Wrap Text
Unaudited results and dividend announcement
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
JSE share code: SBK ZAE000109815
SBKP ZAE000038881
(first preference shares)
SBPP ZAE000056339
(second preference shares)
NSX share code: SNB ZAE000109815
JSE bond codes: SBS, SBK, SBN, SBR, SBSI, ETN series, SSN
series and CLN series (all JSE listed bonds
issued in terms of The Standard Bank of South
Africa Limited's Domestic Medium Term Note
Programme and Structured Note Programme)
Standard Bank Group unaudited results and dividend announcement
for the six months ended 30 June 2012
"Our commitment to grow our group to be the leading financial services organisation in Africa remains unchanged. Our core businesses performed
well in a difficult environment and are showing good momentum and we continue to improve our market position across many of our key products,
segments and geographies. We have experienced strong growth in both loans and deposits in fact our strongest revenue growth has come from
our long-standing transactional banking businesses, both in retail and corporate banking."
Jacko Maree, group chief executive
Headline earnings Return on equity (ROE)
normalised R7 384 million, up normalised 14,5%
11% on 1H11 (1H11: 14,5%)
IFRS R7 185 million, up IFRS 14,6%
9% on 1H11 (1H11: 14,9%)
Cost-to-income ratio Capital adequacy
normalised 59,1% (1H11: 58,0%) Tier I capital adequacy
IFRS 59,3% (1H11: 58,2%) ratio of 11,0% (1H11: 12,4%)
Dividends per ordinary share Credit loss ratio
212 cents normalised and IFRS 0,98%
(1H11: 141 cents) (1H11: 0,81%)
Net asset value (NAV) per share
normalised 6 581 cents (1H11: 5 926 cents)
IFRS 6 667 cents (1H11: 5 994 cents)
The results discussed in the following commentary are presented on an unaudited normalised basis, unless otherwise indicated as being on an
International Financial Reporting Standards (IFRS) basis. Results are normalised to correct the distortions caused by IFRS' treatment of the
Standard Bank Group's (the group's) Black Economic Empowerment Ownership initiative and of group share exposures deemed to be treasury shares,
that are entered into to facilitate client trading activities or for the benefit of Liberty Holdings Limited and its subsidiaries (Liberty)
policyholders. Refer to the normalised explanation alongside for further details. The interim unaudited results in accordance with IFRS are
presented separately in the announcement.
Group results
Amidst the uncertainty in the world economy and the continuous upheavals in global banking, we have consistently delivered
reasonable returns and our financial strength has served us well. Our improving revenue generation capability has allowed
the group to absorb much higher provisions than in the prior period and higher than anticipated rand cost growth and yet
deliver 11% growth in headline earnings per share to our shareholders, declare a dividend of 212 cents per share and
maintain our tier I capital adequacy ratio at 11,0%.
Operating environment
Following a reasonable start to the year, the challenges that hampered the global economy in 2011 intensified in the second
quarter, much of this centred on the Eurozone. Elsewhere official data showed that the UK has slipped into a double-dip
recession, while in the US a struggling housing market and the threat of a tighter fiscal policy continued to hold back the
economy. China's inflation rate fell to just 3%, another sign of cooling in the world's second biggest economy. Its central
bank cut interest rates for the first time since 2008 in an attempt to boost demand. The impact that these issues have had
on investor sentiment was reflected within financial markets, with the FTSE All World Index falling 8% in the second quarter.
Sub-Saharan Africa is still anticipated to show growth of 5,1% in 2012 according to the International Monetary Fund's
latest estimates, driven in particular by Nigeria, Ghana, Ethiopia, Angola and Tanzania. This compares favourably to the
rates predicted for the global economy (3,9%) and advanced economies (1,6%). However, the regions' trade links with
the developed world will continue to mean that its outlook is somewhat determined by the strength of the global economic
recovery.
In South Africa, household consumption continued to grow, albeit at a slower rate, supported by rises in real disposable
income and a household debt-to-income ratio which continued to decline. The production side of the economy continued
to struggle. The manufacturing sector has come under significant pressure due to the weak external environment as well as
rising domestic price pressures, in particular labour and electricity. A slowing economy fuelled expectations of an interest
rate cut which then occurred in July. Global financial instability and weaker commodity prices also resulted in the rand
weakening significantly in the period.
It has become clear that 2012 has developed into another difficult year for the global economy. Investor confidence remains
fragile and financial markets are volatile. This makes for a very challenging operating environment for all banks.
Revenues
Total income grew by 15% in the period under review. This growth was achieved through strong net interest income (NII)
growth of 18% and good non-interest revenue growth of 13%. Revenue growth was assisted by a relatively weaker rand
over the reporting period. On a constant currency basis, total income growth was 11%.
The group achieved good loan growth towards the end of 2011 and this continued during 2012 which provided some good
impetus to NII growth. Margin expansion was achieved through a combination of continued appropriate risk-based pricing
initiatives and a greater proportion of higher margin unsecured loans in Personal & Business Banking (PBB). Also assisting
margin was a positive endowment effect on capital and transactional balances in the rest of Africa, where interest rates rose
sharply towards the end of 2011.
Net fee and commission income increased by 8% compared to the first half of 2011. PBB achieved 10% growth despite
the absence of price increases at the beginning of the year, coupled with some reductions in prices for personal customers
effective 1 April 2012. PBB South Africa increased the number of customers by 10% compared to last June. Electronic
banking fees and card-based fees supported growth and increased in line with a continued trend of increased activity levels
through electronic channels. Fees in Corporate & Investment Banking (CIB) grew by a more subdued 2%. This was the net
result of strong growth in account transaction fees, as our transactional banking franchise in the rest of Africa gained traction,
and decreased knowledge-based fees, partly due to a narrower strategic focus.
Trading revenue ended the period 15% higher than the prior period and was the result of a strong first quarter combined
with a comparatively weak second quarter. Our client franchise across Africa was relatively insulated from the drop off
in revenues experienced globally in the second quarter, where fixed income and currency trading volumes decreased
significantly as clients adopted a "risk-off" stance given macroeconomic uncertainty. Our global markets operations outside
Africa felt this impact markedly and were required to hold much higher liquid asset buffers which further impacted their
revenues in the NII line.
Other revenue grew by 37% for the period and benefited from positive valuation adjustments on listed and unlisted property
investments in South Africa.
Credit impairments
The charge for credit impairments increased 35% to R3,9 billion for the period and resulted in a credit loss ratio of 0,98%
(1H11: 0,81%). In PBB, the charge for non-performing loans (NPLs) increased 18% despite the level of NPLs as a percentage
of the book decreasing from 7,1% at June last year to 5,1%. As anticipated, this was required to cater for the credit risk
inherent in a rapidly growing higher risk, but higher margin unsecured personal term loan book. In CIB, further specific
provisions were raised to account for a small number of large exposures in the Middle East and a natural resources related
exposure in Eastern Europe. In addition, a few large specific exposures in the rest of Africa were impaired as previously
identified watch-list exposures moved into NPL status during the period. In an uncertain environment, we continue to closely
monitor our corporate exposures, particularly as collateral values have come under increasing pressure.
Specific provision coverage ratios for the group increased from 29% at June 2011 to 33% at June 2012.
Operating expenses
Total operating expenses for the period were up by 17% on the prior period on a reported basis and up by 13% excluding
the translation impact of a weaker rand. The average USD/ZAR exchange rate used to translate foreign costs in the first half
of 2012 was 7,94 compared to 6,90 in the first half of 2011.
Staff costs grew by 16% for the period (11,5% on a constant currency basis). Fixed remuneration grew by 14% as a result
of annual inflationary increases and an increased number of client facing staff in the rest of Africa. Variable remuneration
increased by 1%, largely due to the amortisation impact of prior period deferred incentives. Other staff costs increased due
to project staff employed during the period, particularly in operational risk and compliance areas, as well as exit costs incurred
in operations outside of Africa as we continue to scale down activities consistent with our tightened strategy.
In line with the significant revenue opportunities we are seeing on the continent, a major driver of operational cost growth is
the continued expansion of our businesses across the rest of Africa. Other factors placing upward pressure on costs included
increased regulatory and compliance-related costs in our operations outside Africa, continued investment in systems and
distribution, increased planned marketing campaigns and higher amortisation and depreciation charges.
Continued focus will be applied to the group's cost base as the current level of cost growth may prove unaffordable given
softening revenue growth rates.
Loans and advances
Loans to customers grew by 12% when compared to the prior period. PBB grew by 11% with mortgages up 6%, instalment
sale and finance leases up 18%, credit card balances up 14% and other loans up 29%. The strong growth in instalment sale
and finance leases was supported by resilient new vehicle sales in South Africa in the period. Other term loans includes a
small book of unsecured lending to customers who earn less than R8 000 a month (referred to as our inclusive banking loans
book) which has grown to R3,4 billion, up from R761 million at June 2011. In CIB, growth in loans to customers of 14% was
achieved, primarily driven by client demand for lending products in our core sectors of natural resources and infrastructure
towards the end of 2011.
Capital, funding and liquidity
The group's overall liquidity position remains strong with appropriate liquidity buffers held for stress amounting to
R142,8 billion at 30 June 2012 (excluding cash reserving across the group of an additional R42,1 billion). These levels
of liquidity are significant but are required in anticipation of current and pending regulations as well as being appropriately
prudent given the group's liquidity stress-testing philosophy. The group continues to maintain a robust ratio of long-term
funding at 25% of liabilities.
The group's most stable funding source, retail deposits from PBB customers, grew by 13% compared to June 2011 and is a
testament to our ability to hold our own in a fiercely competitive market in South Africa and our growing customer franchise in
the rest of Africa. CIB also evidenced its ability to attract transactional banking customers with current accounts increasing by
21% and cash management deposits increasing by 27% compared to the prior interim period. A number of key debt capital
market and term loan funding transactions were executed, taking advantage of pockets of relatively well-priced liquidity.
Investor appetite for capital markets issuance remained robust and The Standard Bank of South Africa (SBSA) successfully
placed R13 billion of senior debt in the domestic bond market. SBSA also raised USD1,35 billion in a single syndicated loan
from the international bank loan markets.
In May 2012, the South African Reserve Bank (SARB) confirmed that it would assist banks to meet the new Basel III liquidity
coverage ratio (LCR) requirement through the provision of a committed liquidity facility. The mechanics and details of
such a facility are under discussion between the Banking Association and the SARB. Such a facility will significantly reduce
uncertainty around the LCR as we approach the implementation date in 2015. The banking industry still expects to face significant
challenges in meeting the Basel III 2018 net stable funding ratio requirements and continues to engage with the relevant
authorities in this regard.
The group participated in the Basel III quantitative impact assessment submitted to the SARB and the Bank of International
Settlements. The results of the assessment reflect a reduction in the group's capital adequacy ratios under the proposed
framework, but the group will remain adequately capitalised to meet the new Basel III requirements.
During the half year under review, the group implemented Basel 2.5 rules which accounted for R40 billion of the total increase
in risk-weighted assets to R797,7 billion as at 30 June 2012, together with R47 billion of additional risk-weighted assets due to
balance sheet growth.
The group maintained strong Basel II capital ratios in the period under review: core tier I capital ratio at 10,3%, tier I capital ratio
at 11,0% and total capital ratio at 13,5%. Our objective is to strengthen SBSA's capital position in the second half of 2012 from
internal sources of group surplus capital to support the use of SBSA as the primary balance sheet of the group.
Capital allocation to our business units has been refined to ensure a holistic focus on capital utilised including buffers, intangible
assets and goodwill. The new capital allocation approach will support a sharper focus on efficient capital utilisation by business
units and can be adapted easily to reflect the impact of the proposed increases in tier I capital ratios under Basel III rules in the
future.
In order to achieve a better balance between interim and final dividends, the board has declared an interim distribution
of 212 cents, which represents half of the prior year total. The dividend has been declared as a cash distribution but with
an opportunity to elect capitalisation shares to provide flexibility for shareholders, given recent changes to dividend tax in
South Africa.
Overview of business unit performance
Headline earnings by business unit
Change 1H12 1H11 FY11
% Rm Rm Rm
Personal & Business Banking 33 3 194 2 408 5 860
Corporate & Investment Banking (7) 2 861 3 085 5 532
Central and other (17) 424 511 779
Banking activities 8 6 479 6 004 12 171
Liberty 43 905 633 1 428
Total 11 7 384 6 637 13 599
Personal & Business Banking (PBB)
For the six months under review, PBB reported headline earnings of R3 194 million, 33% higher than the prior period. The primary
contributors to the increased headline earnings were income growth in excess of cost growth and well-priced loan origination.
This result reflects the combination of an excellent result achieved in PBB South Africa which generated headline earnings of
R3 250 million, with improving momentum in the rest of Africa, which reflected a smaller loss than the same period in the prior
year as we expand our customer network.
The mortgage business continues to perform well with revenues up by 14% as a result of steady book growth over the last
18 months and a continued improvement in credit experience, particularly in South Africa given the sustained low interest rate
environment and an improvement in customers' ability to service debt. NPLs reduced by a further R1 billion in the period from
December 2011 (now 6,2% of the book) reducing the credit loss ratio to 91 basis points (bps). The specific provision for
mortgages in the balance sheet at June 2012 was R3 749 million (21% coverage ratio, up from 20% at December 2011) and
a further R1 362 million has been accumulated as a portfolio provision. The improving profitability in mortgages was partly
attributable to new business being written at improved concessions in South Africa (68bps above prime for 1H12 and 1bp below
prime for 1H11).
The instalment sale and finance lease book grew by 18% compared to the prior period, assisted by resilient vehicle sales in South
Africa and good book growth in the rest of Africa. NII relating to instalment sale and finance leases in the rest of Africa declined
due to a sharp increase in funding costs as interest rates increased in East Africa. The credit loss ratio increased to 82bps from
72bps in the prior period, in line with book growth, and cost growth was affected by the negative impact of translating local
currency expenses into rand. These factors combined resulted in a net decline in headline earnings for instalment sale and finance
leases for the group.
Card debtors grew by 14% over the period as a result of good new account acquisition. Fee and commission income benefited
from the increased account base, higher turnover and increased volumes in the acquiring business following the acquisition of new
merchants. The credit loss ratio for the period was 2,28% (1H11: 2,20%). Operational risk losses reduced significantly during the
period allowing headline earnings to grow by 19%.
Transaction and lending products achieved good growth in income and earnings. Retail priced deposits grew 13% in the period
and, together with increased activity levels, provided good impetus to growth in fee and commission revenue, absorbing the
impact of the price reductions announced in April in certain segments in South Africa. Strong growth was evidenced in personal
term loans, overdrafts and revolving credit facilities in line with expectations given our focused approach to customer acquisition.
The credit impairment charge for this grouping of unsecured loans more than doubled and the credit loss ratio was 2,64% for the
period, well within pricing assumptions.
Bancassurance and wealth headline earnings grew by 29%. Short-term underwriting profits grew as a result of an improved claims
management process resulting in the overall loss ratio on the book improving. The embedded products profit from the joint
venture agreement with Liberty benefited from book growth and an improvement in product penetration ratios.
Corporate & Investment Banking (CIB)
After a strong start to the year, CIB experienced a much more difficult operating environment in the second quarter which put
pressure on both revenues and earnings. Significant provisions taken in the period, predominantly outside Africa and in the rest
of Africa, contributed to headline earnings being below the prior period and a decline in ROE from 15,5% to 12,7%.
The transactional products and services (TPS) business was the strongest performer in the period in CIB, with revenues for the
first half of the year up 36% on the prior year comparative. This is a significant result given the core role TPS plays across the
wider CIB franchise. Driving this strong growth was our developing businesses in the rest of Africa, supported by both operational
growth and a positive endowment impact. The TPS business in the rest of Africa is now the same size (in revenue terms) as our
long-standing TPS business in South Africa. The South African business made a positive contribution with cash management
benefiting from growth in average balances and the trade business experiencing an increase in exposures with Asian banks.
Investor services income grew following a rise in securities lending, growth in assets under custody and increased volumes for
the derivative-clearing business.
The global markets business saw revenues reduce 5% compared to the prior period as unfavourable market conditions, driven
by the ongoing issues within the Eurozone, led to a weak second quarter for the outside Africa operation. The second quarter
was severely impacted by subdued client activity and tighter margins, all of which contributed to revenues being well below the
prior period. A further impact on revenues was the increased funding costs of the operations in London due to the introduction
of new regulatory liquid asset buffer requirements. A positive trading result was achieved in the rest of Africa due to higher flow
business in foreign exchange at improved margins. Costs in global markets rose year on year primarily due to increased support
function costs, coupled with the translation effect of a weaker rand on operations outside South Africa. In support of revenue
growth, the rest of Africa has also seen increased investment in headcount and infrastructure across selected presence countries,
which have experienced high levels of cost inflation.
Investment banking reported half year income up 19% on the prior period. In particular, NII has risen significantly following the focus
on loan book growth seen towards the end of 2011. Rest of Africa revenues grew off a low base as a result of increased activity
in the period, particularly within Mozambique and Kenya. At a headline earnings level, the positive revenue performance has been
somewhat offset by significant provisions. Large specific impairments were taken in outside Africa relating to a small number of
large exposures in the Middle East and a natural resources related exposure in Eastern Europe. In Africa, charges have been taken in
Nigeria and Kenya as the recent growth in the book matures and credit losses trend to more expected levels.
Real estate and principal investment management, excluding those operations that have been curtailed, saw revenues rise 21%
on the first six months of 2011. The property group in South Africa has seen a good selection of deals won in the period.
Liberty
The Liberty results referred to below reflect the group's 54,3% investment in Liberty Holdings Limited. Bancassurance results
are included under PBB. Liberty's headline earnings for the six months to 30 June 2012 were up 41% to R1 797 million. Of
these headline earnings, R905 million was attributable to the group. Liberty's ROE for the period was 23,4%.
The first half of 2012 reflected the significant operational improvements made by Liberty. Retail SA, which successfully remedied
the policyholder lapse issues over the last few years, has now demonstrated capability to deliver innovative products and is
achieving significant growth in new business and margin. LibFin continues to demonstrate its ability to manage to appropriate
levels of market risk and Liberty's capital position is strong. Stanlib has substantially improved its investment fund performance
and very good client inflows have been evidenced into higher margin retail funds.
Operational results for Liberty for the first half of 2012 include growth in indexed insurance sales of 22% and R2,7 billion cash
inflows in its South African retail insurance operations. The asset management businesses attracted R5,4 billion net inflows.
The core South African insurance operations were managed well within assumptions, producing positive policyholder behaviour
variances. Liberty's operating earnings of R855 million are slightly lower than those reported in first half 2011, largely reflecting
the cost of the investment in the build initiatives and noting that the 2011 earnings had benefited from once-off non-economic
assumption changes of R112 million in the Retail SA business. The value of new business of R232 million is over 60% up on
the prior period due to the growth in sales, a positive change in sales mix and sustainable improvements in persistency. Despite
the ongoing European debt concerns and related volatility, a positive performance from investment markets has resulted in the
shareholder investment portfolio producing a six-month gross return of 6,4% to 30 June 2012 (30 June 2011: 2,7%) marginally
ahead of benchmark.
Strategic update
The results for the first half of 2012 support our strategic refinement to strengthen our focus on Africa. A highlight of the results
was the good growth trajectory being maintained in our on-the-ground banks in the rest of sub-Saharan Africa. Our banks are
all at different stages of development, producing different returns but as a composite delivered an ROE (excluding goodwill) of
13,2%, much improved on the 8,9% of the prior period. Co-operation with the Industrial and Commercial Bank of China (ICBC)
is a vital building block of our strategy, and linkages between Africa and China through ICBC continue apace.
CIB's operations outside Africa mirrored the experience evidenced by recently announced results of many global investment
banks with substantially lower second quarter revenues. The reduced corporate activity and lower trading volumes have resulted
in a continuation of sub-optimal financial results from this operation, especially when converted to rand. Cost savings which
have been achieved by reducing the scale of these operations were largely outweighed in the last six months by the continued
investment in operational risk and compliance areas. We remain committed to the right-sizing of these operations in a responsible
and deliberate manner and the execution thereof will continue to be a protracted and complex process.
Prospects
Macroeconomic uncertainties are expected to continue to weigh on investor sentiment and client activity in the second half of
2012 and we therefore expect revenue growth to be subdued in CIB in the second half. The second half of 2012 is also expected
to be a more difficult environment for revenue generation for PBB, given the anticipated endowment impact of the recently
announced rate cut and the full year impact of price cuts in South Africa. The upward pressure placed on costs as a result of being
on an accelerated growth path in certain of our operations, having to overhaul legacy IT systems and increasing regulatory and
compliance pressures will remain challenging.
Our group is in good health and our core businesses have good momentum. We have maintained a strong liquidity and funding
profile, asset quality is good and our strict capital and risk discipline means we are on track to comply with Basel III next year.
We are mindful of the external challenges but believe that our healthy foundation and our broad product and client base will
stand us in good stead.
Stakeholders should note that any forward looking information in this announcement has not been reviewed or reported on by
the group's external auditors.
Jacko Maree Fred Phaswana
Chief executive Chairman
15 August 2012
Normalised explanation
With effect from 2004, we have adjusted the group's results reported under IFRS for required accounting conventions that do
not reflect the underlying economic substance of transactions. To arrive at the normalised results the IFRS results have been
adjusted for the following items:
Preference share funding for the group's Black Economic Empowerment Ownership initiative (Tutuwa) transaction that is
deducted from equity and reduces the shares in issue in terms of IFRS.
Group shares held for the benefit of Liberty policyholders that result in a reduction of the number of shares in issue and the
exclusion of fair value adjustments and dividends on these shares. The IFRS requirement causes an accounting mismatch
between income from investments and changes in policyholders' liabilities.
The group's transactions in its own shares to facilitate client trading activities. As part of the normal trading operations, a group
subsidiary offers to its clients trading positions of listed shares, including its own shares. In order to hedge the risk on these
shares the subsidiary buys or sells short group shares in the market. Although the share exposure on the group's own shares is
deducted from equity and the related fair value movements are reversed in the income statement on consolidation, the client
trading position and fair value movements are not eliminated, resulting in an accounting mismatch.
The result of these adjustments is shown in the table below:
Normalised headline earnings
Weighted average Headline Growth on
number of shares earnings 1H11
'000 Rm %
Disclosed on an IFRS basis 1 517 158 7 185 9
Tutuwa initiative 63 479 115
Group shares held for the benefit of Liberty policyholders 11 315 82
Share exposures held to facilitate client trading activities (1 012) 2
Normalised 1 590 940 7 384 11
Declaration of dividends
Payment of an interim cash dividend of 212,00 cents per ordinary share to ordinary shareholders with an election to
receive capitalisation shares in lieu of the cash dividend
Shareholders of Standard Bank Group Limited ("the company") are advised of the following dividend declarations in respect of
ordinary shares and preference shares.
Ordinary shares
Ordinary shareholders are advised that the board of directors ("the board") has resolved to declare an interim gross cash
dividend of 212,00 cents per ordinary share ("the cash dividend") to ordinary shareholders recorded in the register of the
company at the close of business on Friday, 14 September 2012. Ordinary shareholders will however be able to elect to receive
ordinary shares of 10 (ten) cents each in the company as capitalisation shares in lieu of the cash dividend ("the capitalisation
issue"), to be determined by the ratio that 212,00 cents bears to the volume weighted average price of the company's
ordinary shares on the exchange operated by the JSE Limited ("JSE") during the five-day trading period ending Thursday,
30 August 2012. No Secondary Tax on Companies ("STC") credits were utilised as part of the ordinary dividend declaration.
The cash dividend will be paid out of profits of the company while the new ordinary shares to be issued pursuant to the
capitalisation issue will be done from the company's share premium reserves.
Details of the ratio will be released on the Securities Exchange News Service of the JSE ("SENS") by no later than 11:00 on
Friday, 31 August 2012 and published in the South African and Namibian press the following business day.
Trading in the Strate Limited environment does not permit fractions and fractional entitlements. Accordingly, where an ordinary
shareholders' entitlement to new ordinary shares calculated in accordance with the above formula gives rise to a fraction of a
new ordinary share, such fraction of a new ordinary share will be rounded up to the nearest whole number where the fraction is
greater than or equal to 0,5 and rounded down to the nearest whole number where the fraction is less than 0,5.
A circular relating to the cash dividend and the capitalisation issue will be posted to ordinary shareholders on or about Friday,
24 August 2012 and the salient dates and times are set out in the table below.
Ordinary share certificates may not be dematerialised or rematerialised between Monday, 10 September 2012, and Friday,
14 September 2012, both days inclusive. Ordinary shareholders who hold dematerialised shares will have their accounts at their
CSDP or broker credited or updated on Monday, 17 September 2012.
Where applicable, dividends in respect of certificated shares will be transferred electronically to shareholders' bank accounts
on the payment date.
In the absence of specific mandates, dividend cheques will be posted to shareholders.
Preference shares
Preference shareholders are advised that the board has resolved to declare the following final distributions:
6,5% first cumulative preference shares (first preference shares) dividend No. 86 of 3,25 cents (gross) per first preference
share, payable on Monday, 10 September 2012, to holders of first preference shares recorded in the books of the company
at the close of business on the record date, Friday, 7 September 2012. The last day to trade to participate in the dividend is
Friday, 31 August 2012. First preference shares will commence trading ex-dividend from Monday, 3 September 2012. No
STC credits were utilised as part of the first preference dividend declaration.
Non-redeemable, non-cumulative, non-participating preference shares (second preference shares) dividend No. 16
of 345,55 cents (gross) per second preference share, payable on Monday, 10 September 2012, to holders of second
preference shares recorded in the books of the company at the close of business on the record date, Friday, 7 September
2012. The total STC credits utilised as part of the declaration amount to R183 080 157,96 and consequently the STC credits
utilised per share amounts to 345,55 cents per second preference share. Second preference shareholders will therefore
receive a net dividend of 345,55 cents per second preference share. The last day to trade to participate in the dividend is
Friday, 31 August 2012. Second preference shares will commence trading ex-dividend from Monday, 3 September 2012.
The salient dates and times for the preference share distributions are set out in the table below.
Preference share certificates (first and second) may not be dematerialised or rematerialised between Monday, 3 September 2012
and Friday, 7 September 2012, both days inclusive.
In the absence of specific mandates, dividend cheques will be posted to shareholders.
Preference shareholders (first and second) who have dematerialised their share certificates will have their accounts at their
CSDP or broker credited on Monday, 10 September 2012.
Salient dates and times for the ordinary and preference share distributions
Non-redeemable,
6,5% non-cumulative,
first cumulative non-participating
preference preference shares
Ordinary shares (first (second
shares preference shares) preference shares)
JSE Limited (JSE)
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 86 86 16
Gross distribution/dividend per share (cents) 212,00 3,25 345,55
Circular and form of election posted to Friday,
ordinary shareholders 24 August 2012
Announcement of the ratio applicable to
the capitalisation shares, based on the
five-day trading period ending Thursday, Friday,
30 August 2012, released on SENS 31 August 2012
Announcement of the ratio applicable to
the capitalisation shares published in the Monday,
South African and Namibian press 3 September 2012
Last day to trade in order to be eligible for
the cash dividend/capitalisation shares Friday, Friday, Friday,
(CUM distribution) 7 September 2012 31 August 2012 31 August 2012
Shares trade EX the cash dividend/ Monday, Monday, Monday,
capitalisation shares 10 September 2012 3 September 2012 3 September 2012
Record date in respect of the cash Friday, Friday, Friday,
dividend/capitalisation shares 14 September 2012 7 September 2012 7 September 2012
Payment date Monday, Monday, Monday,
17 September 2012 10 September 2012 10 September 2012
All times provided in this announcement are South African local times. The above dates and times are subject to change. Any
changes will be released on SENS and published in the South African and Namibian press.
Tax implications
The cash dividend received under the ordinary shares and the preference shares, or the election to receive the capitalisation
shares in lieu of the cash dividend under the ordinary shares, are likely to have tax implications for both resident and non-resident
ordinary and preference shareholders. Ordinary shareholders are therefore encouraged to consult their professional tax advisers
should they be in any doubt as to the appropriate action to take with respect to the election.
In terms of the Income Tax Act 58 of 1962 ("Income Tax Act"), the cash dividend will, unless exempt, be subject to Dividend
Withholding Tax ("DT") that was introduced with effect from 1 April 2012. South African resident ordinary and preference
shareholders that are liable for DT, will be subject to DT at a rate of 15% of the cash dividend, and this amount will be withheld
from the cash dividend with the result that they will receive a net amount of 180,20 cents per ordinary share, 2,7625 cents
per first preference share and 345,55 cents per second preference share. Non-resident ordinary and preference shareholders
may be subject to DT at a rate of less than 15% depending on their country of residence and the applicability of any Double Tax
Treaty between South Africa and their country of residence. The capitalisation issue is not subject to DT in terms of the Income
Tax Act, but the subsequent disposal of shares obtained as a result of the capitalisation issue is likely to have Income Tax or
Capital Gains Tax ("CGT") implications. Where any future disposals of shares obtained as a result of the capitalisation issue fall
within the CGT regime, the base cost of such shares will be regarded as nil in terms of the Income Tax Act (or the value at which
such shares will be included in the determination of the weighted average base cost method would be zero).
The issued share capital of the company, as at declaration date, is as follows:
1 592 617 674 ordinary shares;
8 000 000 first preference shares; and
52 982 248 second preference shares.
The company's tax reference number is 9800/211/71/7.
On behalf of the board
Loren Wulfsohn
Group secretary
Accounting policies
Basis of preparation
These results are prepared in accordance with the recognition and measurement criteria of IFRS, its interpretations adopted
by the International Accounting Standards Board (IASB), the presentation and the disclosure requirements of IAS 34 Interim
Financial Reporting, the AC 500 standards as issued by the Accounting Practices Board or its successor, the Listings Requirements
of the JSE and the South African Companies Act 71 of 2008, as amended.
The consolidated interim financial results are prepared in accordance with the going concern principle under the historical cost
basis as modified by the fair value accounting of certain assets and liabilities where required or permitted by IFRS.
The consolidated interim financial results are presented in South African rand. All amounts are stated in millions of rand (Rm),
unless indicated otherwise.
Changes in accounting policies
The accounting policies are consistent with those adopted in the previous year except as noted below and are in terms of IFRS.
Adoption of new standards and interpretations effective for the current financial year
The group adopted the following IFRS prospectively as of 1 January 2012 with no impact on the group's accounting policies or
results and with no restatement of the prior period results:
IFRS 1 First-time Adoption of International Financial Reporting Standards (revised 2010); and
IFRS 7 Financial Instruments: Disclosures Transfers of Financial Assets (revised 2010).
Early adoption of amended standards and interpretations
The group has early adopted the following amended IFRS as of 1 January 2012 with no material impact on the group's accounting
policies or results and with no restatement of the prior period results:
IAS 1 Presentation of Financial Statements (2011 Improvements to IFRS);
IAS 16 Property, Plant and Equipment (2011 Improvements to IFRS);
IAS 32 Financial Instruments: Presentation (2011 Improvements to IFRS);
IAS 34 Interim Financial Reporting (2011 Improvements to IFRS); and
IFRS 1 First-time Adoption of International Financial Reporting Standards (2011 Improvements to IFRS).
Restatements
The comparative statement of financial position at 30 June 2011 has been adjusted to reflect the presentation consequences of
the restatement below, with no impact on reserves.
Commodity transactions
Following a review of the group's commodity transactions in terms of IFRS and group accounting policies, certain commodity
transactions that had previously been classified as deposits were reclassified to trading liabilities in 2009. The subsequent settlement
of those trading liabilities reduced pledged assets, trading assets and deposits in June 2011. The group believes that this restatement
better reflects the nature of the underlying transactions. The restatement had no impact on reserves or the income statement.
Retirement of directors and group secretary
Sir Paul Judge and Sam Jonah KBE have retired from office by rotation at the company's annual general meeting held on 31 May 2012.
Further to the announcement of 7 February 2012, shareholders are advised that the group secretary, Loren Wulfsohn, will now be
resigning with effect from 31 October 2012 and not 30 September 2012.
Interim unaudited results in accordance with IFRS
The Standard Bank Group's consolidated interim financial results for the six months ended 30 June 2012 have not been audited or independently
reviewed by the group's external auditors. The preparation of the group's consolidated interim financial results was supervised by the group
financial director, Simon Ridley, BCom (Natal), CA(SA), AMP (Oxford). These results were made publicly available on 16 August 2012.
Consolidated income statement
for the six months ended 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Income from banking activities 15 32 191 27 964 58 552
Net interest income 18 15 688 13 316 28 827
Non-interest revenue 13 16 503 14 648 29 725
Income from investment management and life insurance activities 57 31 261 19 923 48 835
Total income 33 63 452 47 887 107 387
Credit impairment charges 35 3 945 2 914 6 436
Benefits due to policyholders 77 22 646 12 810 33 799
Income after credit impairment charges and policyholders'
benefits 15 36 861 32 163 67 152
Operating expenses in banking activities 17 19 175 16 332 34 725
Operating expenses in investment management and life insurance
activities 19 5 723 4 825 10 410
Net income before goodwill impairment 9 11 963 11 006 22 017
Goodwill impairment 61
Net income before associates and joint ventures 9 11 963 11 006 21 956
Share of profit from associates and joint ventures 44 166 115 284
Net income before indirect taxation 9 12 129 11 121 22 240
Indirect taxation 31 821 627 1 384
Profit before direct taxation 8 11 308 10 494 20 856
Direct taxation 9 3 190 2 926 5 713
Profit for the period from continuing operations 7 8 118 7 568 15 143
Profit for the period from discontinued operations1 69 431 255 641
Profit for the period 9 8 549 7 823 15 784
Attributable to non-controlling interests 14 1 215 1 064 2 213
Attributable to preference shareholders (6) 168 179 345
Attributable to ordinary shareholders 9 7 166 6 580 13 226
Basic earnings per share (cents) 8 472,3 436,2 875,7
continuing operations 6 451,0 423,6 843,9
discontinued operations 69 21,3 12,6 31,8
Diluted earnings per share (cents) 8 457,0 422,4 849,2
continuing operations 6 436,4 410,2 818,3
discontinued operations 69 20,6 12,2 30,9
1 The income and expenses relating to Standard Bank Argentina, which qualifies as a discontinued operation, have been presented as a single
amount relating to its after tax profit for 1H12, 1H11 and FY11.
Headline earnings
for the six months ended 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Profit for the period from continuing operations 7 6 843 6 389 12 745
Headline adjustable items added/(reversed) 56 (9) 231
Goodwill impairment IAS 36 61
Loss on deemed disposal of associate IFRS 3 22 22
Loss on net investment hedge reclassified on disposal
of associate IAS 39 130
Realised foreign currency translation reserve on foreign
operations IAS 21 (117)
Profit on sale of property and equipment IAS 16 (16) (25) (62)
Impairment of property and equipment IAS 36 29
Impairment of non-current assets held for sale IFRS 5 37
Impairment of intangible assets IAS 36 109
Realised losses/(gains) on available-for-sale assets IAS 39 59 (6) 35
Taxation on headline earnings adjustable items (15) 10 (33)
Non-controlling interests' share of headline earnings
adjustable items (14) 3
Standard Bank Group headline earnings from continuing
operations 7 6 870 6 393 12 943
Profit for the period from discontinued
operations 69 323 191 481
Headline adjustable items (reversed)/added (19) (47) (49)
Loss/(profit) on sale of property and equipment IAS 16 7 1 (1)
Realised gains on available-for-sale assets IAS 39 (26) (48) (48)
Taxation on headline earnings adjustable items 9 17 17
Non-controlling interests' share of headline earnings
adjustable items 2 8 8
Standard Bank Group headline earnings from
discontinued operations 86 315 169 457
Standard Bank Group headline earnings 9 7 185 6 562 13 400
Consolidated statement of financial position
as at 30 June 2012
1H12 1H111 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Assets
Cash and balances with central banks 5 32 413 30 816 31 907
Financial investments, trading and pledged assets 8 424 166 391 477 385 881
Non-current assets held for sale2 >100 33 296 2 553 34 085
Loans and advances 10 814 292 741 071 801 308
Derivative and other assets 24 171 768 138 196 174 569
Interest in associates and joint ventures (16) 14 991 17 871 13 935
Investment property 4 23 032 22 095 23 470
Goodwill and other intangible assets 20 13 606 11 346 12 754
Property and equipment 0 14 796 14 793 14 920
Total assets 13 1 542 360 1 370 218 1 492 829
Equity and liabilities
Equity 12 119 916 107 133 117 533
Equity attributable to ordinary shareholders 12 101 268 90 531 99 042
Preference share capital and premium 5 503 5 503 5 503
Non-controlling interest 18 13 145 11 099 12 988
Liabilities 13 1 422 444 1 263 085 1 375 296
Deposit and current accounts 8 906 481 842 304 876 777
Derivative, trading and other liabilities 22 241 544 197 564 237 261
Non-current liabilities held for sale2 100 28 808 27 939
Policyholders' liabilities 9 217 252 199 744 208 565
Subordinated debt3 21 28 359 23 473 24 754
Total equity and liabilities 13 1 542 360 1 370 218 1 492 829
1 Restated.
2 Includes the assets and liabilities of Standard Bank Argentina and Standard Ünlü as at 1H12. Standard Bank Argentina and Troika, an associate of
the group that has subsequently been disposed of, were classified as held for sale as at FY11.
3 Includes the issue of SBK15 and SBK16 during 1H12 with notional amounts of R1,2 billion and R2,0 billion respectively.
Contingent liabilities and capital commitments
as at 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Letters of credit and bankers' acceptances 29 16 556 12 787 15 345
Guarantees 53 45 973 30 119 36 307
Contingent liabilities 46 62 529 42 906 51 652
Contracted capital expenditure (9) 2 779 3 044 2 846
Capital expenditure authorised but not yet contracted (16) 6 527 7 733 7 901
Capital commitments (14) 9 306 10 777 10 747
Private equity associates and joint ventures
as at 30 June 2012
1H12 1H111 FY111
Change Unaudited Unaudited Audited
% Rm Rm Rm
Cost (22) 126 161 131
Carrying value 24 491 395 431
Fair value 1 436 430 410
Loans to associates and joint ventures (93) 18 251 278
Equity accounted income 100 35 84
1 Comparative financial information restated to exclude banking activities ring-fenced associates that have been consolidated at a group level.
Consolidated statement of other comprehensive income
for the six months ended 30 June 2012
1H12 1H11 FY11
Non-
controlling
interests
Ordinary and
shareholders' preference Total Total Total
equity shareholders equity equity equity
Unaudited Unaudited Unaudited Unaudited Audited
Rm Rm Rm Rm Rm
Profit for the period 7 166 1 383 8 549 7 823 15 784
Other comprehensive income
after tax for the period
continuing operations (429) (37) (466) 227 4 856
Items that may be reclassified
subsequently to profit or loss:
Exchange rate differences on
translating equity investment
in foreign operations (330) (96) (426) 386 5 531
Foreign currency hedge of net
investment 73 73 19 (279)
Cash flow hedges (271) 3 (268) 154 61
Available-for-sale financial assets 104 63 167 (244) (538)
Items that may not be reclassified
to profit or loss:
Revaluation and other (gains)/losses (5) (7) (12) (88) 81
Other comprehensive income
after tax for the period
discontinued operations (115) (37) (152) (65) 162
Total comprehensive income
for the period 6 622 1 309 7 931 7 985 20 802
Attributable to non-controlling
interests 1 141 1 141 842 3 068
Attributable to equity holders
of the parent 6 622 168 6 790 7 143 17 734
Attributable to preference
shareholders 168 168 179 345
Attributable to ordinary
shareholders 6 622 6 622 6 964 17 389
Consolidated statement of changes in equity
for the six months ended 30 June 2012
Ordinary Preference Non-
shareholders'share capital controlling Total
equity and premium interest equity
Rm Rm Rm Rm
Balance at 1 January 2011 87 073 5 503 10 622 103 198
Total comprehensive income for the period 17 389 345 3 068 20 802
Transactions with owners, recorded directly in equity (5 420) (345) (702) (6 467)
Equity-settled share-based payment transactions 336 30 366
Deferred tax on share-based payment transactions (83) (83)
Transactions with non-controlling shareholders (89) (98) (187)
Issue of share capital and share premium and
capitalisation of reserves 142 142
Net decrease in treasury shares 309 237 546
Net dividends paid (6 035) (345) (871) (7 251)
Balance at 31 December 2011 99 042 5 503 12 988 117 533
Balance at 1 January 2012 99 042 5 503 12 988 117 533
Total comprehensive income for the period 6 622 168 1 141 7 931
Transactions with owners, recorded directly in equity (4 396) (168) (984) (5 548)
Equity-settled share-based payment transactions 65 19 84
Deferred tax on share-based payment transactions 41 41
Transactions with non-controlling shareholders (239) (227) (466)
Issue of share capital and share premium and
capitalisation of reserves 105 105
Net decrease/(increase) in treasury shares 96 (16) 80
Net dividends paid (4 464) (168) (434) (5 066)
Unincorporated property partnerships capital reductions
and distributions (91) (91)
Disposal of property partnership (235) (235)
Balance at 30 June 2012 101 268 5 503 13 145 119 916
Consolidated cash flow information
for the six months ended 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Net cash flows from operating activities (61) 4 268 10 905 24 605
Net cash flows used in investing activities 95 (197) (4 128) (10 138)
Net cash flows used in financing activities 48 (2 370) (4 555) (8 388)
Effect of exchange rate changes on cash and cash equivalents (>100) (435) (81) 2 002
Net increase in cash and cash equivalents (41) 1 266 2 141 8 081
Cash and cash equivalents at beginning of the period 28 36 756 28 675 28 675
Cash and cash equivalents at the end of the period 23 38 022 30 816 36 756
Comprising:
Cash and balances with central banks 5 32 413 30 816 31 907
Cash and balances with central banks held for sale 100 5 609 4 849
Cash and cash equivalents at the end of the period 23 38 022 30 816 36 756
Segment report
for the six months ended 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Revenue contribution by business unit
Personal & Business Banking 16 20 000 17 169 36 940
Corporate & Investment Banking 14 12 589 11 001 22 557
Central and other (>100) (291) (110) (746)
Banking activities 15 32 298 28 060 58 751
Liberty 58 31 445 19 869 48 806
Standard Bank Group normalised 33 63 743 47 929 107 557
Adjustments for IFRS (>100) (291) (42) (170)
Standard Bank Group IFRS 33 63 452 47 887 107 387
Profit or loss attributable to ordinary shareholders
Personal & Business Banking 33 3 200 2 413 5 827
Corporate & Investment Banking (8) 2 832 3 069 5 348
Central and other (21) 429 540 822
Banking activities 7 6 461 6 022 11 997
Liberty 43 904 633 1 428
Standard Bank Group normalised 11 7 365 6 655 13 425
Adjustments for IFRS (>100) (199) (75) (199)
Standard Bank Group IFRS 9 7 166 6 580 13 226
Financial statistics
for the six months ended 30 June 2012
1H12 1H11 FY11
Change Unaudited Unaudited Audited
% Rm Rm Rm
Number of ordinary shares in issue (000's)
end of period 1 1 518 937 1 510 480 1 514 097
weighted average 1 1 517 158 1 508 423 1 510 352
diluted weighted average 1 1 568 121 1 557 675 1 557 415
Cents per ordinary share
Headline earnings 9 473,6 435,0 887,2
continuing operations 7 452,8 423,8 857,0
discontinued operations 86 20,8 11,2 30,2
Diluted headline earnings 9 458,2 421,3 860,4
continuing operations 7 438,1 410,4 831,1
discontinued operations 84 20,1 10,9 29,3
Dividend 50 212,0 141,0 425,0
Net asset value 11 6 667 5 994 6 541
Financial performance (%)
ROE 14,6 14,9 14,6
Net interest margin on continuing operations 2,90 2,75 2,91
Credit loss ratio on continuing operations 0,98 0,81 0,87
Cost-to-income ratio on continuing operations 59,3 58,2 59,0
Capital adequacy (%)
Capital ratios (unaudited)
tier I capital 11,0 12,4 12,0
total capital 13,5 14,8 14,3
Administrative information
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
Website: www.standardbank.com
Registered office
9th Floor, Standard Bank Centre
5 Simmonds Street, Johannesburg 2001.
PO Box 7725, Johannesburg 2000.
Directors
TMF Phaswana (Chairman), Hongli Zhang** (Deputy chairman),
SJ Macozoma (Deputy chairman), JH Maree* (Chief executive),
DDB Band, RMW Dunne#, TS Gcabashe, KP Kalyan,
Yagan Liu**, Adv KD Moroka, AC Nissen, MC Ramaphosa,
SP Ridley*, MJD Ruck, Lord Smith of Kelvin, Kt#, EM Woods
*Executive director **Chinese #British
Group secretary
L Wulfsohn
Share and bond codes
JSE share code: SBK ZAE000109815
SBKP ZAE000038881
(first preference shares)
SBPP ZAE000056339
(second preference shares)
NSX share code: SNB ZAE000109815
JSE bond codes: SBS, SBK, SBN, SBR, SBSI, ETN series, SSN
series and CLN series (all JSE listed bonds
issued in terms of The Standard Bank of South
Africa Limited's Domestic Medium Term Note
Programme and Structured Note Programme)
Share transfer secretaries in South Africa
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Share transfer secretaries in Namibia
Transfer Secretaries Proprietary Limited
Shop 8, Kaiserkrone Centre, Post Street Mall, Windhoek
PO Box 2401, Windhoek
JSE independent sponsor
Deutsche Securities (SA) Proprietary Limited
Namibian sponsor
Simonis Storm Securities Proprietary Limited
JSE joint sponsor
Standard Bank
www.standardbank.com
Date: 16/08/2012 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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