity

Standard Bank Group

Personal and Business Corporate and InvestmentW lth M t

Personal and Business Banking

Corporate and Investment Banking

Wealth Management

We organise ourselves across three business units but aim to present ourselves to the market as one

Why is this important?

o Diversification of revenue and risk

o Flexibility with which to enter new marketso Flexibility with which to enter new markets

o Improve efficiency by leveraging infrastructure and skills globally with increased speed of implementation /

integration

o Capture and leverage client relationships with appropriate global connectivity

o Optimise the use of capital

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Liquidity

Bank Capital

Systemically Important

Firms

Funding

C t l

Ringfencing

Liquid asset

buffers

Leverage Ratio

Counter Cyclical Buffer

Raising Minimum

Ratio

Quality of

Capital

Living Wills

Cross-Border

Resolution Regimes

Increased Oversight

Capital Surcharges

on Size

Simplification of Structure

OTC DerivativesSecuritization

Central Bank

Facilities

Transparency & Disclosure

Fair Value Measurement

Central Clearing Houses

Loan Loss

Financial InstitutionsCapital

Requirements

Underwriting Standards

Disclosure Requirements

Accounting

Compensation

Rating Agencies Securitization and

Off-Balance Sheet

Provisioning

Global Coordination

& Convergence

Fair Value measurement

Guidelines on Risk

Alignment & governance

Shareholder Say on Pay

Potential Link to Capital

Conservation

Deferrals & Clawbacks

Registration

Standards

Skin-in-the-

game

Source: IIF

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Standard Bank’s current position

14Standard Bank market stats

2001 Actual

2008Actual now

CAGR (%)

Share price (Rands) 31.20 83.00 100.00 16

Market cap (Rbn) 41 127 152 18

Market cap ($m) 3 14 20 27

NAV (Rbn) 26 86 85 16

NAV ($m) 2 9 11 24

Value traded per anum (Rbn) 16 118 62 18

Position in world ( k d b $ k t )*

92 53 54(ranked by $ market cap)*

92 53 54

Foreign shareholding (%) 9 40 40

Source: Standard Bank Equity Capital Markets

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15Market cap (US$)

45 000

50 000

55 000

15 000

20 000

25 000

30 000

35 000

40 000

0

5 000

10 000

2001 2002 2003 2004 2005 2006 2007 2008 2009

Standard StanChart

Source: Standard Bank Equity Capital Markets

16Recognised Investment Banking skills

o Emeafinance awards 2009

– Standard Bank “Best Investment

Bank in Africa”

– Stanbic IBTC “Best Investment

Bank in Nigeria”

– Troika Dialog “Best Local

Investment Bank in Russia”

– Standard Ünlü “Best Investment

Bank of the Year - Turkey”

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17Competitive landscape

Large local banks

o Some are now becoming regional players and

expanding footprint

Multi-national banks

o Multi-national banks

o StanChart, Barclays and Citi

o Well capitalised with significant market shares

o Provide significant competition by virtue of their

– Low cost of funds, expansive distribution

networks, good government relationships, strong

ties with top local corporates and increasing

product sophistication

o Less competitive in

o Focus on multi-national corporates, governments, top

local corporates, high end retail and business banking

o All have slightly different core capabilities but focus on

treasury, trade and transactional banking

o Increasingly concentrating on big ticket investment

banking

o Africa may not be considered to be core to their globalp

– Treasury, Debt Capital Markets, Project Finance

and Structured Trade

o Africa may not be considered to be core to their global

strategy

o Nigeria is a noteworthy exception where all have

expressed an intention to grow their presence

The game plan for growth

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19Personal & Business Banking

o Success at scale

– Deposits

– Volume growth

– Efficiencies

– Customer satisfaction

– Lowest cost and best service

o Scale outside South Africa

o Business Banking

o Agricultureo Agriculture

o Electronic and mobile banking

o Nigeria

20Corporate & Investment Banking

o Enhance scale of local operations and cross border capabilities

o Improve payments and trade finance businesses

o Build emerging markets equities franchisesg g q

o Cross border advisory business

o Core sectors

– Oil & gas

– Telecoms

– Power & infrastructure

– Mining & metals

o Skills transfer / career development / external hires

o Link Africa, China, Russia and Brazil

o Capitalise on ICBC advantage

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21Wealth

o South Africa

– Good track record of Bancassurance

– Global private client services capability

o Africa

– Sub-Saharan wealth market small relative to

SA

– Melville Douglas niche superior investment

performance

– Leverage Liberty distribution and Standard

Bank brand

– Address current Liberty challenges

– Access to customers through payrolls for

compulsory retirement savings

– Current low penetration of voluntary savings

– Reform driving compulsion, particularly in

pensions, life cover and motor vehicle

insurance

– Good margins - less competition

– Significant scope to increase penetration

– Health

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1.5

3

5

2.4 21.2

0.5 0 312345

Number of customers

145

465

950

300 298180 135 70200

400600800

1000

Number of branches

Nigeria - The opportunity beyond investment banking

Mill

ion

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610

1205973

800100012001400

Number of ATMs

5 135 70

0200

GT

B

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A

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o Increase footprint

o Upgrade core banking system and develop lowcost infrastructure

276

610387

181 110 110

0200400600800

GT

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o Increase personal client base and cross sell ratio

o Scale the business bank

o Leverage the China and emerging marketfranchise of Standard Bank to capture cross-border opportunities

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23Conclusion

o Our strategy is proving to be sustainable

o Our African calling card and skills will deliver superior rates of growth over time

o Our ICBC business co-operation showing strong signs of significant tractionp g g g g

o Our wealth business will start showing growth in Africa

o Our reputation in emerging markets is growing

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