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STANDARD BANK INVESTMENT CORPORATION LIMITED
(REGISTRATION NUMBER 69/17128/06)
FINANCIAL HIGHLIGHTS
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1997 1996 %
R'M R'M INCREASE
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ATTRIBUTABLE EARNINGS 2003 1547 29
HEADLINE EARNINGS PER SHARE (CENTS) 1586 1311 21
TOTAL ASSETS 146726 127760 15
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COMMENT
EARNINGS AND DIVIDEND
THE GROUP ACHIEVED SATISFACTORY RESULTS FOR THE YEAR, WITH THE MAJOR OPERATING
UNITS TRADING WELL IN A VERY COMPETITIVE ENVIRONMENT. ATTRIBUTABLE EARNINGS OF
R2 003 MILLION WERE 29 PER CENT HIGHER THAN THE PREVIOUS YEAR, AND HEADLINE
EARNINGS PER SHARE REFLECTED AN INCREASE OF 21 PER CENT. EARNINGS IN THE SECOND
HALF OF THE YEAR WERE POSITIVELY AFFECTED BY THE IMPROVEMENT IN MONEY MARKET
CONDITIONS, AND BY THE INCREASE IN TRADING VOLUMES THAT ACCOMPANIED THE
HEIGHTENED VOLATILITY IN FINANCIAL MARKETS IN THE LATTER MONTHS OF THE YEAR.
NET INTEREST INCOME OF R5 095 MILLION BEFORE PROVISION FOR CREDIT LOSSES, WAS
19 PER CENT UP ON THE PREVIOUS YEAR, WITH THE NET INTEREST MARGIN AT 5.3 PER
CENT COMPARED WITH LAST YEAR'S 5.1 PER CENT. THE PROVISION FOR CREDIT LOSSES OF
R1 072 MILLION WAS SIGNIFICANTLY HIGHER THAN IN 1996. THIS INCREASE WAS DUE TO
THE DIFFICULT TRADING CONDITIONS ENCOUNTERED BY CERTAIN CORPORATE CUSTOMERS AS
WELL AS BY THE HARDSHIPS CAUSED TO THE PERSONAL MARKET BY THE CONTINUED HIGH
REAL RATES OF INTEREST, WITH INSTALMENT SALE DEBTORS AND HOME LOANS
PARTICULARLY AFFECTED. THE PROVISION FOR CREDIT LOSSES, AS A PERCENTAGE OF YEAR
END LOANS AND ADVANCES, WAS 1.05 PER CENT COMPARED WITH O.65 PER CENT FOR THE
PREVIOUS YEAR. THE GENERAL CREDIT PROVISION HAS BEEN INCREASED BY R75 MILLION
DURING THE YEAR.
NON-INTEREST INCOME OF R4 248 MILLION WAS 31 PER CENT UP AND NOW COMPRISES 45
PER CENT OF TOTAL INCOME COMPARED WITH 43 PER CENT IN THE PREVIOUS YEAR. FEES
AND COMMISSION INCOME, WHICH COMPRISES 69 PER CENT OF NON-INTEREST INCOME, WAS
22 PER CENT HIGHER AS A RESULT OF THE INCREASE IN TRANSACTION VOLUMES AND THE
REPRICING OF CASH RELATED SERVICES. TRADING INCOME WAS 62 PER CENT UP, WITH
THIS STRONG PERFORMANCE A REFLECTION OF THE GROUP'S LOCAL AND OFFSHORE
EXPERTISE AND CAPACITY IN TREASURY RELATED ACTIVITIES. OPERATING EXPENSES FOR
THE YEAR OF R5 921 MILLION WERE 20 PER CENT HIGHER THAN IN 1996. THIS
RELATIVELY HIGH RATE OF INCREASE WAS CAUSED BY THE EXPANSION OF ACTIVITIES IN
AFRICAN AND OFFSHORE LOCATIONS, BUSINESS VOLUME INCREASES IN VIRTUALLY ALL
AREAS OF OPERATION AND THE CONSIDERABLE INVESTMENT MADE IN SYSTEMS AND
TECHNOLOGY TO SUPPORT OUR STRATEGIC POSITIONING. THE RATIO OF OPERATING COSTS
TO TOTAL INCOME DECLINED IN THE YEAR FROM 65.2 PER CENT IN 1996 TO 63.4 PER
CENT AND THE GROUP REMAINS ON COURSE TO CONTINUE THIS EFFICIENCY IMPROVEMENT IN
THE YEAR AHEAD. THE METHOD OF CALCULATION OF THIS RATIO IS NOW SUBSTANTIALLY IN
ACCORDANCE WITH THAT ADOPTED BY OTHER MAJOR BANKS, WITH INDIRECT TAXES EXCLUDED
FROM OPERATING EXPENSES.
THE EFFECTIVE TAX RATE FOR THE YEAR, INCLUSIVE OF INDIRECT TAXES, OF 29.1 PER
CENT WAS DOWN ON THE PREVIOUS YEAR'S 33.3 PER CENT, DUE TO THE ABOLITION OF THE
FINANCIAL SERVICES LEVY IN OCTOBER 1996, THE INCREASE IN INCOME FROM LOW TAX
RATE JURISDICTIONS AND HIGHER LEVELS OF NON-TAXABLE INCOME.
INCOME FROM ASSOCIATES, WHICH INCLUDES EARNINGS FROM LIBERTY LIFE AS WELL AS
FROM CERTAIN BANKING ASSOCIATES, WAS 11 PER CENT HIGHER.
THE EXCEPTIONAL PROFIT OF R93 MILLION WAS MAINLY DUE TO THE DISPOSAL OF THE
MAJOR PORTION OF THE GROUP'S HOLDING IN STANDARD BANK PROPERTY FUND, AS WELL AS
CERTAIN PROPERTY AND OTHER INVESTMENT DISPOSALS.
A FINAL DIVIDEND OF 357 CENTS PER SHARE (1996: 298 CENTS) HAS BEEN DECLARED TO
SHAREHOLDERS, BRINGING THE TOTAL DIVIDEND FOR THE YEAR TO 493 CENTS PER SHARE
(1996: 407 CENTS). DIVIDEND COVER REMAINS UNCHANGED AT 3.2 TIMES.
BALANCE SHEET
TOTAL ASSETS AT THE YEAR END OF R146.7 BILLION WERE 15 PER CENT HIGHER THAN THE
PREVIOUS YEAR. LOANS AND ADVANCES, WHICH CONSTITUTED 69 PER CENT OF TOTAL
ASSETS, INCREASED BY 12 PER CENT. INSTALMENT SALES FOR THE YEAR WERE AFFECTED
BY THE SLOW-DOWN IN MOTOR VEHICLE SALES AND BY THE PROLIFERATION OF LOW-COST
ENTRY VEHICLES. HOME LOANS RECORDED AN INCREASE OF 14 PER CENT FOR THE YEAR,
WITH THE HOUSING MARKET UNDER PRESSURE AS A RESULT OF THE HIGH INTEREST RATE
AND THE GENERAL DECLINE IN HOUSE PRICES. CARD DEBTORS, ADJUSTED FOR THE SALE OF
THE WOOLWORTHS' BOOK, AND OVERDRAFTS WERE BOTH 11 PER CENT HIGHER.
THE GROUP'S CAPITAL BASE AT 11.9 PER CENT OF RISK WEIGHTED ASSETS REMAINS WELL
ABOVE THE STATUTORY REQUIREMENT OF 8.0 PER CENT. TIER ONE CAPITAL AMOUNTS TO
9.4 PER CENT.
PROSPECTS
THE YEAR AHEAD WILL UNDOUBTEDLY SEE A CONTINUATION OF THE VOLATILITY THAT HAS
CHARACTERISED FINANCIAL MARKETS OVER RECENT MONTHS. NEVERTHELESS, THE GROUP IS
WELL POSITIONED IN ITS VARIOUS MARKETS, BOTH LOCALLY AND OVERSEAS, AND IT IS
EXPECTED THAT THE GROWTH IN EARNINGS FOR THE YEAR AHEAD SHOULD BE SATISFACTORY.
C B STRAUSS, CHAIRMAN
M H VOSLOO, GROUP CHIEF EXECUTIVE
DECLARATION OF DIVIDEND NO. 57
NOTICE IS HEREBY GIVEN THAT A FINAL ORDINARY DIVIDEND NO. 57 OF 357 CENTS PER
ORDINARY SHARE HAS BEEN DECLARED PAYABLE ON MARCH 20 1998 TO SHAREHOLDERS
REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON FEBRUARY 27
1998. THE REGISTER OF MEMBERS WILL BE CLOSED FROM FEBRUARY 28 1998 TO MARCH 8
1998, BOTH DATES INCLUSIVE.
ON DUE DATE, DIVIDENDS WILL, WHERE APPLICABLE, BE ELECTRONICALLY TRANSFERRED TO
SHAREHOLDERS' BANK ACCOUNTS. IN THE ABSENCE OF SUITABLE MANDATES, DIVIDEND
CHEQUES WILL BE POSTED TO SHAREHOLDERS.
BY ORDER OF THE BOARD
K D CURR
GROUP SECRETARY
FEBRUARY 10 1998
SHARE TRANSFER SECRETARIES REGISTERED OFFICE
RAND REGISTRARS LIMITED 9TH FLOOR
BLOCK C 100 NORTHERN PARKWAY STANDARD BANK CENTRE
ORMONDE 5 SIMMONDS STREET
JOHANNESBURG 2001 JOHANNESBURG 2001
P O BOX 82549 P O BOX 7725
SOUTHDALE 2135 JOHANNESBURG 2000
CONSOLIDATED INCOME STATEMENT
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1997 1996 %
R'M R'M INCREASE
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INTEREST INCOME 18616 15605 19
INTEREST EXPENSE 13521 11308 20
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NET INTEREST INCOME BEFORE PROVISION FOR CREDIT
LOSSES 5095 4297 19
PROVISION FOR CREDIT LOSSES 1072 591 81
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NET INTEREST INCOME 4023 3706 9
NON-INTEREST INCOME 4248 3242 31
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TOTAL INCOME 8271 6948 19
EMPLOYEE COMPENSATION AND BENEFITS 3123 2647 18
OTHER OPERATING EXPENSES 2798 2268 23
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OPERATING PROFIT 2350 2033 16
EXCEPTIONAL ITEMS 93 (27)
TAXATION 683 676
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INCOME AFTER TAXATION 1760 1330 32
SHARE OF INCOME FROM ASSOCIATED UNDERTAKINGS 246 222 11
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NET INCOME 2006 1552 29
ATTRIBUTABLE TO OUTSIDE SHAREHOLDERS 3 5
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ORDINARY SHAREHOLDERS 2003 1547 29
ORDINARY DIVIDENDS 594 489
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RETAINED SURPLUS 1409 1058
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FINANCIAL STATISTICS
SHARES IN ISSUE
NUMBER OF ORDINARY SHARES IN ISSUE
- END OF PERIOD (MILLIONS) 120,5 120,2
- WEIGHTED AVERAGE (MILLIONS) 120,4 120,0
EARNINGS
HEADLINE EARNINGS PER ORDINARY SHARE (CENTS) 1586 1311 21
EARNINGS PER ORDINARY SHARE (CENTS) 1664 1289 29
DIVIDENDS PER ORDINARY SHARE (CENTS) 493 407 21
NET ASSET VALUE PER ORDINARY SHARE (CENTS) 8440 6891 22
EFFECTIVE TAXATION RATE (PER CENT) 29 33
FINANCIAL PERFORMANCE
RETURN ON ORDINARY SHAREHOLDERS' FUNDS
(PER CENT)* 20,7 21,3
RETURN ON TOTAL ASSETS (PER CENT)* 1,4 1,4
OPERATING COSTS TO TOTAL INCOME (PER CENT) 63,4 65,2
CAPITAL ADEQUACY
CAPITAL RATIO RELATIVE TO 8 PER CENT BANKS
ACT REQUIREMENT
- PRIMARY CAPITAL 9,4 8,6
- TOTAL CAPITAL 11,9 11,5
*CALCULATION BASED ON HEADLINE EARNINGS
CONSOLIDATED BALANCE SHEET
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1997 1996
R,M R'M
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ASSETS
CASH AND SHORT-TERM FUNDS 15839 11525
INVESTMENT AND TRADING SECURITIES 5859 5630
LOANS AND ADVANCES L01853 90807
OTHER ASSETS 17788 14660
INTEREST IN ASSOCIATED UNDERTAKINGS 2253 1751
FIXED ASSETS 2602 2690
CUSTOMERS' ACCEPTANCE LIABILITIES 532 697
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TOTAL ASSETS 146726 127760
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LIABILITIES
DEPOSIT AND CURRENT ACCOUNTS 119050 102988
OTHER CREDITORS AND PROVISIONS 16293 14923
DEBENTURES 620 791
ACCEPTANCES OUTSTANDING 532 697
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TOTAL LIABILITIES 136495 119399
SHAREHOLDERS' FUNDS
- SHARE CAPITAL 128 128
- SHARE PREMIUM 1630 1613
- RESERVES 8419 6552
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TOTAL SHAREHOLDERS' FUNDS 10177 8293
OUTSIDE SHAREHOLDERS' INTEREST 54 68
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TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS 146726 127760
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CONTINGENT LIABILITIES AND COMMITMENTS
CONTINGENT LIABILITIES
- LETTERS OF CREDIT 2113 2759
- GUARANTEES 12123 10676
CAPITAL EXPENDITURE
- INCURRED 518 771
- CONTRACTED 100 98
- AUTHORISED BUT NOT YET CONTRACTED 7 26
SHAREHOLDERS' FUNDS
ADJUSTED FOR THE INCREASE IN MARKET VALUE
OVER THE CARRYING VALUE OF ASSOCIATED
UNDERTAKING AND OVER THE BOOK VALUE OF
INVESTMENTS AND PROPERTY 13571 11649
HEADLINE EARNINGS
NET INCOME ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 2003 1547
ADJUSTED FOR EXCEPTIONAL ITEMS:
- PROVISION FOR RESTRUCTURING COSTS - 60
- NET SURPLUS ON SALE OF SUBSIDIARY
UNDERTAKINGS, INVESTMENTS AND PROPERTY (93) (33)
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1910 1574
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CONSOLIDATED CASH FLOW STATEMENT
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1997 1996
R'M R'M
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OPERATING ACTIVITIES
CASH RECEIPTS FROM CUSTOMERS 22335 18356
CASH PAID TO CUSTOMERS, EMPLOYEES AND
SUPPLIERS (18967) (15831)
DIVIDENDS ON INVESTMENT SECURITIES AND
PREFERENCE SHARES 358 340
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CASH INFLOW FROM
OPERATING ACTIVITIES 3726 2865
CHANGES IN OPERATING FUNDS
INCREASE IN INCOME-EARNING ASSETS (L5210) (22175)
INCREASE IN DEPOSITS AND OTHER CREDITORS AND
PROVISIONS 16878 24766
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NET INCREASE IN OPERATING FUNDS 1668 2591
TAXATION PAID (537) (637)
NET CASH USED IN INVESTING ACTIVITIES (112) (661)
FINANCING ACTIVITIES
PROCEEDS FROM ISSUE OF SHARE CAPITAL 17 21
DIVIDENDS PAID (514) (417)
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NET CASH USED IN FINANCING ACTIVITIES (497) (396)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND
SHORT-TERM FUNDS 66 318
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NET INCREASE IN CASH AND SHORT-TERM FUNDS 4314 4080
CASH AND SHORT-TERM FUNDS AT BEGINNING OF YEAR 11525 7445
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CASH AND SHORT-TERM FUNDS AT END OF YEAR 15839 11525
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