Wrap Text
Standard Bank Group provisional results and dividend announcement for the year ended 31 December 2013
Standard Bank Group Limited
Registration Number 1969/017128/06
Incorporated in the Republic of South Africa
Website: www.standardbank.com
Share and bond codes
JSE share code: SBK
ISIN: ZAE000109815
NSX share code: SNB
NSX share code: SNB ZAE000109815
SBKP ZAE000038881 (First preference shares)
SBPP ZAE000056339 (Second preference shares)
JSE bond codes: SBS, SBK, SBN, SBR, 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 Credit Linked Note Programme)
Standard Bank Group provisional results and dividend announcement
for the year ended 31 December 2013
The Standard Bank Group Limited's (group)
summary consolidated financial statements (results)
are prepared in accordance with the requirements
of the JSE Limited Listings Requirements for
provisional reports, the requirements of the
Companies Act applicable to summary financial
statements, the framework, measurement and
recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting
Practices Committee and the requirements of
IAS 34 Interim Financial Reporting. The accounting
policies applied in the preparation of the
consolidated financial statements from which the
results have been derived are in terms of IFRS and
are consistent with the accounting policies applied
in the preparation of the group's previous
consolidated annual financial statements with the
exception of the changes as noted on pages 38 to 39.
Whilst this report is itself not audited, the
consolidated annual financial statements, from
which the summary consolidated annual financial
statements on pages 14 to 44 were derived, were
audited by KPMG Inc. and PricewaterhouseCoopers
Inc, who expressed an unmodified opinion thereon.
That audit report does not necessarily report on all
of the information contained in this report.
Shareholders are therefore advised that, in order to
obtain a full understanding of the nature of the
auditor's engagement and, more specifically, the
nature of the information that has been audited,
they should obtain a copy of the auditor's report
together with the accompanying audited
consolidated annual financial statements, both of
which are available for inspection at the company's
registered office.
The directors of Standard Bank Group Limited take
full responsibility for the preparation of this report
and that the selected financial information has been
correctly extracted from the underlying
consolidated annual financial statements.
The results discussed in this announcement are
presented on a normalised basis, unless indicated as
being on an IFRS basis. For further explanation,
refer to page 10.
This report contains pro forma constant currency
information. For further details refer to page 13.
Headline earnings
R17 194 million, up 15%
2012
R14 918 million
Headline earnings per share
1 065 cents
2012: 935 cents
Return on equity (ROE)
14.1%
2012: 14.0%
Tier I capital adequacy ratio
13.2%
2012: 11.2%
Net asset value per share
8 127 cents
2012: 7 136 cents
Cost-to-income ratio
58.5%
2012: 58.9%
Credit loss ratio
1.04%
2012: 1.08%
The preparation of the group's results was supervised by the group financial director, Simon Ridley, BCom (Natal),
CA(SA), AMP (Oxford). These results were made publicly available on 6 March 2014.
Investors are referred to www.standardbank.com/reporting where a detailed analysis of the group's financial
results, including an income statement and a statement of financial position for The Standard Bank of South Africa
Limited and Standard Bank Plc, can be found.
Overview
Overview of financial results
Group results
The group has produced a satisfactory performance
in 2013, increasing headline earnings per share by
14% and net asset value per share by 14%. Group
return on equity (ROE) has increased to 14.1%
from 14.0% in 2012. Total income and expenses
grew by 10% while credit impairments rose just
5%, reflecting a more normalised level of corporate
credit losses. A final dividend of 300 cents per
share has been declared bringing the total dividend
for the year to 533 cents per share, a 17% increase
on 2012.
Underlying momentum in our business units was
maintained during the year with particularly
pleasing growth evident in our subsidiaries in the
rest of Africa, where 44% growth in aggregate
headline earnings was achieved. We made further
substantial progress in group restructures and
implementing our Africa-focused strategy, and our
positioning in selected countries in Africa reflects
our confidence in its economic prospects.
We continue to use our South African scale, as well
as our access to pools of capital around the world,
to provide products and services that deliver value
to our clients across the continent.
Operating environment
Global economic activity and trade increased
throughout the course of 2013, particularly in the
second half of the year, but risks remain. While the
recovery in the United States (US) and Japan
appears to be gaining traction, economic conditions
in the Eurozone remain fragile and doubts about
the sustainability of China's economic expansion
persist. The volatile performance of currencies,
bonds and equities in emerging markets, particularly
those countries with large current account deficits,
reflect international concern over the impact of the
removal of significant monetary support by the US
Federal Reserve.
In South Africa, households continued to struggle
despite the accommodative interest rate
environment. Growth in household consumption
expenditure, which accounts for approximately
two-thirds of total GDP, moderated further in 2013.
South African consumer confidence remains low and
disposable incomes have stagnated on the back of
rising inflation and lower wage payments, partly
because of strike activity in 2013. However, in sync
with a slower pace of spending, personal debt levels
declined slightly and household net wealth
improved, but total fixed investment growth
remained sluggish in 2013.
In spite of the exposure to faltering commodity
prices, expansion in sub-Saharan African economies
has remained resilient and has not been confined to
resource-rich countries, reflecting the positive
impact of better macroeconomic policies and
institutions. Growth of around 5% for the region is
expected by the International Monetary Fund (IMF)
for 2013.
Revenue
Total revenue increased by 10% over the year with
net interest income (NII) growing strongly by 15%
and non-interest revenue (NIR) up by 6%. The
significant depreciation of the rand across most
currencies throughout the course of 2013 assisted
revenue growth and, on a constant currency basis,
total revenue was 7% higher than in 2012.
The NII growth of 15% was achieved in spite of
moderate customer loan growth of 9% within
banking activities. Continued repricing of the
residential mortgage portfolio in South Africa and
the product mix benefit resulting from growth in
higher-margin unsecured lending and rest of Africa
portfolios resulted in further margin expansion.
Net fee and commission growth of 9% over the
year was driven mostly by a good performance
from Personal & Business Banking (PBB) which
achieved 11% growth despite no price increases
on personal transactional accounts during the
year. PBB's strategy to protect and grow its
customer base, including the launch of its
customer reward programme, UCount, during the
year was rewarded with significantly higher
transaction activity, mostly in electronic banking
channels. Further good growth was experienced
in bancassurance income which supported PBB's
fee and commission levels. Corporate &
Investment Banking (CIB) fee and commission
levels were affected by a decline in
knowledge-based fee and commission levels but
good growth was experienced in transaction-
based activity across the African continent.
Trading revenue grew by 15% due mainly to a
strong performance in the rest of Africa and from
commodity trading, while equity trading benefited
from the release of a provision made in 2012
relating to a claim against the group that was
settled in our favour during the course of the year.
Difficult and volatile conditions persisted in fixed
income and currency trading during the year in
South Africa and outside Africa, due in part to
uncertainty over the withdrawal of liquidity
support to financial markets by the US
Federal Reserve.
Credit impairments
Credit impairments increased by 5% over the year
and the credit loss ratio decreased to 1.04% from
1.08% in 2012. Stabilisation in the inclusive
personal term loan portfolio in South Africa in the
second half of the year was evident due to reduced
risk appetite in this section of the market and
careful management of non-performing accounts.
PBB's credit loss ratio of 1.47% (2012: 1.39%)
was affected mainly by small and medium enterprise
(SME) lending in the rest of Africa and higher losses
in card products and instalment sale and finance
leases off low bases in 2012. Steady improvement
in the residential property market continued during
the year and non-performing loans along with credit
losses in the mortgage portfolio continued
to decline.
CIB's credit losses declined by R943 million in 2013
and its credit loss ratio declined to a more normalised
0.36% from the high level of 0.63% in 2012, in spite
of a small number of high value credit impairments in
South Africa and the rest of Africa. The
non-recurrence of specific provisioning mainly against
Middle East exposures, as well as a recovery received
in respect of a previously written-off exposure in CIB
outside Africa assisted the improvement.
Operating expenses
Operating expenses increased by 10% in 2013 and
by 4% on a constant currency basis.
Staff costs increased by 11%, and by 7% on a
constant currency basis, while fixed and variable
remuneration increased by 10% and 15%,
respectively. Sharply improved profitability in CIB
and in our African subsidiaries contributed to the
higher variable remuneration increase. Total
headcount within banking activities declined by 1%
due to lower staffing levels in administrative
functions in both South Africa and outside Africa.
This was outweighed by an increase in employee
levels in our African subsidiaries which is consistent
with group strategy. Other operating expenses
increased by 13% and by 6% on a constant
currency basis. The group's cost-to-income ratio
improved to 58.5% from 58.9% in 2012.
Loans and advances
Loans and advances to customers increased by 9%
in 2013. PBB growth of 8% captures the lower
growth in residential mortgages of 3% and higher
growth in personal unsecured lending of 22%. CIB
loans and advances growth of 11% is boosted by
rand weakness and grew by 7% on a constant
currency basis in line with its strategy to contain
growth in risk-weighted assets.
Capital, funding and liquidity
Throughout the course of 2013, the group made
considerable progress in building its common equity
tier I and tier I capital levels and is well placed to
meet the rising capital adequacy ratios required by
the South African Reserve Bank (SARB) by 2016.
The group's 31 December 2013 Basel III tier I ratio
increased to 13.2% from the pro forma Basel III
ratio of 11.2% at 31 December 2012. The effect
of the weaker rand on capital invested in
subsidiaries outside of South Africa boosted
shareholders' equity by approximately R6,3 billion
and increased qualifying common equity tier I
capital by 8% over the year.
The group's liquidity position remains strong with
appropriate liquidity buffers of R154,2 billion in
excess of regulatory requirements at 31 December
2013. These significant levels of liquidity are
appropriately conservative given the group's
liquidity stress-testing philosophy and in view of
potential change in regulatory requirements.
The group's long-term funding ratio (which
measures funding-related liabilities with a remaining
maturity of six months or more as a percentage of
total funding-related liabilities) declined to 19.4%
during 2013. This is in alignment with reduced
long-dated asset positions, particularly in CIB, and
adopting a more active term asset distribution
strategy. This strategy has been adopted to better
utilise scarce and expensive capital and term
funding resources.
Deposits increased by 8% over the year with a low
increase of 4% in more expensive wholesale
deposits which reflected the lower level of term
deposits from asset managers and companies,
mainly in South Africa. Good growth in call deposits,
reflecting client preference for liquidity, only
partially made up this term deposit decline. PBB
continued to grow its retail priced deposit base
strongly, increasing this source of funding by 20%
over the year mainly in current accounts and call
deposits across all geographies in which it operates.
The Basel Committee on Banking Supervision
(BCBS) has proposed the two liquidity ratios,
namely the liquidity coverage ratio (LCR) and net
stable funding ratio (NSFR), as part of the Basel III
requirements. The SARB confirmed that the LCR will
be applied to the South African banking industry
from 2015 and that a committed liquidity facility
will also be made available, at a fee, to assist banks
in meeting this ratio. The proposals for the NSFR,
which will be implemented in 2018, have recently
been moderated. Notwithstanding the changes,
further term funding will have to be raised by all
South African banks to fully meet the proposed
Basel III liquidity regime in South Africa and certain
other emerging markets.
Overview of business unit performance
Headline earnings by business unit
Change 2013 2012
% Rm Rm
Personal & Business Banking 14 8 358 7 343
Corporate & Investment Banking 49 6 591 4 419
Central and other (93) 34 493
Banking activities excluding earnings from Argentina 22 14 983 12 255
Discontinued operation - Argentina (100) 673
Banking activities 16 14 983 12 928
Liberty 11 2 211 1 990
Standard Bank Group 15 17 194 14 918
Personal & Business Banking
PBB reported headline earnings of R8 358 million
in 2013, an increase of 14% which was principally
due to 18% growth in NII after accounting for
credit impairments. PBB South Africa increased
earnings by 15% to R8 538 million and PBB rest of
Africa reported a loss of R361 million. PBB's ROE
declined to 18.5% from 19.4% in 2012.
Transactional products grew total income by 8% in
spite of the short-term effect of the
implementation of various pricing-based measures
to retain and attract customers in both 2012 and
2013. Good growth was achieved in transactional
and saving products, and increased term deposits in
the rest of Africa supported net interest income
that was affected by lower endowment income in
the rest of Africa. Headline earnings for
transactional products fell marginally to R2 727
million in 2013 (2012: R2 789 million) due to
higher operating costs and the lower endowment
income.
Mortgages delivered a strong performance during
2013, lifting headline earnings to R1 516 million
from R966 million in 2012. In South Africa higher
pricing on the portfolio that more appropriately
reflected underlying risk helped income increase by
21%, in spite of a low 3% increase in net mortgage
balances. Credit impairments and non-performing
loans both declined due to enhanced credit
collection activities and a steady recovery in the
South African housing market.
Within instalment sale and finance leases, headline
earnings fell to R181 million from R229 million in
2012 in spite of 15% growth in total income during
the year that was helped by good loan growth in
certain African countries. Deterioration in the credit
quality within personal markets led to an increase in
both non-performing loans and credit impairments
off a relatively low base in 2012.
Card products increased headline earnings by 11%
to R1 334 million, in spite of a substantial increase
in credit impairment charges which had been
expected due to the low level of impairments in
2012. Income growth of 13% was driven by
increased transaction volumes and the full-year
impact of an increased number of high-value
corporate merchants following account initiatives
and upgrades. The credit loss ratio of 3.26% for
2013 (2012: 1.73%) reflects a more normalised
level of impairments given the risk profile of
business generated.
Strong income growth of 24% in lending products
reflected the growth primarily in overdraft and
revolving credit plan products following a focused
approach on limit changes and higher limit
utilisation in South Africa. Higher impairments were
also recorded due to the loan book growth, but the
credit loss ratio declined slightly in 2013. Headline
earnings increased by 25% in 2013 to
R785 million.
In the bancassurance and wealth product set,
increased premiums following growth in the
short-term insurance policy base as well as
continued growth in the policy base in core banking
products and in the joint venture with Liberty
helped total income to grow 20%. Insurance profits
improvement in certain African countries, moderate
growth in expenses, and increased profitability in
Standard Bank Offshore Group supported the 19%
growth in headline earnings to R1 815 million.
Corporate & Investment Banking
CIB recorded headline earnings of R6 591 million,
representing a 49% increase on the prior year.
Moderate revenue growth of 9% (2% on a constant
currency basis) masks the continued strong growth
in the CIB rest of Africa franchise which now
accounts for 39% of total revenues generated.
Credit impairments were substantially lower than
2012, as expected. Total costs were up 4%, and
down by 6% on a constant currency basis, due to
restructuring initiatives undertaken in our outside
Africa business in 2012. CIB's ROE improved to
14.3% from 9.6% in 2012 following improved
earnings and intensive focus on capital utilisation in
the year.
Our transactional products and services (TPS)
business recorded a strong revenue performance in
2013, growing revenues by 19%, and now
contributing 31% of CIB's overall revenues.
This was primarily driven by higher net interest
income in spite of a negative endowment impact
notably in East Africa and certain other African
countries where interest rates decreased
significantly in 2013. All product areas performed
well with cash management, trade finance and
investor services growing revenues strongly. Rest of
Africa now accounts for 50% of the overall TPS
revenue generated.
Our global markets business increased revenues by
16% on 2012. This growth was as a result of our
strategic focus on rest of Africa where revenues
increased by over 50% supported by a positive
trading environment. It was a challenging year for
global markets in South Africa, where increased
regulation and competition compressed trading
margins. Outside Africa also experienced difficult
trading due to uncertainty relating to the reduction
in the US Federal Reserve's quantitative easing
program. However, total headline earnings
benefited from the well contained cost growth,
following the restructuring initiatives undertaken in
our outside Africa business in 2012, and grew
strongly from R1 225 million to R2 403 million.
Investment banking reported revenues of
R6,1 billion, 7% below 2012 as a result of further
progress made in its strategy to focus on Africa and
its core sectors, while at the same time significantly
reducing its portfolio outside Africa. The reduction
in revenue lost was largely offset by strong revenue
growth of 29% in the rest of Africa portfolio.
The level of credit impairments improved off the
high level of R1,7 billion in 2012 to R919 million
consisting of a small number of large provisions.
Headline earnings declined by 6% .
Real estate and principal investment management
revenues reduced by 13% mainly due to the
non-recurrence of gains on principal investments
recorded in 2012 and lower property revenue, but
headline earnings rose 24% due to tax credits
received in the current year.
Central and other
Headline earnings declined to R34 million from
R1 166 million in the prior year which had included
the contribution of R673 million from the group's
75% investment in Standard Bank Argentina, the
majority of which was sold in the last quarter of
2012. The attributable income from the 20%
holding that the group retains in Argentina
amounted to R249 million in the current period.
The non-recurrence of a prior year profit release of
the cash flow hedge reserve and more general
overhead costs held centrally contributed to the
headline earnings reduction.
Liberty
The financial results reported are the consolidated
results of our 54.1% investment in Liberty.
Bancassurance results are included in PBB. Liberty's
headline earnings for the year increased by 11% to
R4 076 million of which R2 211 million was
attributable to the group.
Liberty's return on equity at 24.7% and return on
group equity value of 16.1% are highly satisfactory
and are well ahead of the group's medium term
target levels. Liberty continues to produce positive
experience variances in its long-term insurance
business and its balance sheet management
capability successfully managed the volatile interest
rate and currency markets experienced during
2013. This performance has been supported by
innovative new products, solid insurance new
business growth, good investment performance,
growth in assets under management and
demonstrated ability to manage to model.
Long-term indexed insurance sales of
R6 948 million were up 15% on the prior year.
This, combined with improved pricing, produced a
21% improvement in the group embedded value of
long-term insurance new business to R839 million
at an overall margin of 2.2% (2012: 2.0%). This
performance was achieved despite approximately a
R100 million reduction in value due to the increase
in discount rate in line with increased long term
interest rates. The new Evolve and Stable Growth
investment product ranges, launched in 2012, have
been very successful. Group asset management net
cash inflows of R15,7 billion were 10% up on
2012, despite a drawdown of R7 billion of assets
under a government mandate in East Africa.
STANLIB's South African business had a particularly
good year attracting R21,7 billion of net cash
inflows of which R19,4 billion went into higher
margin non-money market retail and institutional
mandates. Assets under management across the
group grew by 16% to R611 billion.
Strategic update
The group's strategy is to build the leading
Africa-focused financial services organisation.
Our intention, therefore, is also to build the leading
wealth management and insurance businesses in
Africa. In line with this, the group has created
executive oversight for the group's wealth,
insurance and non-bank financial services interests
which broaden the group's value propositions.
Demand for non-bank financial services is expected
to grow rapidly on the African continent and, by
more tightly integrating these businesses, we will
be able to improve both our capital and our
cost efficiency.
Additionally, we have entered into an agreement
with the Industrial and Commercial Bank of China
(ICBC) in terms of which ICBC will acquire a
controlling interest in our global markets business
outside Africa, focusing on commodities, fixed
income, currencies, credit and equities products.
We believe the platform that has been developed
over many years has the potential to create
considerably more value through growing its
franchise and generating incremental revenues from
a wider spectrum of opportunities than are
currently available to it given our narrower strategic
focus on Africa.
In partnership with ICBC, we intend to create a new
and larger commodity and financial markets
platform and expand the strategic emphasis for the
global markets business outside Africa to include a
focus on China by becoming part of China's leading
banking group. Shareholders are being requested to
approve the transaction at a general meeting on
28 March 2014, and we are currently working with
the relevant regulatory authorities to obtain their
approval. Completion of the transaction is expected
towards the end of 2014.
Prospects
The global economic outlook appears
somewhat brighter in recent months due to the
strengthening of US growth. However, the
distribution of expected growth is unbalanced with
the Eurozone struggling to lift economic activity.
Robust economic growth of around 6% is
expected generally across sub-Saharan Africa
in 2014, but only a mild improvement to 2.2%
growth is expected for South Africa assuming some
negative impact from higher interest rates and
subdued consumer demand.
We are confident of our positioning across Africa
and of the quality and dedication of our people to
serve and provide value for our clients. The
considerable progress we have made in realigning
our available resources and intensifying our focus
on the expanding markets on the African continent
has delivered an enviable franchise off which the
group is able to drive sustainable growth.
Competition is high in all the markets we serve and
business operating environments remain
challenging. However, the group's capital and
liquidity strength, together with our firm
commitment to our strategy which includes the
building of world-class information systems,
provides substantial opportunity to elevate our ROE
and deliver higher levels of economic value to our
shareholders over the medium term.
Sim Tshabalala
Group chief executive
Ben Kruger
Group chief executive
Fred Phaswana
Chairman
5 March 2014
Declaration of dividends
Shareholders of Standard Bank Group Limited
(the company) are advised of the following dividend
declarations out of income reserves 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 a final
gross cash dividend of 300,00 cents per ordinary
share (the cash dividend) to ordinary shareholders
recorded in the register of the company at the
close of business on Friday, 11 April 2014. The last
day to trade to participate in the dividend is Friday,
4 April 2014. Ordinary shares will commence
trading ex dividend from Monday, 7 April 2014.
No STC credits were utilised as part of the ordinary
dividend declaration.
The salient dates and times for the cash dividend
are set out in the table that follows.
Ordinary share certificates may not be
dematerialised or rematerialised between Monday,
7 April 2014, and Friday, 11 April 2014, both days
inclusive. Ordinary shareholders who hold
dematerialised shares will have their accounts at
their Central Securities Depository Participant
(CSDP) or broker credited or updated on Monday,
14 April 2014.
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 interim
distributions:
- 6.5% first cumulative preference shares
(first preference shares) dividend No. 89 of
3,25 cents (gross) per first preference share,
payable on Monday, 7 April 2014, to holders of
first preference shares recorded in the books
of the company at the close of business on the
record date, Friday, 4 April 2014. The last day
to trade to participate in the dividend is Friday,
28 March 2014. First preference shares will
commence trading ex dividend from Monday,
31 March 2014. No STC credits were utilised
as part of the dividend declaration in respect of
the first preference shares.
- Non-redeemable, non-cumulative,
non-participating preference shares (second
preference shares) dividend No. 19 of
329,94 cents (gross) per second preference
share, payable on Monday, 7 April 2014, to
holders of second preference shares recorded
in the books of the company at the close of
business on the record date, Friday, 4 April
2014. The total STC credits utilised as part of
the declaration amount to R14 990 633 and
consequently the STC credits utilised per share
amount to 28,29369 cents per second
preference share. Second preference
shareholders will, therefore, receive a net
dividend of 284,69305 cents per second
preference share. The last day to trade to
participate in the dividend is Friday,
28 March 2014. Second preference shares will
commence trading ex dividend from Monday,
31 March 2014.
The salient dates and times for the preference
share distributions are set out in the table
that follows.
Preference share certificates (first and second) may
not be dematerialised or rematerialised between
Monday, 31 March 2014 and Friday, 4 April 2014,
both days inclusive. Preference shareholders (first
and second) who hold dematerialised shares will
have their accounts at their CSDP or broker
credited on Monday, 7 April 2014.
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.
The relevant dates for the payment of dividends are as follows:
Non-redeemable,
6.5% non-cumulative
cumulative, non-participating
preference shares preference shares
Ordinary (First (Second
shares preference shares) preference shares)
JSE Limited
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 89 89 18
Gross distribution/dividend per
share (cents) 300,00 3,25 329,94
Last day to trade in order to be Friday, Friday, Friday,
eligible for the cash dividend 4 April 2014 28 March 2014 28 March 2014
Shares trade ex the cash dividend Monday, Monday, Monday,
7 April 2014 31 March 2014 31 March 2014
Record date in respect of the cash Friday, Friday, Friday,
dividend 11 April 2014 4 April 2014 4 April 2014
Dividend cheques posted and
CSDP/broker accounts credited/ Monday, Monday, Monday
updated (payment date) 14 April 2014 7 April 2014 7 April 2014
The above dates 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 is likely to have
tax implications for both resident and non-resident
ordinary and preference shareholders. Such
shareholders are therefore encouraged to consult
their professional tax advisers.
In terms of the Income Tax Act, 58 of 1962, 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 not exempt from 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
255,00 cents per ordinary share, 2,7625 cents per
first preference share and 284,69305 cents per
second preference share (after taking STC credits
into consideration). 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 issued share capital of the company, as at
declaration date, is as follows:
- 1 617 987 124 ordinary shares
- 8 000 000 first preference shares
- 52 982 248 second preference shares
The company's tax reference number is
9800/211/71/7 and registration number is
1969/017128/06.
Normalised results
With effect from 2004, the group's results reported
under IFRS have been normalised to reflect the
group's view of the economics and legal substance
of the following arrangements (normalised results):
- Preference share funding for the group's
Tutuwa transaction is deducted from equity and
reduces the shares in issue in terms of IFRS.
- Group company shares held for the benefit of
Liberty policyholders 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 also enters into transactions on its
own shares to facilitate client trading activities.
As part of its normal trading operations, a
group subsidiary offers to its clients trading
positions over listed shares, including its own
shares. To hedge the risk on these trades, the
group buys (sells short) its own shares in the
market. Although the share exposure on the
group's own shares is deducted/(added) from/
(to) 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.
A common element in these transactions relates to
shares in issue which are deemed by IFRS to be
treasury shares. Consequently, the net value of the
shares is recognised in equity and the number of
shares used for per-share calculation purposes is
materially lower than the economic substance,
resulting in inflated per-share ratios. The deemed
treasury share adjustments reinstate the shares as
issued, recognise the related transaction in the
statement of financial position as an asset or
liability (as appropriate) and recognise changes in
the value of the related transaction (together with
dividend income) within the income statement.
On 8 November 2013 the group announced that it
was in discussions regarding the disposal of a
controlling stake in its global markets business
outside Africa through the sale of a controlling
interest in Standard Bank Plc, the group's London
banking operation (disposal of OA GM). This was
followed by an announcement on 29 January 2014
that transaction agreements had been signed with
ICBC. The transaction is subject to Standard Bank
shareholder approval and various
regulatory approvals.
Whilst IFRS deems OA GM to be a discontinued
operation, OA GM was managed and reported as
part of the group's continuing operations
throughout 2013. Accordingly, the group's
normalised results are reported before recognising
the IFRS discontinued operations' adjustments
relating to OA GM (deemed disposal adjustments)
as more fully set out on page 14.
The normalised results reflect the basis on which
management manages the group and is consistent
with that reported in the group's segmental report.
The normalised adjustments have been made within
Liberty, and central and other.
The result of these normalised adjustments is shown in the table below.
Normalised headline earnings
for the year ended 31 December 2013
Weighted average Headline Growth on
number of shares earnings 2012
'000 Rm %
Disclosed on an IFRS basis 1 566 694 16 986 17
Tutuwa initiative 42 909 188
Group shares held for the benefit
of Liberty policyholders 6 896 56
Share exposures held to facilitate
client trading activities (1 825) (36)
Normalised 1 614 674 17 194 15
Reconciliation of statement of financial position adjustments to
achieve IFRS
Deemed
treasury Deemed
share disposal Total IFRS
adjustments adjustments adjustments
2013 2012 2013 2012 2013 2012
Rm Rm Rm Rm Rm Rm
Assets
Cash and balances with
central banks (14 099) (14 099)
Financial investments,
trading and pledged
assets (1 555) (1 731) (67 915) (69 470) (1 731)
Loans and advances (1 199) (2 721) (58 556) (59 755) (2 721)
Loans and advances to banks (30 655) (30 655)
Loans and advances to
customers (1 199) (2 721) (27 901) (29 100) (2 721)
Derivative and other assets (42 714) (42 714)
Intangible assets (339) (339)
Property and equipment (271) (271)
Non-current assets held
for sale 183 284 183 284
Total assets (2 754) (4 452) (610) (3 364) (4 452)
Equity and liabilities
Equity (2 724) (4 378) (610) (3 334) (4 378)
Equity attributable to
ordinary shareholders (1 929) (3 534) (610) (2 539) (3 534)
Non-controlling interest (795) (844) (795) (844)
Liabilities (30) (74) (30) (74)
Deposit and current accounts (65 043) (65 043)
Deposits from banks (41 756) (41 756)
Deposits from customers (23 287) (23 287)
Derivative, trading and
other liabilities (30) (74) (62 014) (62 044) (74)
Subordinated debt (7 447) (7 447)
Non-current liabilities held
for sale 134 504 134 504
Total equity and liabilities (2 754) (4 452) (610) (3 364) (4 452)
Reconciliation of income statement adjustments to achieve IFRS
Deemed treasury
share Deemed disposal Total IFRS
adjustments adjustments adjustments
2013 2012 2013 2012 2013 2012
Rm Rm Rm Rm Rm Rm
Net interest income (153) (218) 23 (49) (130) (267)
Non-interest revenue 54 25 (2 412) (2 074) (2 358) (2 049)
Net fee and commission revenue 37 375 37 375
Trading revenue 54 25 (2 445) (2 104) (2 391) (2 079)
Other revenue (4) (345) (4) (345)
Income from investment management
and life insurance activities (166) (297) (166) (297)
Total income (265) (490) (2 389) (2 123) (2 654) (2 613)
Specific credit impairment charges (56) (86) (56) (86)
Income after credit impairment charges (265) (490) (2 333) (2 037) (2 598) (2 527)
Revenue sharing agreements with
group companies (142) (115) (142) (115)
Income after revenue sharing
agreements
and policyholders' benefits (265) (490) (2 475) (2 152) (2 740) (2 642)
Operating expenses in banking activities (2 807) (3 605) (2 807) (3 605)
Staff costs (1 673) (1 846) (1 673) (1 846)
Other operating expenses (1 134) (1 320) (1 134) (1 320)
Restructure charge (439) (439)
Net income before indirect taxation (265) (490) 332 1 453 67 963
Indirect taxation (58) (145) (58) (145)
Profit before direct taxation (265) (490) 390 1 598 125 1 108
Direct taxation 16 4 (29) (20) (13) (16)
Profit from continuing operations (281) (494) 419 1 618 138 1 124
Discontinued operations (1 022) (1 618) (1 022) (1 618)
Profit for the year (281) (494) (603) (884) (494)
Attributable to non-controlling interests (74) (135) (74) (135)
Attributable to preference shareholders 1 (5) 1 (5)
Attributable to ordinary shareholders (208) (354) (603) (811) (354)
Headline adjustable items 603 603
Headline earnings (208) (354) (208) (354)
Pro forma constant currency information
The pro forma constant currency information disclosed in these results is the responsibility of the group's
directors. The pro forma constant currency information has been presented to illustrate the impact of
changes in currency rates on the group's results and hence may not fairly present the group's results of
operations. In determining the change in constant currency terms, the comparative financial reporting
period's results have been adjusted for the difference between the current and prior period's average
exchange rates (determined as the average of the daily exchange rates). The measurement has been
performed for each of the group's currencies, materially that of the US dollar, Nigerian naira, Kenyan shilling,
Zambian kwacha and Ugandan shilling. The pro forma constant currency information has been reviewed by
the group's external auditors and their unmodified review report is available for inspection at the company's
registered office.
The following average exchange rates were used in the determination of the pro forma constant currency
information.
Nigerian Kenyan Zambian Ugandan
US dollar naira shilling kwacha shilling
2013 average exchange rate 9,64 0,06 0,11 0,0018 0,0037
2012 average exchange rate 8,21 0,05 0,10 0,0016 0,0033
Provisional results in accordance
with IFRS
Discontinued operation - disposal of
the group's controlling interest in the
global markets business outside
Africa
On 8 November 2013 the group announced that it
was in discussions regarding the disposal of a
controlling stake in its global markets business
outside Africa through the sale of a controlling
interest in SB Plc, the group's London banking
operation (disposal of OA GM). This was followed by
an announcement on 29 January 2014 that
transaction agreements had been signed with the
ICBC. The transaction is subject to Standard Bank
shareholder approval and various regulatory
approvals. Accordingly, the group's IFRS results
have been adjusted as follows:
- Presentation of OA GM's 2013 assets and
liabilities in the statement of financial position
as single line items titled: non-current assets
held for sale and non-current liabilities
held for sale.
- Presentation of OA GM's 2013 and 2012's
results as a single line item in the group's
discontinued operations in the income
statement. In addition, the previously
eliminated intercompany transactions between
the group's continuing and discontinued
operations have been presented separately
within the group's continuing and discontinued
operations as applicable.
- Recognition of an impairment loss, being the
difference between OA GM's fair value less
costs to sell and its recognised carrying value.
This impairment loss has been limited to the
value of OA GM's non-financial assets, being its
property and equipment and intangible assets.
The remaining loss will be recognised in the
income statement at the time at which the
transaction is completed.
Whilst IFRS deems OA GM to be a discontinued
operation, OA GM was managed and reported as
part of the group's continuing operations
throughout 2013. Accordingly the group's
normalised results are reported recognising the
IFRS discontinued operation's adjustments relating
to OA GM. The normalised results reflect the basis
on which management manages the group and is
consistent with that reported in the group's
segmental report. The IFRS adjustments as set out
above have been recognised as part of the IFRS
adjustments to the group's segment report in
arriving at the group's reported IFRS results.
The fair value of OA GM was determined using
valuation techniques that incorporate unobservable
inputs. Accordingly, the non-current assets and
liabilities held for sale have been classified within
level 3 of the fair value hierarchy. However, for
disclosure purposes, the financial assets and
liabilities within the non-current assets and
liabilities held for sale classification that are
measured at fair value have been categorised as
level 1, 2 and 3 as appropriate in the fair value
disclosures of these results.
Financial statistics
for the year ended 31 December 2013
Change
% 2013 2012(1)
Number of ordinary shares in issue (000's)
End of period 3 1 584 449 1 535 917
Weighted average 3 1 566 694 1 521 510
Diluted weighted average 2 1 598 161 1 573 168
Cents per ordinary share
Headline earnings 13 1 084,2 957,2
Continuing operations 9 1 110,9 1 019,3
Discontinued operation (57) (26,7) (62,1)
Diluted headline earnings 14 1 057,1 925,8
Continuing operations 10 1 083,2 985,8
Discontinued operation (57) (26,1) (60,0)
Dividend 17 533,0 455,0
Net asset value 13 8 138 7 232
Financial performance (%)
Return on equity on continuing operations 14.2 14.2
Net interest margin on continuing banking operations 3.67 3.62
Credit loss ratio on continuing banking operations 1.12 1.19
Cost-to-income ratio on continuing banking operations 56.8 55.7
Capital adequacy ratios (%) (unaudited)
Basel III
Tier I capital 13.2 11.2(2)
Total capital 16.2 14.3(2)
(1) Restated. Refer to pages 38 to 44 for further explanation.
(2) Pro forma Basel III.
Condensed consolidated statement of financial position
as at 31 December 2013
Change 2013 2012(1) 2011(1)
% Rm Rm Rm
Assets
Cash and balances with central banks (14) 53 310 61 985 31 907
Financial investments, trading and pledged assets (3) 457 018 473 216 413 433
Non-current assets held for sale(2) >100 183 284 960 34 085
Loans and advances 4 839 620 811 171 801 308
Derivative and other assets (42) 90 635 155 429 175 322
Interest in associates and joint ventures 58 4 796 3 035 1 849
Investment property 13 27 299 24 133 23 470
Goodwill and other intangible assets 23 18 085 14 687 12 754
Property and equipment 7 16 882 15 733 14 920
Total assets 8 1 690 929 1 560 349 1 509 048
Equity and liabilities
Equity 17 152 648 130 889 117 897
Equity attributable to ordinary shareholders 16 128 936 111 085 99 450
Preference share capital and premium 5 503 5 503 5 503
Non-controlling interest 27 18 209 14 301 12 944
Liabilities 8 1 538 281 1 429 460 1 391 151
Deposit and current accounts 1 921 738 910 682 870 613
Derivative, trading and other liabilities (23) 193 579 250 546 259 280
Non-current liabilities held for sale(2) - 134 504 27 939
Policyholders' liabilities 12 263 944 236 684 208 565
Subordinated debt (22) 24 516 31 548 24 754
Total equity and liabilities 8 1 690 929 1 560 349 1 509 048
(1) Restated. Refer to pages 38 to 44 for further explanation.
(2) The intended disposal of OA GM, RCS Investment Holdings Proprietary Limited (RCS) and Standard Bank Argentina (SBA)
resulted in their respective assets and, where applicable, liabilities being classified as held for sale at 31 December 2013,
31 December 2012 and 31 December 2011, respectively. The group's controlling interest in SBA was disposed of during
2012. The group's associate interest in RCS was reclassified out of non-current assets held for sale during 2013.
Condensed consolidated income statement
for the year ended 31 December 2013
Change 2013 2012(1)
% Rm Rm
Continuing operations
Income from banking activities 11 73 406 66 252
Net interest income 15 39 095 33 966
Non-interest revenue 6 34 311 32 286
Income from investment management and life insurance activities 10 85 240 77 580
Total income 10 158 646 143 832
Credit impairment charges 5 9 158 8 714
Benefits due to policyholders 8 63 295 58 739
Income after credit impairment charges and policyholders'
benefits 13 86 193 76 379
Revenue sharing agreements with group companies 23 142 115
Income after revenue sharing agreements with group
companies 13 86 051 76 264
Operating expenses in banking activities 13 42 055 36 902
Staff costs 13 23 087 20 419
Other operating expenses 15 18 968 16 483
Restructure costs 319
Operating expenses in investment management and life
insurance activities 18 14 226 12 080
Net income before goodwill impairment and gains on
disposal of subsidiary 10 29 770 26 963
Goodwill impairment (100) 777
Gain on disposal of subsidiary (66) 64 188
Net income before share of profits from associates and joint
ventures 13 29 834 26 374
Share of profits from associates and joint ventures (2) 685 701
Net income before indirect taxation 13 30 519 27 075
Indirect taxation 18 1 911 1 621
Profit before direct taxation 12 28 608 25 454
Direct taxation 8 7 580 7 002
Profit for the period from continuing operations 14 21 028 18 452
Discontinued operation2 (>100) (1 022) 817
Profit for the year from discontinued operation (1 022) (708)
Profit from disposal of discontinued operation 1 525
Profit for the period 4 20 006 19 269
Attributable to non-controlling interests 20 3 451 2 871
Continuing operations 31 3 451 2 644
Discontinued operations (100) 227
Attributable to preference shareholders (1) 349 352
Attributable to ordinary shareholders 1 16 206 16 046
Basic earnings per share (cents) (2) 1 034,4 1 054,6
Continuing operations 8 1 099,6 1 015,8
Discontinued operations (>100) (65,2) 38,8
Diluted earnings per share (cents) (1) 1 008,6 1 020,0
Continuing operations 9 1 072,2 982,5
Discontinued operations (>100) (63,6) 37,5
(1) Restated. Refer to pages 38 to 44 for further explanation.
(2) The income and expenses relating to the group's investment in Standard Bank Plc's Global Markets business and SBA
have been presented as single amounts relating to their after-tax profits for 2013 and 2012, and 2012, respectively.
Headline earnings
for the year ended 31 December 2013
Change 2013 2012(1)
% Rm Rm
Profit for the period from continuing operations 11 17 228 15 456
Headline adjustable items added 350 21
Goodwill impairment - IAS 36 777
Profit on sale of property and equipment - IAS 16 (4) (31)
Realised foreign currency translation profit on foreign operations
- IAS 21 (16) (119)
Gains on the disposal of businesses and divisions - IAS 27 (91) (188)
Transactions with associates - IAS28/IFRS 3 (217)
Impairment of intangible assets - IAS 36 477 264
Realised gains on available-for-sale assets - IAS 39 (16) (595)
Loss on net investment hedge reclassification on disposal of
associate - IAS 39 130
Taxation on headline earnings adjustable items (88) 13
Non-controlling interests' share of headline earnings
adjustable items (85) 19
Standard Bank Group headline earnings from continuing
operations 12 17 405 15 509
Profit for the period from discontinued operations (>100) (1 022) 590
Headline adjustable items added/(reversed) 603 (1 547)
Loss on sale of property and equipment - IAS 16 1
Realised gains on available-for-sale assets - IAS 39 (23)
Gain on the disposal of discontinued operation - IAS 27 (1 525)
Impairment of non-current assets held for sale - IFRS 5 603
Taxation on headline earnings adjustable items 10
Non-controlling interests' share of headline earnings
adjustable items 2
Standard Bank Group headline earnings from discontinued
operations (56) (419) (945)
Standard Bank Group headline earnings 17 16 986 14 564
(1) Restated. Refer to pages 38 to 44 for further explanation.
Condensed consolidated statement of other comprehensive income
for the year ended 31 December 2013
2013 2012(1)
Non-
controlling
Ordinary interests
share- and
holders' preference Total Total
equity shareholders equity equity
Rm Rm Rm Rm
Profit for the period 16 206 3 800 20 006 19 269
Other comprehensive income after tax
for the period - continuing operations 6 205 1 698 7 903 1 070
Items that may be reclassified
subsequently to profit or loss:
Exchange rate differences on
translating equity investments
in foreign operations 6 276 1 809 8 085 544
Foreign currency hedge of net
investments (176) (176) 181
Cash flow hedges 298 (59) 239 (230)
Available-for-sale financial assets 69 22 91 194
Items that may not be
reclassified to profit or loss:
Defined benefit fund adjustments (202) 16 (186) 383
Other losses (60) (90) (150) (2)
Other comprehensive income after tax
for the period - discontinued operations 615
Total comprehensive income
for the period 22 411 5 498 27 909 20 954
Attributable to non-controlling
interests 5 149 5 149 3 178
Attributable to equity holders
of the parent 22 411 349 22 760 17 776
Attributable to preference
shareholders 349 349 352
Attributable to ordinary
shareholders 22 411 22 411 17 424
(1) Restated. Refer to pages 38 to 44 for further explanation.
Condensed consolidated statement of changes in equity
for the year ended 31 December 2013
Ordinary Preference Non-
shareholders' share capital controlling Total
equity and premium interest equity
Rm Rm Rm Rm
Balance at 1 January 2012 - as previously
reported and audited 99 042 5 503 12 988 117 533
Restatement of opening equity balances 408 (44) 364
Balance at 1 January 2012 - restated1 99 450 5 503 12 944 117 897
Total comprehensive income for the year 17 424 352 3 178 20 954
Transactions with owners, recorded directly
in equity (5 789) (352) (1 405) (7 546)
Equity-settled share-based payment transactions 282 46 328
Deferred tax on share-based payment transactions 69 69
Transactions with non-controlling shareholders (74) (970) (1 044)
Issue of share capital and share premium and
capitalisation of reserves 125 125
Net decrease in treasury shares 271 245 516
Net dividends paid (6 462) (352) (726) (7 540)
Unincorporated property partnerships capital
reductions and distributions (182) (182)
Disposal of property partnership (234) (234)
Balance at 31 December 2012 - restated(1) 111 085 5 503 14 301 130 889
Balance at 1 January 2013 111 085 5 503 14 301 130 889
Total comprehensive income for the year 22 411 349 5 149 27 909
Transactions with owners, recorded directly
in equity (4 560) (349) (1 235) (6 144)
Equity-settled share-based payment transactions 242 38 280
Deferred tax on share-based payment
transactions 76 76
Transactions with non-controlling shareholders (50) 4 (46)
Issue of share capital and share premium and
capitalisation of reserves 165 165
Share buy-back (343) (343)
Net increase in treasury shares 23 36 59
Redemption of preference shares 1 676 1 676
Net dividends paid (6 349) (349) (1 313) (8 011)
Unincorporated property partnerships capital
reductions and distributions (6) (6)
Balance at 31 December 2013 128 936 5 503 18 209 152 648
(1) Restated. Refer to pages 38 to 44 for further explanation.
Consolidated cash flow information
for the year ended 31 December 2013
2013 2012(1)
Rm Rm
Net cash flows from operating activities 24 020 42 970
Net cash flows used in investing activities (17 345) (14 530)
Net cash flows used in financing activities (9 238) (3 820)
Effect of exchange rate changes on cash and cash equivalents 7 987 609
Net increase in cash and cash equivalents 5 424 25 229
Cash and cash equivalents at the beginning of the year 61 985 36 756
Cash and cash equivalents at the end of the year 67 409 61 985
Comprising:
Cash and balances with central banks 53 310 61 985
Cash and balances with central banks held for sale 14 099
Cash and cash equivalents at the end of the year 67 409 61 985
(1) Restated. Refer to pages 38 to 44 for further explanation.
Notes
Segment report
for the year ended 31 December 2013
Change 2013 2012(1)
% Rm Rm
Revenue contribution by business unit
Personal & Business Banking 14 48 596 42 544
Corporate & Investment Banking 9 28 304 25 927
Central and other (>100) (1 006) 236
Banking activities 10 75 894 68 707
Liberty 10 85 406 77 738
Standard Bank Group - normalised 10 161 300 146 445
Adjustments for IFRS (3) (2 654) (2 728)
Standard Bank Group - IFRS 10 158 646 143 717
Profit or loss attributable to ordinary shareholders
Personal & Business Banking 10 8 271 7 515
Corporate & Investment Banking 42 6 524 4 594
Central and other (97) 69 2 262
Banking activities 3 14 864 14 371
Liberty 6 2 153 2 029
Standard Bank Group - normalised 4 17 017 16 400
Adjustments for IFRS >100 (811) (354)
Standard Bank Group - IFRS 1 16 206 16 046
Total assets by business unit
Personal & Business Banking 10 571 583 518 458
Corporate & Investment Banking 6 805 814 760 428
Central and other >100 (18 930) (4 652)
Banking activities 7 1 358 467 1 274 234
Liberty 16 335 826 290 567
Standard Bank Group - normalised 8 1 694 293 1 564 801
Adjustments for IFRS (24) (3 366) (4 452)
Standard Bank Group - IFRS 8 1 690 927 1 560 349
Total liabilities by business unit
Personal & Business Banking 10 522 583 474 684
Corporate & Investment Banking 6 758 083 713 330
Central and other 89 (55 970) (29 572)
Banking activities 6 1 224 696 1 158 442
Liberty 16 313 615 271 092
Standard Bank Group - normalised 8 1 538 311 1 429 534
Adjustments for IFRS (57) (32) (74)
Standard Bank Group - IFRS 8 1 538 279 1 429 460
(1) Refer to pages 38 to 44 for further explanation.
Contingent liabilities and capital commitments
as at 31 December 2013
2013 2012
Rm Rm
Letters of credit and bankers' acceptances 17 303 14 218
Guarantees 50 287 45 247
Contingent liabilities 67 590 59 465
Contracted capital expenditure 1 315 2 153
Capital expenditure authorised but not yet contracted 11 411 8 832
Capital commitments 12 726 10 985
Private equity associates and joint ventures
The following table provides disclosure of those private equity associates and joint ventures as at
31 December 2013 that are equity accounted in terms of IAS 28 Investments in Associates and Joint Ventures
and have been ring-fenced in terms of the requirements of Circular 3/2012 Headline Earnings, issued by the
South African Institute of Chartered Accountants (SAICA) at the request of the Johannesburg Stock Exchange
(JSE). On the disposal of these associates and joint ventures held by the group's private equity division, the gain
or loss on the disposal will be included in headline earnings.
2013 2012(1)
Rm Rm
Cost 150 162
Carrying value 631 543
Fair value 579 454
Attributable income before impairment 92 94
(1) Restated to reflect comparability with the current year.
Equity securities
During the year the group issued 10 281 204 shares (2012: 12 041 298 shares) as a scrip dividend
distribution, allotted 4 304 866 shares (2012: 5 347 398 shares) in terms of the group's share incentive
schemes and repurchased 2 877 768 shares (2012: nil shares). The total equity securities held as treasury
shares at the end of the year was 5 669 530 shares (2012: 6 740 125 shares).
Subordinated debt
During the year ended 31 December 2013, the group issued R1 billion (2012: R11,4 billion) subordinated
debt instruments and redeemed R1,6 billion (2012: R5,3 billion) subordinated debt instruments.
Tutuwa initiative refinancing
The group concluded its Tutuwa initiative in October
2004 when it sold an effective 10% interest in its
South African banking operations to a broad-based
grouping of black-owned entities. The group
subscribed for 8.5% redeemable, cumulative
preference shares that were issued by special
purpose vehicles, including Tutuwa Strategic
Holdings 1 Proprietary Limited (Tutuwa 1) and
Tutuwa Strategic Holdings 2 Proprietary Limited
(Tutuwa 2) that used the funds to acquire shares in
the group. These two vehicles were in turn acquired
by Shanduka Group Proprietary Limited and Safika
Holdings Proprietary Limited, respectively. From an
IFRS perspective, all of the preference shares
subscribed for by the group were accounted for as a
negative empowerment reserve.
During the year, Tutuwa 1 and Tutuwa 2 obtained
third-party financing and repaid in full their
outstanding preference share funding and accrued
dividends thereon of R668 million and R1 007
million respectively, to the group.
In terms of IFRS, the redemption of the preference
share funding resulted in a release of the group's
negative empowerment reserve relating to Tutuwa 1
and Tutuwa 2 and resulted in 35,8 million ordinary
shares being recognised by IFRS as issued shares
during May and June 2013.
Day one profit or loss
The table below sets out the aggregate net day one profits yet to be recognised in profit or loss at the
beginning and end of the year with a reconciliation of changes in the balances during the year.
Derivative Trading
instruments assets Total
Rm Rm Rm
Unrecognised net profit at the beginning
of the year 384 13 397
Additional net profit on new transactions 13 13
Recognised in profit or loss during
the year (153) (153)
Exchange differences 3 3
Unrecognised net profit at end of the
year 244 16 260
Fair value disclosures (1)
In terms of IFRS, the group is either required to or
elects to measure a number of its financial assets
and financial liabilities at fair value, being the price
that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between
market participants at the measurement date.
The existence of quoted prices in an active market
represents the best evidence of fair value. Where
such prices exist, they are used in determining the
fair value of its financial assets and financial
liabilities. Where quoted market prices are
unavailable, the group establishes fair value using
valuation techniques that incorporate inputs that
are observable either directly (that is, as prices) or
indirectly (that is, derived from prices) for such
assets and liabilities. Where such inputs are not
available, the group makes use of unobservable
inputs in establishing fair value.
All financial instruments carried at fair value,
regardless of classification, and for which there are
no quoted market prices for that instrument, are
marked to market using models that have been
validated independently by the group's model
validation unit and approved by the market risk
methodologies committee. This control applies to
both off-the-shelf models as well as those
developed internally by the group and company.
Further, all inputs into the valuation models are
subject to independent price validation procedures
carried out by the market risk unit. Such price
validation is performed on at least a monthly basis,
and daily where possible given the liquidity of the
underlying price inputs. Less liquid risk drivers,
which are typically used to mark level 3 assets and
liabilities to market, are carefully validated and
tabled at the monthly price validation forum to
ensure that these are reasonable and used
consistently across all entities in the group.
Sensitivities arising from exposures to such drivers
are similarly scrutinised, together with movements
in level 3 fair values. They are also disclosed on a
monthly basis to the market risk and asset and
liability committees.
(1) IFRS 13 – Fair value Measurement has been
prospectively applied from 1 January 2013.
Comparable financial information, in accordance
with the transitional provisions of the standard,
has not been provided.
Accounting classifications and fair values of financial assets and liabilities
The table below categorises the group's assets and liabilities as at 31 December 2013 between that which
is financial and non-financial. All financial assets and liabilities have been classified according to their
measurement category with disclosure of the fair value being provided for those items.
Other
Other non-financial Total
Held-for- Designated Held-to- Loans and Available-for- amortised assets/ carrying
trading(1) at fair value maturity receivables(2) sale cost(2) liabilities amount Fair value(3)
Rm Rm Rm Rm Rm Rm Rm Rm Rm
2013
Assets
Cash and balances with central banks 53 310 53 310 53 310
Derivative assets 64 474 64 474 64 474
Trading assets 54 588 54 588 54 588
Pledged assets 3 324 1 348 2 041 6 713 6 713
Non-current assets held for sale(4) 107 306 74 871 29 1 078 183 284 180 051
Financial investments 506 342 896 13 264 11 162 27 889 395 717 396 243
Loans and advances to banks 668 94 236 94 904 95 034
Loans and advances to customers 1 074 181 4 743 457 744 716 736 389
Interest in associates and joint ventures 4 797 4 797
Investment property 27 299 27 299 27 299
Other financial assets(4) 8 365 8 365
Other non-financial assets(4) 52 762 52 762
231 272 345 093 13 268 985 401 29 959 85 936 1 690 929
Liabilities
Derivative liabilities 69 244 69 244 69 244
Trading liabilities 35 368 35 368 35 368
Non-current liabilities held for sale 57 194 294 75 505 1 511 134 504 130 031
Deposits from banks 961 67 689 68 650 68 877
Deposits from customers 24 377 828 711 853 088 858 875
Policyholders’ liabilities 74 146 189 798 263 944 74 146
Subordinated debt 24 516 24 516 22 096
Other financial liabilities(4) 39 983 31 347 71 330
Other non-financial liabilities(4) 17 637 17 637
161 806 139 761 1 027 768 208 946 1 538 281
(1) Includes derivative assets or liabilities designated as hedging instruments in hedge relationships.
(2) Includes financial assets and financial liabilities for which the carrying value has been adjusted for changes in fair value
due to designated hedged risks.
(3) Carrying value has been used where it closely approximates fair values, excluding non-financial assets and liabilities.
(4) The carying value of other non-financial assets/liabilities approximates fair value.
Fair value hierarchy
The tables that follow analyse the group's financial
assets and liabilities that are measured at fair value
at the end of the reporting period, by level of fair
value hierarchy as required by IFRS. The different
levels are based on the extent to which observable
market data and inputs are used in the calculation
of the fair value of the financial assets and
liabilities. The levels of the hierarchy are defined
as follows:
Level 1 - fair values are based on quoted market
prices (unadjusted) in active markets for an
identical financial asset or liability. An active market
is a market in which transactions for the asset or
liability take place with sufficient frequency and
volume to provide pricing information on an
ongoing basis.
Level 2 - fair values are calculated using valuation
techniques based on observable inputs, either
directly (that is, as prices) or indirectly (that is,
derived from prices). This category includes
financial assets and liabilities valued using quoted
market prices in active markets for similar financial
assets or liabilities, quoted prices for identical or
similar financial assets or liabilities in markets that
are considered less than active or other valuation
techniques where all significant inputs are directly
or indirectly derived or corroborated from
observable market data.
Level 3 - fair values are based on valuation
techniques using significant unobservable inputs.
This category includes financial assets and liabilities
where the valuation technique includes
unobservable inputs that have a significant effect
on the financial asset or liability's valuation. This
category includes financial assets and liabilities that
are valued based on quoted prices for similar
financial assets or liabilities and for which significant
unobservable adjustments or assumptions are
required to reflect differences between the
financial assets or liabilities.
Recurring fair value measurements of assets or
liabilities are those that other IFRSs require or
permit in the statement of financial position at the
end of each reporting period. Non-recurring fair
value measurements of assets or liabilities are those
that other IFRS require or permit in the statement
of financial position in particular circumstances.
Financial assets measured at fair value
as at 31 December 2013
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Financial assets
Measured on a recurring basis
Derivative assets 91 62 293 2 090 64 474
Trading assets 19 477 33 001 2 110 54 588
Pledged assets 3 525 3 180 8 6 713
Financial investments 178 044 189 066 4 181 371 291
Loans and advances to banks 668 668
Loans and advances to customers 7 1 205 43 1 255
Investment property 27 299 27 299
Measured on a non-recurring basis
Non-current assets held for sale 24 942 76 780 5 613 107 335
226 754 365 525 41 344 633 623
Comprising:
Held-for-trading 231 272
Designated at fair value 345 093
Available-for-sale 29 959
Investment property 27 299
633 623
Financial liabilities
Measured on a recurring basis
Derivative liabilities 162 61 207 7 875 69 244
Trading liabilities 18 384 16 552 432 35 368
Deposits from banks 961 961
Deposits from customers 389 23 988 24 377
Policyholders' liabilities 74 146 74 146
Other financial liabilities 39 983 39 983
Measured on a non-recurring basis
Non-current liabilities held for sale 7 981 42 579 6 928 57 488
26 916 259 416 15 235 301 567
Comprising:
Held-for-trading 161 806
Designated at fair value 139 761
301 567
Fair value measurement disclosures -
level 2 and level 3
The valuation techniques used in determining the
fair value of financial assets and liabilities classified
within level 2 and level 3 of the fair value hierarchy
include the discounted cash flow model, Black-
Scholes model and earnings multiple and
sustainable earnings valuation methods and other
valuation techniques commonly used by market
participants. Such models are populated using
market parameters that are corroborated by
reference to independent market data, where
possible, or alternative sources such as third party
quotes, recent transaction prices or suitable proxies.
The inputs used include discount, liquidity discount,
risk-free and volatility rates, risk premiums, credit
spreads, volatilities and correlations.
The fair value of level 3 assets and liabilities is
determined using valuation techniques which
include reference to recent arm's length
transactions, discounted cash flow analyses, pricing
models and other valuation techniques commonly
used by market participants. These valuation
techniques incorporate assumptions that are not
supported by prices from observable current market
transactions in the same asset or liability, are not
based on available observable market data and
typically have unobservable inputs that are subject
to management judgment. These inputs include
credit spreads on illiquid issuers, implied volatilities
on thinly traded stocks, correlation between risk
factors, prepayment rates and other illiquid risk
drivers. Exposure to such illiquid risk drivers is
typically managed by:
- using bid-offer spreads that are reflective of
the relatively low liquidity of the underlying
risk driver
- quantifying and reporting the sensitivity to
each risk driver
- raising day one profit provisions in accordance
with IFRS
- limiting exposure to such risk drivers and analysing
this exposure on a regular basis.
Level 2 financial assets and financial liabilities
The following table sets out the group's principal valuation techniques used in determining the fair value of
its financial assets and financial liabilities that are classified within Level 2 of the fair value hierarchy.
Valuation basis/technique Main assumptions(1)
Derivative instruments Discounted cash flow model Discount rate
Black-Scholes model Risk-free rate, volatility rate
Multiple valuation technique Valuation multiples
Trading assets Discounted cash flow model Discount rate, liquidity discount rate
Black-Scholes model Risk-free rate, volatility rate
Financial investments Discounted cash flow model Discount rate, liquidity discount rate
Multiple valuation technique Valuation multiples
Quoted exit price adjusted for Discount rate
notice period
Pledged assets Discounted cash flow model Discount rate, liquidity discount rate
Loans and advances to customers Discounted cash flow model Discount rate, liquidity discount rate
Trading liabilities Discounted cash flow model Discount rate, liquidity discount rate
Deposits from banks Discounted cash flow model Discount rate, liquidity discount rate
Deposits from customers Discounted cash flow model Discount rate, liquidity discount rate
Policyholder liabilities Discounted cash flow model Discount rate, liquidity discount rate
Other financial liabilities Discounted cash flow model Discount rate, liquidity discount rate
(1) The main assumptions for all instruments include applicable credit spreads.
Level 3 financial assets and financial liabilities
The tables below set out the reconciliation of financial assets that are measured at fair value based on
inputs that are not based on observable market data (level 3):
Reconciliation of level 3 financial assets measured on a recurring basis
Measured on a
non-recurring
Measured on a recurring basis basis
Loans and Non-current
Derivative Trading Pledged advances to Financial Investment assets held
assets assets assets customers investments Property for sale Total
Rm Rm Rm Rm Rm Rm Rm Rm
Balance at 1 January 2013 - restated 3 397 6 344 215 5 528 24 133 39 617
Classified as held for sale (1 914) (5 992) (5) 7 911
Total gains/(losses) included in profit or loss 1 282 (60) 132 207 2 530 (1 589) 2 502
Interest income (2) (2)
Trading revenue 1 282 (60) 132 (22) (1 589) (257)
Other revenue 225 225
Investment gains 6 2 530 2 536
Total gains/(losses) included in other comprehensive
income 1 (1)
Originations and purchases 499 3 087 6 1 325 588 961 6 466
Sales (1 068) (2 019) (89) (3 207) (35) (2 748) (9 166)
Settlements(1) (114) (202) (60) (376)
Transfers into level 3(2) 12 798 118 928
Transfers out of level 3(3) (7) (13) (21) (36) (77)
Reclassifications 69 69
Exchange movements 2 (35) 2 8 312 14 1 078 1 381
Balance at 31 December 2013 2 090 2 110 8 43 4 181 27 299 5 613 41 344
(1) Derivative fair values represent the net present value of positive and/or negative future cash flows. Settlements may
increase or decrease the carrying value of derivative assets and liabilities.
(2) During 2013, the valuation inputs of certain financial assets became unobservable.
The fair value of these assets was transferred into level 3.
(3) During 2013, the valuation inputs of certain level 3 financial assets became observable. The fair value of these
financial assets was transferred into level 2.
Financial assets transferred between level 1 and level 2
During the year, R60 million of financial assets were transferred into level 1 from level 2 as the quoted price
became readily and regularly available.
Unrealised gains/(losses) for the period included in profit or loss for level 3 financial assets held
at the end of the reporting period
as at 31 December 2013
Measured on a
non-recurring
Measured on a recurring basis basis
Non-current
Derivative Trading Financial Investment assets held
assets assets investments property for sale Total
Rm Rm Rm Rm Rm Rm
Trading revenue 1 271 (35) 913 2 149
Other revenue 76 76
Investment gains 2 598 2 598
1 271 (35) 76 2 598 913 4 823
The following table provides a reconciliation of the opening to closing balance for all financial liabilities that
are measured at fair value based on inputs that are not based on observable market data (level 3).
Reconciliation of level 3 financial liabilities
Measured
on a non-
recurring
Measured on a recurring basis basis
Policy- Non-current
Derivative Trading holders' assets held
liabilities liabilities liabilities for sale Total
Rm Rm Rm Rm Rm
Balance at 1 January 2013 2 335 5 021 10 7 366
Classified as held for sale (898) (5 021) 5 919
Total losses/(gains) included in
profit or loss - trading revenue 4 084 (27) (434) 3 623
Originations and purchases 3 050 458 590 4 098
Sales (856) (856)
Settlements (633) (633)
Transfers into level 3(1) 58 378 436
Transfers out of level 3(2) (8) (8)
Net change in policyholders'
liabilities (10) (10)
Exchange movements (113) 1 1 331 1 219
Balance at 31 December 2013 7 875 432 6 928 15 235
(1) During 2013, the valuation inputs of certain financial liabilities became unobservable. The fair value of these liabilities was
transferred into level 3.
(2) During 2013, the valuation inputs of certain level 3 financial assets became observable. The fair value of these financial
liabilities was transferred into level 2.
Unrealised (gains)/losses for the period included in profit or loss for level 3 financial liabilities
held at the end of the reporting period
as at 31 December 2013
Measured on a
non-recurring
Measured on a recurring basis basis
Derivative Trading Non-current assets
liabilities liabilities held for sale Total
Rm Rm Rm Rm
Trading revenue 3 862 (32) 436 4 266
Although the group believes that its estimates of fair values are appropriate, changing one or more of these
assumptions to reasonably possible alternative values could impact the fair value of its assets and liabilities.
The behaviour of the unobservable parameters used to fair value level 3 financial assets and liabilities is not
necessarily independent, and may often hold a relationship with other observable and unobservable market
parameters. Where material and possible, such relationships are captured in the valuation by way of
correlation factors, though these factors are, themselves, frequently unobservable. In such instances, the
range of possible and reasonable fair value estimates is taken into account when determining appropriate
model adjustments.
The table that follows indicates the valuation techniques and main assumptions used in the determination of
the fair value of the level 3 financial assets and liabilities measured at fair value on a recurring basis. The
table further indicates the effect that a significant change in one or more of the inputs to a reasonably
possible alternative assumption would have on profit or loss at the reporting date (where the change in the
input would change the fair value of the asset or liability significantly). The changes in the inputs that have
been used in the analysis that follows have been determined taking into account several considerations such
as the nature of the asset or liability and the market within which the asset or liability is transacted.
The valuation techniques used in determining the fair value of financial assets and liabilities
classified within level 3
as at 31 December 2013
Effect on profit or loss
Variance in
fair value (Un-
Valuation basis/ Main measure- Favourable favourable)
technique assumptions ment Rm Rm
Derivative instruments Discounted cash Discount rate
flow model (1%) - 1% 142 (142)
Black-Scholes Risk- free rate,
model volatility rate (1%) - 1% 56 (58)
Multiple valuation Valuation
technique multiples (1) - 1 9 (9)
Trading assets Discounted cash Discount rate
flow model liquidity discount
rate (1%) - 1% 548 (548)
Financial investments Discounted cash Discount rate,
flow model liquidity discount
rate (1%) - 1% 134 (116)
Multiple valuation Valuation
technique multiples (1) - 1 98 (86)
Liquidity discount
rate (1%) - 1% 3 (3)
Loans and advances to Discounted cash Discount rate
customers flow model (1%) - 1% 1 (1)
Trading liabilities Discounted cash Discount rate
flow model (1%) - 1% 126 (126)
1 117 (1 089)
Accounting policies and restatements
Basis of preparation
The group's condensed consolidated interim
financial statements (results) are prepared in
accordance with the framework, measurement and
recognition requirements of IFRS as issued by the
International Accounting Standards Board (IASB)
and are prepared in accordance with the
requirements of the SAICA Financial Reporting
Guides as issued by the Accounting Practices
Committee, the presentation requirements of
IAS 34 Interim Financial Reporting and
requirements of the South African Companies Act,
71 of 2008.
The 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 accounting policies applied in the preparation
of the consolidated financial statements from which
the results have been derived are in terms of IFRS
and are consistent with the accounting policies
applied in the preparation of the group's previous
consolidated annual financial statements, except for
changes as required by the mandatory adoption of
new and revised IFRS and, where applicable, as set
out below:
Adoption of new and amended
standards effective for the current
financial period
The accounting policies are consistent with those
reported in the previous year except as required in
terms of the adoption of the following:
- IFRS 7 Disclosures - Offsetting Financial Assets
and Financial Liabilities
- IFRS 10 Consolidated Financial Statements
(IFRS 10)
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosure of Interests in Other Entities
- IFRS 13 Fair Value Measurement
- IAS 19 Employee Benefits (2011 revised)
(IAS 19R)
- IAS 27 Separate Financial Statements (2011
revised) and
- IAS 28 Investments in Associates and Joint
Ventures (2011 revised) (IAS 28R).
Early adoption of revised standards
- IAS 36 Impairment of Assets - Recoverable
Amount Disclosures for Non-Financial Assets
(2013 revised)
- IAS 39 Financial Instruments: Recognition and
Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (2013
revised)
Restatements
Of the abovementioned IFRS adopted on 1 January
2013, IFRS 10, IAS 19R and IAS 28R resulted in the
restatement of the group's previously reported
financial results as follows:
IFRS 10
In terms of IFRS 10, control exists only if the investor
has power over the investee; exposure, or rights to,
variable returns from its involvement with the
investee; and the ability to use its power to affect
those returns. The application of control will be
applied irrespective of the nature of the investee.
Investments in mutual funds that amounted to
between 20% and 50% of the total fund value or
voting rights were previously considered to be
interests in associates, and those greater than 50%
were previously considered to be subsidiaries. As a
result of the adoption of IFRS 10, references in the
accounting policies to specific percentage holdings
have been removed.
The adoption of IFRS 10 resulted in the group
consolidating additional mutual funds, classifying
additional interests in mutual funds as associates,
reclassifying interests between these categories and
financial investments and the recognition of additional
treasury shares.
IAS 19R
The most significant change as a result of the
adoption of IAS 19R is the elimination of the ‘corridor'
method under which the recognition of actuarial gains
or losses was deferred. In terms of IAS 19R all
unrecognised actuarial gains have to be recognised in
other comprehensive income on transition to the new
requirements.
IAS 28R
The adoption of IAS 28R resulted in the group
classifying mutual fund interests, for which the group
is the fund manager in terms of an irrevocable fund
management agreement, as interests in associates. In
order to achieve consistency in the presentation for
associates that are measured at fair value and those
that are equity accounted, the group reclassified all of
its interests in associates that are measured at fair
value to its financial investments line item in the
statement of financial position. Following the
reclassification, the group's line item ‘Interests in
associates and joint ventures' in its statement of
financial position includes only those associates and
joint ventures that are equity accounted. The amount
reclassified was R15 696 million.
Other restatements and
reclassifications
The comparative income statement and statement of
financial position as at 31 December 2012 has been
adjusted to reflect the presentation consequences of
the following restatements and reclassifications:
IFRS 5 - Non-current Assets Held for Sale
and Discontinued Operations (IFRS 5)
Following the announcement regarding the intended
disposal of the group's controlling interest in the
global markets business outside Africa, the group's
previously reported income statement has, in
accordance with IFRS 5, been restated in order to
present the discontinued operation's results as a
separate line item.
Deposits from customers to trading
liabilities
Liabilities of R5 268 million were previously classified
as designated at fair value through profit or loss within
deposits from customers. In accordance with IFRS and
the group's accounting policies, these liabilities should
have been classified as trading liabilities. The liabilities
have accordingly been reclassified from deposits from
customers to trading liabilities. The restatement had
no impact on the group's reserves or profit and loss.
Loans and advances: reclassification
between banks and customers
An amount of R5 586 million was reclassified from
loans and advances to banks to loans and advances to
customers. The reclassification aligns an amount that
was placed with a non-bank subsidiary of a bank
holding company to loans and advances to customers
as opposed to loans and advances to banks. The
restatement had no impact on the group's reserves
and profit or loss.
Restatement of financial results
Consolidated statement of financial position
restatements as at 31 December 2012 and 31 December 2011
31 December 2012 31 December 2011
Customer Customer
As previously deposit As previously deposit
reported IFRS 10 IAS 19R IAS 28R reclassification Restated reported IFRS 10 IAS 19R IAS 28R reclassification Restated
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Assets
Cash and balances with central banks 61 985 61 985 31 907 31 907
Financial investments, trading and pledged assets 444 217 13 303 15 696 473 216 385 881 14 602 12 950 413 433
Non-current assets held for sale 960 960 34 085 34 085
Loans and advances 811 171 811 171 801 308 801 308
Derivative and other assets 154 088 190 1 151 155 429 174 569 81 672 175 322
Interest in associates and joint ventures 17 246 1 485 (15 696) 3 035 13 935 864 (12 950) 1 849
Investment property 24 133 24 133 23 470 23 470
Goodwill and other intangible assets 14 687 14 687 12 754 12 754
Property and equipment 15 733 15 733 14 920 14 920
Total assets 1 544 220 14 978 1 151 1 560 349 1 492 829 15 547 672 1 509 048
Equity and liabilities
Equity 130 173 716 130 889 117 533 (99) 463 117 897
Equity attributable to ordinary shareholders 110 370 715 111 085 99 042 (53) 461 99 450
Preference share capital and premium 5 503 5 503 5 503 5 503
Non-controlling interest 14 300 1 14 301 12 988 (46) 2 12 944
Liabilities 1 414 047 14 978 435 1 429 460 1 375 296 15 646 209 1 391 151
Deposit and current accounts 918 533 (2 583) (5 268) 910 682 878 922 (3 317) (7 019) 868 586
Derivative, trading and other liabilities 227 282 17 561 435 5 268 250 546 235 116 18 963 209 7 019 261 307
Non-current liabilities held for sale 27 939 27 939
Policyholders’ liabilities 236 684 236 684 208 565 208 565
Subordinated debt 31 548 31 548 24 754 24 754
Total equity and liabilities 1 544 220 14 978 1 151 1 560 349 1 492 829 15 547 672 1 509 048
Consolidated income statement
restatements for the year ended 31 December 2012
As previously
reported IFRS 10 IAS 19R IFRS 5 Restated
Rm Rm Rm Rm Rm
Continuing operations
Income from banking activities 68 375 (2 123) 66 252
Net interest income 34 015 (49) 33 966
Non-interest revenue 34 360 (2 074) 32 286
Income from investment management and life
insurance activities 75 716 1 849 15 77 580
Total income 144 091 1 849 15 (2 123) 143 832
Credit impairment charges 8 800 (86) 8 714
Benefits due to policyholders 56 878 1 861 58 739
Income after credit impairment charges and
policyholders' benefits 78 413 (12) 15 (2 037) 76 379
Revenue sharing agreements with group companies 115 115
Income after revenue sharing agreements with
group companies 78 413 (12) 15 (2 152) 76 264
Operating expenses in banking activities 39 998 70 (3 166) 36 902
Staff costs 22 195 70 (1 846) 20 419
Other operating expenses 17 803 (1 320) 16 483
Restructuring costs 758 (439) 319
Operating expenses in investment management and life
insurance activities 11 952 1 127 12 080
Net income before goodwill impairment and gains
on disposal of subsidiaries 25 705 (13) (182) 1 453 26 963
Goodwill impairment 777 777
Gains on disposal of subsidiaries 188 188
Net income before share of profits from
associates and joint ventures 25 116 (13) (182) 1 453 26 374
Share of profit from associates and joint ventures 701 701
Net income before indirect taxation 25 817 (13) (182) 1 453 27 075
Indirect taxation 1 766 (145) 1 621
Profit before direct taxation 24 051 (13) (182) 1 598 25 454
Direct taxation 7 075 (53) (20) 7 002
Profit for the year from continuing operations 16 976 (13) (129) 1 618 18 452
Profit for the year and from disposal of discontinued
operation 2 435 (1 618) 817
Profit for the year 19 411 (13) (129) 19 269
Attributable to non-controlling interests 2 913 (5) (37) 2 871
Continuing operations 2 686 (5) (37) 2 644
Discontinued operation 227 227
Attributable to preference shareholders 352 352
Attributable to ordinary shareholders 16 146 (8) (92) 16 046
Basic earnings per share (cents) 1 060,7 (0,1) (6,0) 1 054,6
Continuing operations 915,7 (0,1) (6,0) 106,3 1 015,9
Discontinued operations 145,0 (106,3) 38,7
Diluted earnings per share (cents) 1 025,9 (0,1) (5,8) 1 020,0
Continuing operations 885,6 (0,1) (5,8) 102,8 982,5
Discontinued operations 140,3 (102,8) 37,5
Consolidated statement of other comprehensive income
for the year ended 31 December 2012
Total equity
As previously
reported IFRS 10 IAS 19R Restated
Rm Rm Rm Rm
Profit for the year 19 411 (13) (129) 19 269
Other comprehensive income after tax for
the year - continuing operations 687 383 1 070
Items that may be reclassified subsequently
to profit or loss:
Exchange rate differences on translating equity
investment in foreign operations 544 544
Foreign currency hedge of net investment 181 181
Cash flow hedges (230) (230)
Available-for-sale financial assets 194 194
Items that may not be reclassified to profit
or loss:
Defined benefit fund adjustments 383 383
Other losses (2) (2)
Other comprehensive income after tax for
the year - discontinued operations 615 615
Total comprehensive income for the year 20 713 (13) 254 20 954
Attributable to non-controlling interests 3 183 (5) 3 178
Attributable to equity holders of the parent 17 530 (8) 254 17 776
Attributable to preference shareholders 352 352
Attributable to ordinary shareholders 17 178 (8) 254 17 424
Consolidated cash flow information
for the year ended 31 December 2012
As previously
reported IFRS 10 IAS 19R Restated
Rm Rm Rm Rm
Net cash flows from operating activities 42 954 143 (127) 42 970
Net cash flows used in investing activities (14 514) (16) (14 530)
Net cash flows used in financing activities (3 820) (3 820)
Effect of exchange rate changes on cash and cash
equivalents 609 609
Net increase in cash and cash equivalents 25 229 127 (127) 25 229
Cash and cash equivalents at the beginning of
the year 36 756 36 756
Cash and cash equivalents at the end of
the year 61 985 127 (127) 61 985
Administrative and contact detail
Standard Bank Group Limited
Registration Number 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
Group secretary
Zola Stephen
Tel: +27 11 631 9106
Head: Investor relations
David Kinsey
Tel: +27 11 631 3931
Group financial director
Simon Ridley
Tel: +27 11 636 3756
Head office switch board
Tel: +27 11 636 9111
Directors
TMF Phaswana (Chairman)
Kaisheng Yang** (Deputy chairman)
SJ Macozoma (Deputy chairman)
DDB Band, RMW Dunne#, TS Gcabashe, BJ Kruger*
(Chief executive), Wenbin Wang**, Adv KD Moroka,
AC Nissen, SP Ridley*, MJD Ruck, Lord Smith of
Kelvin, KT#, PD Sullivan†, SK Tshabalala*
(Chief executive), EM Woods
*Executive director
**Chinese
#British
†Australian
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
4 Robert Mugabe Avenue
(entrance in Burg Street), Windhoek
PO Box 2401, Windhoek
JSE independent sponsor
Deutsche Securities (SA) Proprietary Limited
Namibian sponsor
Simonis Storm Securities (Proprietary) Limited
JSE joint sponsor
The Standard Bank of South Africa Limited
Share and bond codes
JSE share code: SBK
ISIN: ZAE000109815
NSX share code: SNB
NSX share code: SNB ZAE000109815
SBKP ZAE000038881 (First preference shares)
SBPP ZAE000056339 (Second preference shares)
JSE bond codes: SBS, SBK, SBN, SBR, 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 Credit Linked Note Programme)
Date: 06/03/2014 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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