Wrap Text
Provisional results and dividend announcement
for the year ended 31 December 2014
Standard Bank Group Limited
Registration number 1969/017128/06
Incorporated in the Republic of South Africa
Website: www.standardbank.com
Share codes
JSE share code: SBK
ISIN: ZAE000109815
NSX share code: SNB
NSX share code: SNB ZAE000109815
The Standard Bank Group
provisional results and dividend announcement
for the year ended 31 December 2014
The Standard Bank Group Limited's (group) summary
consolidated financial statements for the year
ended 31 December 2014 (results) are prepared
in accordance with the requirements of the JSE
Limited (JSE) Listings Requirements for provisional reports, the
requirements of International Financial Reporting Standards
(IFRS), as issued by the International Accounting Standards
Board, the South African Institute of Chartered Accountants
(SAICA) Financial Reporting Guides as issued by the Accounting
Practices Committee and financial pronouncements as issued
by the Financial Reporting Standards Council, the presentation
requirements of IAS 34 Interim Financial Reporting and the
requirements of the South African Companies Act, 71 of 2008
applicable to summary financial statements. The accounting
policies applied in the preparation of these 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 changes
referred to in the accounting policies section.
While this report is itself not audited, the consolidated annual
financial statements from which the summary consolidated
annual financial statements 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 auditors' 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.
The preparation of the group's results was supervised by the
group financial director, Simon Ridley, BCom (Natal), CA(SA),
AMP (Oxford).
The results were made publicly available on 5 March 2015.
This report contains pro forma constant currency information.
Financial highlights
Headline earnings
continuing operations up 20%
R21 068 million
2013: R17 613 million
Headline earnings up 1%
R17 323 million
2013: R17 194 million
Headline earnings per share (HEPS) up 1%
1 070 cents
2013: 1 065 cents
Return on equity (ROE)
12.9%
2013: 14.1%
Tier I capital adequacy ratio
12.9%
2013: 13.2%
Net asset value per share up 7%
8 625 cents
2013: 8 089 cents
Cost-to-income ratio
54.5%
2013: 56.8%
Credit loss ratio
1.00%
2013: 1.12%
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.
The group's reporting suite, including the Standard Bank Group integrated report and annual financial statements will be made available during
April 2015. Copies can be requested from our registered office or downloaded from the website above.
In line with changes to JSE's Listing Requirements, the group will no longer be posting this document to its shareholders. The group has initiated
an electronic communication program to distribute its annual financial statements via email and/or sms where the group has the required
shareholder information available. In all other instances the group will post the annual financial statements to its shareholders, with the group
encouraging these shareholders to provide the relevant information to the group in order to communicate financial information electronically in
the future.
Overview of financial results
Group results
Group headline earnings increased by 1% to
R17 323 million and HEPS increased by 1% to
1 070 cents. Headline earnings from continuing operations
increased by 20% to R21 068 million. Net asset value per
share increased by 7% and group ROE decreased to 12.9%
from 14.1% in 2013. A final dividend of 339 cents per
share has been declared bringing the total dividend for the
year to 598 cents per share, a 12% increase on 2013.
As a result of the sale of 60% of the group's interest
in the global markets business outside Africa, the
completion of which was communicated to shareholders
on 2 February 2015, IFRS requires the results from
this business to be reflected as a single line item in the
group's income statement, being a loss from discontinued
operation. Prior period comparatives have been restated
accordingly. The assets and liabilities for this business are
each disclosed in single line items in the statement of
financial position, being "non-current assets/liabilities
held for sale". The commentary which follows refers to the
group's continuing banking operations and hence excludes,
unless otherwise indicated, the discontinued operation's
results. Liberty's results are discussed separately.
Total income grew by 15% and expenses were 11% higher
than 2013. Credit impairments were 2% lower, mostly
due to the reduction in specific impairments required for
corporate loans. Net income before taxation grew by 31%
and profit from continuing operations was 32% higher.
As communicated on the Stock Exchange News Service
(SENS) of the JSE during June and July 2014 as well as
at the release of the group's interim results in August
2014, the group instituted legal proceedings against
several parties with respect to the group's rights to
physical aluminium held in bonded warehouses in China.
The aluminium represents the group's collateral held for
a series of commodity financing arrangements, otherwise
referred to as reverse repurchase agreements (repos).
The group believes that the financing arrangements
were impacted by fraudulent activities in respect of the
physical aluminium. The group's exposure in respect of the
repos is USD167 million, against which USD210 million
of aluminium collateral is held and is subject to this legal
process. As at 31 December 2014 the group recognised a
valuation adjustment of USD147 million (R1 624 million)
against the repos, representing management's best
estimate of the risk adjustment required in determining the
fair value of the group's net exposure. The adjustment was
recognised within the discontinued operation's line in the
income statement. The group continues to pursue various
alternatives in order to recover the client exposure in
respect of this matter, including claiming under the group's
insurance policies. At this time, the precise quantum and
timing of recoveries remains uncertain.
In addition to the valuation adjustment outlined above,
the discontinued operation suffered losses from trading
operations amounting to R1 674 million. This was due
mainly to the high volatility and dislocation displayed
in key international markets in the final quarter of 2014
during which time liquidity in asset classes related to
oil and oil producing countries reduced substantially as
many participants withdrew from these markets. The poor
operating performance was exacerbated by R447 million
of mainly systems costs required to separate and prepare
for sale a global markets business outside Africa that was
previously integrated within the group. The net loss from
the discontinued operation amounts to R4 048 million
(2013: R1 022 million loss).
Operating environment
Global growth increased through the course of 2014 at
a similar pace to 2013 of around 3.3% but this overall
growth masked marked divergences among major
economies. The recovery in the US was stronger than
expected, while economic performance in other developed
economies remained weak, specifically in Europe and
Japan. Oil prices in US dollars declined by about 55% in the
second half of 2014 due to a combination of unexpected
demand weakness in some major economies and the
increase in supply into the oil market from non-traditional
sources. Global interest rates remained at multi-year lows
and the European Central Bank has now committed itself to
quantitative easing in 2015 and 2016 in an effort to boost
demand in the Eurozone.
South African GDP growth of approximately 1.5% in 2014,
which was significantly below consensus expectations at
the beginning of the year, was affected by lost output from
strike action in the mining sector in the first half of 2014
and slowing growth in personal consumption expenditure.
The South African Reserve Bank (SARB) increased interest
rates in January 2014 by 50bps and a further 25bps in
July, imposing higher costs on indebted households that
were partially alleviated by the decline in petrol prices in
the final quarter of 2014.
Sub-Saharan Africa GDP growth of approximately 5%
through 2014 matched that of the previous year,
supported by infrastructure spending, good agricultural
output and stronger services sectors. There was broad-
based output expansion across all the sub-Saharan
countries in which the group is invested.
Revenue
Total income grew by 15% in 2014, and by 13% on a
constant currency basis. Net interest income (NII) growth of
15% was assisted by good balance sheet growth in the rest
of Africa and an improvement in the net interest margin
of 13bps which was supported by higher South African
interest rates.
Non-interest revenue (NIR) was 14% higher than 2013
with fees and commissions growing by 13% and trading
income by 19%, helped by a good fixed income and
currency (FIC) trading performance in the rest of Africa and
favourable exchange rate movements.
Other income grew by just 6%, partly as a result of the
non-recurrence of a 2013 fair value gain on a contingent
interest held in Troika.
Credit impairments
Credit impairments declined by 2% over 2013 largely
due to the reduction in impairments across the rest of
Africa.
On a business line basis, credit impairments in Personal &
Business Banking (PBB) increased by 5%, due to higher
specific provisioning required, mainly in instalment sale and
finance leases and card debtors. Mortgage impairments
were mainly flat relative to 2013, and impairment charges
required for personal unsecured lending fell by 10%.
In Corporate & Investment Banking (CIB) there was a
reduction in provisioning as the legacy portfolio originated
outside of Africa was substantially reduced.
Operating expenses
Operating expenses grew by 11% and by 9% on a constant
currency basis, resulting in an improvement in the cost-to-
income ratio to 54.5% from 56.8% in 2013. Staff costs
were well controlled, rising by 8% and by 6% on a constant
currency basis. Other operating expenses growth of 16%
(13% on a constant currency basis) was primarily affected
by 26% growth in information technology (IT) costs and by
the increased amortisation (up 32%) of capitalised systems
taken into production. Professional fees were 34% higher
due mainly to several change initiatives undertaken during
the year to improve our customer experience as well as new
projects designed to increase medium-term operational
efficiency across the group.
Loans and advances
Gross loans and advances to customers grew by 9% over
the year. PBB customer balances grew by 6% with low
growth of 3% in each of the secured lending components
of residential mortgages and instalment sale and finance
leases being supplemented by higher growth of 8% in card
debtors and 24% growth in business lending. CIB customer
balances grew by 16%, led principally by corporate lending
growth of 17% that reflected the higher levels of activity in
transactional and investment banking in both South Africa
and the rest of Africa.
Capital, funding and liquidity
The group has maintained its strong capital position with
tier I and total capital at 12.9% (2013: 13.2%) and 15.5%
(2013: 16.2%) respectively. Rising capital ratios are
evident across the global banking industry in response to
regulatory pressures but the group's current capital ratios
and capital target levels are adequate to satisfy increased
regulatory requirements.
Deposits from customers increased by 12% through the
course of 2014 with retail and wholesale priced deposits
each recording 14% and 11% growth respectively.
Particularly good growth was experienced in the rest of
Africa, with customer deposits growing by 22% with notable
growth experienced in current accounts and call deposits.
The group maintains adequate levels of highly marketable
liquid securities to meet prudential, regulatory and
internal stress testing requirements as protection against
unforeseen disruptions in cash flows. Eligible Basel III
Liquidity Coverage Ratio (LCR) high quality liquid assets
(HQLA) are defined according to the Basel Committee
on Banking Supervision (BCBS) January 2013 LCR and
liquidity risk monitoring tools framework. In addition to
this, management liquidity represents unencumbered
marketable securities which together with eligible Basel
III HQLA would be able to provide significant sources of
liquidity in a stress scenario. The group is on track to meet
the minimum phased-in Basel III LCR standards.
From 2018, the group will be required to comply with
the Basel III Net Stable Funding Ratio (NSFR), a metric
designed to ensure that the majority of term assets are
funded by stable funding sources, such as capital, term
borrowings or other stable funds. The final BCBS NSFR
framework was issued in October 2014. At present the local
banking industry does not meet the minimum proposed
NSFR in full and further available stable funding may have to
be raised to fully meet the proposed requirement. Ongoing
impact analyses and engagement through the Banking
Association of South Africa and the SARB continue to
address this issue.
Overview of business unit performance
Headline earnings by business unit
Change 2014 2013
% Rm Rm
Personal & Business Banking 17 9 834 8 401
Corporate & Investment Banking – continuing operations 26 8 728 6 919
Central and other >100 348 82
Banking activities – continuing operations 23 18 910 15 402
Liberty (2) 2 158 2 211
Standard Bank Group – continuing operations 20 21 068 17 613
Discontinued operation – Global markets outside Africa (>100) (3 745) (419)
Standard Bank Group 1 17 323 17 194
Personal & Business Banking
PBB achieved headline earnings of R9 834 million, 17%
higher than 2013. Robust revenue growth in NII and NIR
of 15% and 13% respectively was offset by higher credit
impairments of 5%. PBB's cost-to-income ratio was stable
at 59.8% as operating costs grew by 14% due largely
to the commissioning of major IT systems. ROE declined
marginally to 18.2% from 18.6% in the prior period due to
higher average capital allocated. PBB South Africa headline
earnings grew by 10% in a difficult operating environment
and PBB rest of Africa recorded headline earnings of
R105 million from a loss of R366 million in 2013.
Transactional products grew headline earnings by 13%
over the prior period to R3 037 million. Higher domestic
interest rates and good growth in savings, investment and
transactional accounts as well as transactional volumes
supported good growth in total income of 15%.
Mortgage lending grew earnings by 14% to R1 935 million.
Although net asset growth was muted as prepayments
increased, the income growth of 12% was supported by
higher new business registrations and disciplined new
business pricing. Credit impairments and the credit loss
ratio were flat relative to 2013.
Instalment sale and finance leases' headline earnings fell by
50% during 2014 to R165 million on a marginal increase
in customer advances. Although reasonable income growth
of 9% was achieved, substantially higher credit impairments
resulting from adverse credit selection in 2013 in the retail
portfolio had a material impact on risk-adjusted revenue.
Card product headline earnings grew by 15% to
R1 420 million. Income growth of 16% was supported
by 11% growth in average balances and higher domestic
interest rates, together with increased activity by card
holders and merchants. Credit impairments increased
by 38% due to earlier recognition of impairments and a
reduction in post write-off recoveries. These were partially
offset by a moderate increase in operating costs which
resulted in a credible overall performance.
Lending products' headline earnings almost doubled to
R1 247 million. Total income increased by 12% due to
growth in revolving credit and overdraft products as well as
business lending. There was a significant impact from the
8% reduction in credit impairments due to reduced risk
appetite in the low income segment of the unsecured loan
market as well as lower impairments from the rest of Africa,
particularly Tanzania and Zambia. The blended lending
product credit loss ratio fell to 2.05% from 2.83% in 2013.
Bancassurance and wealth delivered headline earnings
of R2 030 million, a 12% improvement on 2013. Total
income grew by 14%, benefitting from an increased active
insurance policy base and higher assets under management
in Nigeria's wealth business. Underwriting margins were
under pressure due to claims arising from adverse weather
conditions but total underwriting profit was slightly higher
than the prior period.
Corporate & Investment Banking
CIB's headline earnings of R4 983 million declined by
23% in 2014 due to a combination of a headline loss of
R3 745 million incurred in the discontinued operation
and headline earnings of R8 728 million achieved by
CIB's continuing operations. The details of the loss in the
discontinued operation have been set out in the group
results section at the front of this announcement. The
continuing operations headline earnings growth of 26%
represents a pleasing underlying performance across the
continuing CIB franchise. Total income increased by 14%
with NII up by 18% and NIR growing by 11%. Credit
impairments declined by 40% due to reduced specific
credit impairments and a release of portfolio provisioning
to the income statement due to the improved risk profile
of credit exposures. Costs were well controlled, with staff
costs flat on 2013 due to lower incentive payments, and
12% increase in other operating costs.
Transactional products and services recorded another
successful year, growing revenue by 18% and earnings by
21% to R2 692 million with significant client mandates
awarded across all business lines. Cash management, trade
finance and investor services all recorded good revenue
growth primarily due to a strong performance in the rest of
Africa as well as in the more mature South African business.
Global markets operated in an extremely volatile
environment during the year but performed well in
increasing revenue by 13% and headline earnings by
19% to R3 268 million. Higher levels of activity in money
markets, cash equities, structured solutions and foreign
exchange all contributed to the good revenue performance.
Operating costs were well controlled in spite of further
investment in electronic platforms to deliver consistent
product capabilities for clients.
Investment banking increased headline earnings by 22%
to R2 534 million in spite of a moderate overall 6% growth
in revenue that recovered well in the second half of the
year. A sharp reduction in specific credit impairments due
to better loan quality assisted the growth in earnings. An
improved performance in debt markets in South Africa, as
well as continued growth in the African franchise contributed
to the strong earnings performance.
Real estate and principal investment management (PIM)
achieved headline earnings of R234 million mainly due to
profit earned on the disposal of real estate investments and
valuation adjustments on the property portfolio. The PIM
portfolio and private equity activity continues to be wound-
down with minimal remaining distressed debt net exposure.
Central and other
Headline earnings of R348 million improved from the
R82 million recorded in 2013. The improvement was
largely due to the attributable income from the 20%
associate investment that the group retains in Argentina
amounting to R357 million compared with R249 million in
the prior period and profit realised on hedges implemented
during the year.
Liberty
The financial results reported are the consolidated results
of our 54% investment in Liberty Holdings Limited.
Bancassurance results are included in PBB. Liberty's
headline earnings for the year to December 2014
decreased by 3% to R3 968 million of which
R2 158 million was attributable to the group.
Headline earnings from the group's South African retail
operations were R1 689 million (2013: R1 467 million)
reflecting an earnings increase of 15%. An increased asset
base on which management fees are charged, on-going
good expense management and positive risk variances are
significant contributors to the result. Liberty Corporate
improved headline earnings of R170 million (up 52%) and
are mainly a function of higher asset based management
fees and cost control. The shareholder investment portfolio,
which comprises the group's own investment market
exposure and which is managed by LibFin Investments,
contributed R1 382 million (2013: R1 878 million) to the
group's headline earnings broadly in line with decreased
market returns partially offset by the growth in the average
asset base invested.
Stanlib's headline earnings of R662 million are 5% higher
compared to the equivalent period in 2013. Net cash
outflows (excluding inter group) of R7,3 billion compare to
the inflows of R15,7 billion in 2013. The outflows comprise
net withdrawals of R13,7 billion from the various Stanlib
money market funds and net inflows of R6,4 billion into
higher margin retail and institutional mandates. The
substantial outflows in the second half of 2014, associated
costs and reduced fee income arising from the African Bank
failure and the decision to cease initial fees has resulted in
lower earnings growth in South Africa. Total assets under
management across the Liberty group grew by 4% from
31 December 2013 to R633 billion.
Prospects
Expected global economic growth has recently been revised
down by the International Monetary Fund to 3.5% from
3.8% previously. Although economic output is expected
to receive a boost from lower oil prices, this is expected to
be more than offset by diminished medium term growth
expectations in many developed and emerging economies.
The global growth profile is expected to continue to be
unbalanced with the United States the only major economy
for which growth expectations have recently been raised.
South Africa continues to face both structural and cyclical
headwinds in 2015 exacerbated by an under-supplied
electricity market. However, some relief is likely from the
fall in the price of oil, which has resulted in downward
revisions to inflation expectations and upward revisions
to growth forecasts due to higher real disposable incomes
for households. While sub-Saharan Africa's outlook is
influenced by lower commodity prices, the overall growth
profile remains robust. The group's brand and positioning
has never been stronger following a steady realignment
of the group's resources to focus on our customers on the
African continent. The group's medium-term return on
equity target of between 15% and 18% remains in place
and reflects our confidence in the ability of our people to
deliver the necessary consistent growth to achieve this
target.
Sim Tshabalala Ben Kruger
Group chief executive Group chief executive
Fred Phaswana
Chairman
4 March 2015
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 No. 91 of 339,00 cents per ordinary share
(the cash dividend) to ordinary shareholders recorded in
the register of the company at the close of business on
Friday, 24 April 2015. The last day to trade to participate
in the dividend is Friday, 17 April 2015. Ordinary shares
will commence trading ex dividend from Monday,
20 April 2015. 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, 20 April 2015, and Friday,
24 April 2015, both days inclusive. Ordinary shareholders
who hold dematerialised shares will have their accounts at
their Central Securities Depository Participant (CSDP) or
broker credited on Tuesday, 28 April 2015.
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. 91 of 3,25 cents
(gross) per first preference share, payable on Monday,
20 April 2015, to holders of first preference shares
recorded in the books of the company at the close of
business on the record date, Friday, 17 April 2015. The
last day to trade to participate in the dividend is Friday,
10 April 2015. First preference shares will commence
trading ex dividend from Monday, 13 April 2015.
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. 21 of 358,16 cents (gross) per second
preference share, payable on Monday, 20 April 2015,
to holders of second preference shares recorded in the
books of the company at the close of business on the
record date, Friday 17 April 2015. The last day to trade
to participate in the dividend is Friday, 10 April 2015.
Second preference shares will commence trading ex
dividend from Monday, 13 April 2015. No STC credits
were utilised as part of the dividend declaration in
respect of the second preference shares.
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,
13 April 2015 and Friday, 17 April 2015, both days
inclusive. Preference shareholders (first and second) who
hold dematerialised shares will have their accounts at their
CSDP or broker credited on Monday, 20 April 2015.
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 91 91 21
Gross distribution/dividend per share (cents) 339,00 3,25 358,16
Last day to trade in order to be eligible for the Friday, Friday, Friday,
cash dividend 17 April 2015 10 April 2015 10 April 2015
Monday, Monday, Monday,
Shares trade ex the cash dividend 20 April 2015 13 April 2015 13 April 2015
Record date in the respect of the Friday, Friday, Friday,
cash dividend 24 April 2015 17 April 2015 17 April 2015
Dividend cheques posted and CSDP/broker Tuesday, Monday, Monday,
account credited/updated (payment date) 28 April 2015 20 April 2015 20 April 2015
The above dates are subject to change. Any changes will be released on SENS and published in 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 South African 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
288,15000 cents per ordinary share, 2,76250 cents per
first preference share and 304,43600 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 issued share capital of the company, as at the date of
declaration, is as follows:
- 1 618 361 849 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 IFRS results have been
normalised to reflect the group's view of the economic
and legal substance of the following arrangements
(normalised results):
- Preference share funding provided by the group for the
group's Tutuwa transaction is deducted from equity as a
negative empowerment reserve 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,
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
normalisation 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 the changes in the value of the related
transaction (together with dividend income) in the income
statement.
The normalised results reflect the basis on which
management manages the group and is consistent with
that reported in the group's segmental report, where the
normalised adjustments have been made within Liberty,
and central and other. The results of the other business
units are unaffected.
The group's normalised statement of financial position and
income statement has been presented below.
The lock in period for the group's Tutuwa transaction ended
on 31 December 2014, allowing participants to trade in
the group shares in the scheme.
The result of these normalised adjustments is shown in the
table below.
Normalised headline earnings
for the year ended 31 December 2014
Weighted
average number Headline Growth
of shares earnings on 2013
'000 Rm %
Disclosed on an IFRS basis 1 584 720 17 137 1
Tutuwa initiative 27 726 125
Group shares held for the benefit of Liberty policyholders 7 854 115
Share exposures held to facilitate client trading activities (1 743) (54)
Normalised 1 618 557 17 323 1
Normalised condensed group statement
of financial position
as at 31 December 2014
Change 2014 2013
% Rm Rm
Assets
Cash and balances with central banks 21 64 302 53 310
Financial investments, trading and pledged assets 18 539 704 458 573
Non-current assets held for sale(1) 20 219 958 183 284
Loans and advances 11 929 544 840 819
Derivative and other assets (7) 84 537 90 634
Interest in associates and joint ventures (22) 3 727 4 797
Investment property (1) 27 022 27 299
Goodwill and other intangible assets 17 21 175 18 085
Property and equipment (1) 16 737 16 882
Total assets 13 1 906 706 1 693 683
Equity and liabilities
Equity 6 165 367 155 372
Equity attributable to ordinary shareholders 7 139 588 130 865
Preference share capital and premium - 5 503 5 503
Non-controlling interest 7 20 276 19 004
Liabilities 13 1 741 339 1 538 311
Deposit and current accounts 14 1 047 212 921 738
Derivative, trading and other liabilities 3 199 021 193 609
Non-current liabilities held for sale(1) 35 182 069 134 504
Policyholders' liabilities 9 287 516 263 944
Subordinated debt 4 25 521 24 516
Total equity and liabilities 13 1 906 706 1 693 683
(1) Global markets outside Africa's total assets and liabilities are presented as held for sale in 2014 and 2013 in accordance with IFRS. Banco Standard
de Investimentos SA (Brazil) assets and liabilities are presented as held for sale in 2014 in accordance with IFRS.
Normalised condensed group
income statement
for the year ended 31 December 2014
Change 2014 2013
% Rm Rm
Net interest income 15 45 256 39 248
Non-interest revenue 14 38 984 34 257
Total income 15 84 240 73 505
Credit impairment charges (2) 9 009 9 158
Income after credit impairments 17 75 231 64 347
Revenue sharing agreements with group companies (20) (171) (142)
Income before operating expenses 17 75 060 64 205
Operating expenses in banking activities 11 46 871 42 055
Staff costs 8 24 961 23 087
Other operating expenses 16 21 910 18 968
Net income before goodwill impairment 27 28 189 22 150
Goodwill impairment 100 4
Net income before disposal of subsidiary and equity
accounted earnings 27 28 185 22 150
Gain on disposal and liquidation of subsidiaries >100 1 212 64
Share of profit from associates and joint ventures (1) 665 673
Net income before taxation 31 30 062 22 887
Taxation 29 7 869 6 110
Profit for the year from continuing operations 32 22 193 16 777
Loss from discontinued operation – Global markets
outside Africa (>100) (4 048) (1 022)
Profit for the year 15 18 145 15 755
Attributable to non-controlling interests 61 1 848 1 146
Attributable to preference shareholders 5 364 348
Attributable to ordinary shareholders 12 15 933 14 261
Headline adjustable items – banking activities (>100) (768) 722
Headline earnings – banking activities 1 15 165 14 983
Headline earnings – Liberty (2) 2 158 2 211
Standard Bank Group headline earnings 1 17 323 17 194
Pro forma constant currency
information
The following pro forma constant currency information is the responsibility of the group's directors. Because of its nature,
the pro forma constant currency information may not be a fair reflection of the group's results of operation. 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 pro forma constant currency information has been presented to illustrate the impact of changes in currency rates on the
group's results. 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 material currencies,
being the US dollar, Nigerian naira, Kenyan shilling, Zambian kwacha and Ugandan shilling. 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
2014 average exchange rate 10,84 0,07 0,12 0,0018 0,0042
2013 average exchange rate 9,64 0,06 0,11 0,0018 0,0037
Provisional results in accordance
with IFRS
Financial statistics
for the year ended 31 December 2014
Change
% 2014 2013
Number of ordinary shares in issue ('000)
End of period (0) 1 577 828 1 584 449
Weighted average 1 1 584 720 1 566 694
Diluted weighted average 1 1 617 008 1 606 782(1)
Cents per ordinary share
Headline earnings (0) 1 081,4 1 084,2
Continuing operations 19 1 317,7 1 110,9
Discontinued operation (>100) (236,3) (26,7)
Diluted headline earnings 0 1 059,8 1 057,1
Continuing operations 19 1 291,4 1 083,2
Discontinued operation (>100) (231,6) (26,1)
Dividend 12 598,0 533,0
Net asset value 7 8 682 8 138
Financial performance (%)
ROE on continuing operations 13.0 14.2
Net interest margin on continuing operations 3.79 3.67
Credit loss ratio on continuing operations 1.00 1.12
Cost-to-income ratio on continuing operations 54.6 56.8
Capital adequacy ratios (%)
Basel III
Tier I capital 12.9 13.2
Total capital 15.5 16.2
(1) The comparative period's diluted weighted average number of ordinary shares has been restated to be in line with that as reported in the
group's 2013 and 2014 annual financial statements. The restatement had no effect on the group's previously published diluted headline
earnings and earnings per share.
Condensed consolidated statement
of financial position
as at 31 December 2014
Change 2014 2013
% Rm Rm
Assets
Cash and balances with central banks 21 64 302 53 310
Financial investments, trading and pledged assets 18 537 146 457 018
Non-current assets held for sale(1) 20 219 958 183 284
Loans and advances 11 928 241 839 620
Derivative and other assets (7) 84 537 90 634
Interest in associates and joint ventures (22) 3 727 4 797
Investment property (1) 27 022 27 299
Goodwill and other intangible assets 17 21 175 18 085
Property and equipment (1) 16 737 16 882
Total assets 13 1 902 845 1 690 929
Equity and liabilities
Equity 6 161 634 152 648
Equity attributable to ordinary shareholders 6 136 985 128 936
Preference share capital and premium – 5 503 5 503
Non-controlling interest 5 19 146 18 209
Liabilities 13 1 741 211 1 538 281
Deposit and current accounts 14 1 047 212 921 738
Derivative, trading and other liabilities 3 198 893 193 579
Non-current liabilities held for sale(1) 35 182 069 134 504
Policyholders' liabilities 9 287 516 263 944
Subordinated debt 4 25 521 24 516
Total equity and liabilities 13 1 902 845 1 690 929
(1) Global markets outside Africa's total assets and liabilities are presented as held for sale in 2014 and 2013 in accordance with IFRS. Banco
Standard de Investimentos SA (Brazil) assets and liabilities are presented as held for sale in 2014 in accordance with IFRS.
Condensed consolidated
income statement
for the year ended 31 December 2014
Change 2014 2013
% Rm Rm
Continuing operations
Income from banking activities 15 84 214 73 406
Net interest income 15 45 152 39 095
Non-interest revenue 14 39 062 34 311
Income from investment management
and life insurance activities (7) 79 467 85 240
Total income 3 163 681 158 646
Credit impairment charges (2) 9 009 9 158
Benefits due to policyholders (8) 58 258 63 295
Income after credit impairment charges
and policyholders' benefits 12 96 414 86 193
Revenue sharing agreements with discontinued operation (20) 171 142
Income after revenue sharing agreements with
discontinued operation 12 96 243 86 051
Operating expenses in banking activities 11 46 871 42 055
Staff costs 8 24 961 23 087
Other operating expenses 16 21 910 18 968
Operating expenses in investment management and life
insurance activities 2 14 546 14 226
Net income before goodwill impairment and gains
on disposals of subsidiaries 17 34 826 29 770
Goodwill impairment 100 4
Gains on disposal and liquidation of subsidiaries >100 1 212 64
Net income before share of profit from associates
and joint ventures 21 36 034 29 834
Share of profit from associates and joint ventures (1) 679 685
Net income before indirect taxation 20 36 713 30 519
Indirect taxation 28 2 439 1 911
Profit before direct taxation 20 34 274 28 608
Direct taxation 6 8 061 7 580
Profit for the year from continuing operations 25 26 213 21 028
Loss for the year from discontinued operation(1) (>100) (4 048) (1 022)
Profit for the year 11 22 165 20 006
Attributable to non-controlling interests 13 3 904 3 451
Attributable to preference shareholders 2 356 349
Attributable to ordinary shareholders 10 17 905 16 206
Basic earnings per share (cents) 1 129,9 1 034,4
Continuing operations 1 385,3 1 099,6
Discontinued operation (255,4) (65,2)
Diluted earnings per share (cents) 1 107,3 1 008,6
Continuing operations 1 357,6 1 072,2
Discontinued operation (250,3) (63,6)
(1) Gains and losses relating to the group's global markets outside Africa business has been presented as a single
amount relating to their after-tax losses.
Headline earnings
for the year ended 31 December 2014
Change 2014 2013
% Rm Rm
Profit for the period from continuing operations 27 21 953 17 228
Headline adjustable items (deducted)/added (1 017) 350
Goodwill impairment – IAS 36 4
Loss/(profit) on sale of property and equipment – IAS 16 16 (4)
Realised foreign currency profit on foreign operations – IAS 21 (1 203) (16)
Profit on the disposal and liquidation of subsidiaries – IAS 27 (9) (91)
Impairment of intangible assets – IAS 36 257 477
Realised gains on available-for-sale assets – IAS 39 (29) (16)
Disposal profit and reversal of impairment of associate
– IAS 27 / IAS 36 (53)
Taxation on headline earnings adjustable items (81) (88)
Non-controlling interests' share of headline earnings
adjustable items 27 (85)
Standard Bank Group headline earnings from
continuing operations 20 20 882 17 405
Loss for the period from discontinued operation (>100) (4 048) (1 022)
Headline adjustable items added 346 603
Impairment of intangible assets – IAS 38 193
Impairment of non-current assets held for sale – IFRS 5 153 603
Taxation on headline earnings adjustable items (43)
Standard Bank Group headline earnings from
discontinued operation (>100) (3 745) (419)
Standard Bank Group headline earnings 1 17 137 16 986
Condensed consolidated statement
of other comprehensive income
for the year ended 31 December 2014
2014
Non-
controlling
Ordinary- interests
Share- and 2013
holders preference Total Total
equity shareholders equity equity
Rm Rm Rm Rm
Profit for the period 17 905 4 260 22 165 20 006
Other comprehensive income (OCI)
after tax for the period 327 (1 215) (888) 7 903
Items that may be reclassified
subsequently to profit or loss:
Exchange rate differences on translating equity
investments in foreign operations 1 085 (1 090) (5) 8 085
Foreign currency hedge of net investments (147) (147) (176)
Cash flow hedges (337) (42) (379) 239
Available-for-sale financial assets (134) (92) (226) 91
Items that may not be reclassified to
profit or loss:
Defined benefit fund adjustments (108) 9 (99) (186)
Other losses (32) (32) (150)
Total comprehensive income for the year 18 232 3 045 21 277 27 909
Attributable to non-controlling interests 2 689 2 689 5 149
Attributable to equity holders of the parent 18 232 356 18 588 22 760
Attributable to preference shareholders 356 356 349
Attributable to ordinary shareholders 18 232 18 232 22 411
Condensed consolidated statement of
changes in equity
for the year ended 31 December 2014
Ordinary Preference
shareholders' share capital Non-controlling
equity and premium interest Total equity
Rm Rm Rm Rm
Balance at 1 January 2013 111 085 5 503 14 301 130 889
Total comprehensive income for
the period 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 decrease in treasury shares 23 36 59
Net dividends paid (6 349) (349) (1 313) (8 011)
External refinancing of Tutuwa transaction 1 676 1 676
Unincorporated property partnerships
capital reductions and distributions (6) (6)
Balance at 31 December 2013 128 936 5 503 18 209 152 648
Balance at 1 January 2014 128 936 5 503 18 209 152 648
Total comprehensive income for
the period 18 232 356 2 689 21 277
Transactions with owners, recorded
directly in equity (10 183) (356) (1 673) (12 212)
Equity-settled share-based payment
transactions 221 48 269
Deferred tax on share-based payment
transactions 150 150
Transactions with non-controlling
shareholders (416) (26) (442)
Issue of share capital and share premium
and capitalisation of reserves 14 14
Share buy-back (613) (613)
Net increase in treasury shares (592) (304) (896)
Net dividends paid (8 947) (356) (1 391) (10 694)
Unincorporated property partnerships
capital reductions and distributions (79) (79)
Balance at 31 December 2014 136 985 5 503 19 146 161 634
Condensed consolidated statement
of cash flows
for the year ended 31 December 2014
2014 2013
Rm Rm
Net cash flows from operating activities 29 654 24 020
Cash flows used in operations (21 943) (9 659)
Direct taxation paid (8 070) (7 059)
Other operational cash flows 59 667 40 738
Net cash flows used in investing activities (8 298) (17 345)
Capital expenditure (8 426) (8 143)
Other investing cash flows 128 (9 202)
Net cash flows used in financing activities (10 262) (9 238)
Proceeds from the issue of share capital 14 165
Share buy-backs (613) (343)
Release of empowerment reserve 1 676
Net subordinated debt cash flows 1 960 (1 890)
Other financing cash flows (11 623) (8 846)
Effect of exchange rate changes on cash and cash equivalents 2 376 7 987
Net increase in cash and cash equivalents 13 470 5 424
Cash and cash equivalents at beginning of the period 67 409 61 985
Cash and cash equivalents at the end of the period 80 879 67 409
Comprising:
Cash and balances with central banks 64 302 53 310
Cash and balances with central banks held for sale 16 577 14 099
Cash and cash equivalents at the end of the period 80 879 67 409
Notes
Segment report
for the year ended 31 December 2014
Change 2014 2013(1)
% Rm Rm
Revenue contribution by business unit
Personal & Business Banking 14 55 410 48 621
Corporate & Investment Banking 14 29 466 25 849
Central and other 34 (636) (965)
Banking activities 15 84 240 73 505
Liberty (7) 79 744 85 406
Standard Bank Group – normalised 3 163 984 158 911
Adjustments for IFRS (14) (303) (265)
Standard Bank Group – IFRS 3 163 681 158 646
Profit or loss attributable to ordinary shareholders
Personal & Business Banking 17 9 699 8 314
Corporate & Investment Banking (24) 4 879 6 433
Central and other >100 1 355 (486)
Banking activities 12 15 933 14 261
Liberty 0 2 158 2 153
Standard Bank Group – normalised 10 18 091 16 414
Adjustments for IFRS 11 (186) (208)
Standard Bank Group – IFRS 10 17 905 16 206
Total assets by business unit
Personal & Business Banking 8 621 299 574 352
Corporate & Investment Banking 19 954 063 802 343
Central and other (33) (25 101) (18 838)
Banking activities 14 1 550 261 1 357 857
Liberty 6 356 445 335 826
Standard Bank Group – normalised 13 1 906 706 1 693 683
Adjustments for IFRS (40) (3 861) (2 754)
Standard Bank Group – IFRS 13 1 902 845 1 690 929
Total liabilities by business unit
Personal & Business Banking 7 562 906 525 352
Corporate & Investment Banking 19 900 059 754 612
Central and other 3 (53 683) (55 268)
Banking activities 15 1 409 282 1 224 696
Liberty 6 332 057 313 615
Standard Bank Group – normalised 13 1 741 339 1 538 311
Adjustments for IFRS (>100) (128) (30)
Standard Bank Group – IFRS 13 1 741 211 1 538 281
(1) Global markets outside Africa's total assets and liabilities are presented as held for sale in 2014 and 2013 in accordance with IFRS.
Banco Standard de Investimentos SA (Brazil) assets and liabilities are presented as held for sale in 2014 in acccordance with IFRS. Where
responsibility for individual cost centres and divisions within business units change, the comparative figures are reclassified accordingly.
Contingent liabilities and capital commitments
2014 2013
Rm Rm
Letters of credit and bankers' acceptances 16 162 17 303
Guarantees 53 365 50 287
Contingent liabilities 69 527 67 590
Contracted capital expenditure 4 216 1 315
Capital expenditure authorised but not yet contracted 10 867 11 411
Capital commitments 15 083 12 726
Private equity associates and joint ventures
The following table provides disclosure of those private equity associates and joint ventures 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 2/2013 Headline Earnings, issued by SAICA at the request of the 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.
2014 2013
Rm Rm
Cost 94 150
Carrying value 625 631
Fair value 589 579
Attributable income before impairment 64 92
Equity securities
During the year the group issued no shares (2013: 10 281 204 shares) as a scrip dividend distribution,
allotted 4 879 268 shares (2013: 4 304 866 shares) in terms of the group's share incentive schemes and
repurchased 4 361 547 shares (2013: 2 877 768 shares). The total equity securities held as treasury shares at the end of
the period was 12 807 677 shares (2013: 5 669 530 shares).
Subordinated debt
During the period the group issued R4,4 billion (2013: R1 billion) and redeemed R2,4 billion (2013: R1,9 billion)
subordinated debt instruments.
The terms of the SBK 20 bonds which were issued in 2014, include a regulatory requirement for tier II capital instruments
which provides for the write-off in whole or, if permitted by the relevant regulator (SARB), in part on the earlier of a decision
that a write off, without which the issuer would become non-viable, is necessary; or a decision to make a public sector
injection of capital, or equivalent support, without which the issuer would have become non-viable, as determined and
notified by the relevant regulator (SARB).
Related Party Transactions
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 structured entities, 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 entities 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.
In May and June 2013 , Tutuwa 1 and Tutuwa 2,
respectively, 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. This resulted in a release of
R1 676 million of the group's negative empowerment
reserve relating to Tutuwa 1 and Tutuwa 2 and 35,8 million
ordinary shares no longer being deemed to be treasury
shares for accounting purposes.
Post-employment benefit plans
Details of transactions between the group and the group's post-employment benefit plans are listed below:
2014 2013
Rm Rm
Fee income 18 33
Deposits held with the group 160 363
Interest paid 54 47
Value of assets under management 9 077 11 276
Investments held in bonds and money market instruments 655 797
Value of ordinary group shares held 330 7 281
Aluminium reverse repurchase
agreements
As communicated on SENS of the JSE during 2014 and
at the release of the group's interim results in August
2014, the group instituted legal proceedings against
several parties with respect to the group's rights to
physical aluminium held in bonded warehouses in China.
The group believes that the financing arrangements were
impacted by fraudulent activities in respect of the physical
aluminium. The exposure on the group's statement of
financial position as at 31 December 2014 in respect of
the repos is USD167 million, against which USD210 million
of aluminium collateral is held, and is subject to this
legal process. As at 31 December 2014 the group had
recognised a valuation adjustment of USD147 million
(R1 624 million) against the repos representing
management's best estimate of the risk adjustment
required in determining the fair value of the group's net
exposure. The adjustment was recognised within the
discontinued operation's line in the income statement.
The group continues to pursue various alternatives in order
to recover the client exposure, including claiming under the
group's insurance policies, in respect of this matter. At this
time, the precise quantum and timing of recoveries remains
uncertain. More information can be found in the overview
of financial results.
Change in group directorate
The following changes in directorate took place during the year ended 31 December 2014:
Appointments
Kaisheng Yang as director 16 January 2014
Wenbin Wang as director 16 January 2014
F du Plessis as director 14 March 2014
AC Parker as director 14 March 2014
BS Tshabalala as director 14 March 2014
ANA Peterside CON as director 22 August 2014
Shu Gu as director 10 December 2014
Resignations and retirements
Hongli Zhang as director 16 January 2014
Yagan Liu as director 16 January 2014
KP Kalyan as director 3 March 2014
AC Nissen as director 29 May 2014
DDB Band as director 29 May 2014
Kaisheng Yang as director 10 December 2014
SJ Macozama as director 31 December 2014
Non-current assets and liabilities held
for sale
Brazil
In March 2014 the group entered into an agreement with
Grupo Financiero Inbursa SAB (Inbursa), a listed Mexican
banking group, in terms of which Inbursa will acquire
the group's Brazilian licensed banking subsidiary, Banco
Standard de Investimentos SA (BSI), subject to regulatory
approvals. Inbursa will acquire BSI for a price to be
determined with reference to the closing net asset value of
BSI, which is USD41 million as at 31 December 2014.
Standard Bank Plc
The group entered into an agreement on 29 January 2014
in terms of which ICBC, a 20.1% shareholder of the group,
would upon completion acquire a controlling interest in the
group's London-based global markets business, focusing on
commodities, fixed income, currencies, credit and equities
products (OA global markets business).
Under the agreement, ICBC acquired 60% of SB Plc from
Standard Bank London Holdings Limited, (SBLH), a wholly
owned subsidiary of the group for cash.
During the course of the 2014 financial year, SB Plc
and relevant group subsidiaries and operations were
restructured to form a focused global markets platform
(disposal group or the SB Plc group). As part of this
restructure, all activities that the group currently performs
and any previously discontinued activities and legacy assets,
which do not form part of the OA global markets business,
were transferred from the SB Plc group. These activities
include investment banking, transactional products and
services, principal investment management, and the
group's London-based services unit, which provides key
skills and services to the group and have been moved to
new or existing group non-bank entities. These activities
will be continued post completion in the United Kingdom,
United States, Dubai and Hong Kong.
The SB Plc group is classified in the 2014 financial
statements as a disposal group held for sale in terms
of IFRS and is remeasured to the lower of its fair value
less cost to sell and its carrying value. The difference
between its fair value less cost to sell and its carrying
value is recognised within the discontinued operations
line item in the income statement and in the central and
other segment. This loss is limited to the disposal group's
carrying value of its non-financial assets, being its property
and equipment and intangible assets. Any further loss
on disposal (together with the release of the associated
foreign currency translation reserve (FCTR) and other OCI
releases), as well as the loss recognised on classification of
the disposal group as held for sale, will be recognised in the
income statement and in the central and other segment
on the date of completion of the transaction, which was
1 February 2015.
As disclosed in the overview, the disposal
has been accounted for as a discontinued operation and
disposal group held for sale in line with the requirements
of IFRS for the financial year ended 31 December 2014.
The discontinued operation's results have been determined
based on an assessment of the attribution of both direct
and support-related costs. Support-related costs have been
allocated using cost allocation methodologies for each
support function.
As disclosed in the announcement on 10 December 2014,
the group retains the right to any net recoveries on the
metal exposures that may result from inter alia, ongoing
litigation in China and insurance claims. While the group
maintains insurance for such loss events, no insurance
recovery was recognised at 31 December 2014. The
group's right to recoveries on the metal exposures will be
recognised as a contingent right to compensation on the
date of disposal of SB Plc.
Post-balance sheet events
Disposal of the controlling interest in
Standard Bank Plc
The group announced on 2 February 2015 the completion
of the disposal of its controlling interest in Standard
Bank's London-based global markets business to ICBC
on 1 February 2015. ICBC acquired 60% of SB Plc, the
group's UK banking subsidiary, and has a five-year call
option to purchase a further 20% of the outstanding shares
of Standard Bank Plc, exercisable from 1 February 2017.
Contingent upon ICBC exercising its call option and
from six months after such exercise, SBLH will have a
five-year option to require ICBC to acquire its residual
shareholding for cash. The disposal proceeds are expected
to total approximately USD690 million (calculated based
on 60% of the estimated closing NAV less a discount
of USD80 million) and is based on the best information
available at the time at which these financial statements
are authorised for issue. The proceeds will be calculated
from the net asset value of Standard Bank Plc as at
1 February 2015 (the closing NAV), which remains subject
to audit verification.
Tutuwa
The group and Liberty entered into
a series of transactions in 2004 whereby investments were
made in cumulative redeemable preference shares issued
by BEE entities. The group's banking operations' BEE
initiative is referred to throughout this report as the Tutuwa
initiative and that pertaining to Liberty is referred to as
Lexshell or their Black Economic Empowerment transaction.
A key feature of the BEE initiative is that all participants
were subject to a ten-year lock-in restriction, during which
time they were not permitted to access the underlying
equity value in their shares. This lock-in period expired on
31 December 2014.
The expiry of the lock-in period had no effect on the
group's 2014 financial results. To the extent that
participants access their underlying equity value and to
the extent that those equity shares are financed by the
group, a proportionate amount of the group's negative
empowerment reserve will be released to retained
earnings. Such transactions will also affect the group's IFRS
earnings to the extent that the group's funding to the BEE
entities is repaid.
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 period with a reconciliation of changes in the balances during the period.
Derivative
instruments Trading assets Total
Rm Rm Rm
Unrecognised net profit at 1 January 2013 384 13 397
Additional net profit/(loss) on new transactions 13 13
Recognised in profit or loss during the year (153) (153)
Exchange differences 3 3
Unrecognised net profit at 31 December 2013 244 16 260
Additional net profit/(loss) on new transactions 144 144
Recognised in profit or loss during the year (85) (85)
Unrecognised net profit at 31 December 2014 303 16 319
Offsetting and other similar arrangements
Financial instruments subject to offsetting, enforceable master netting
arrangements or similar agreements
IFRS requires financial assets and financial liabilities to be offset and the net amount presented in the statement of financial
position when, and only when, the group has a current legally enforceable right to set off recognised amounts, as well as the
intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
The following table sets out the impact of offset, as well as financial assets and financial liabilities that are subject to
enforceable master netting arrangements, or similar agreements, irrespective of whether they have been offset in
accordance with IFRS. There are no items measured on different measurement bases within the line items in the tables.
It should be noted that the information below is not intended to represent the group's actual credit exposure nor will it
agree to that presented in the statement of financial position.
Gross
amounts of
recognised
financial
liabilities
Gross offset Financial
amount of in the Net collateral
recognised statement amounts and cash
financial of financial subject collateral Net
assets(1) position(2) to offset(3) received(4,5) amount
Rm Rm Rm Rm Rm
2014
Assets
Derivative assets 170 304 (40 676) 129 628 (109 362) 20 266
Trading assets 8 990 8 990 (7 566) 1 424
Loans and advances(6) 141 118 (39 082) 102 036 (24 266) 77 770
320 412 (79 758) 240 654 (141 194) 99 460
Gross
amounts of
recognised
financial
assets
Gross offset Financial
amounts of in the Net collateral
recognised statement amounts and cash
financial of financial subject collateral Net
liabilities(1) position(2) to offset(3) pledged(4,7) amount
Rm Rm Rm Rm Rm
2014
Liabilities
Derivative liabilities 184 537 (40 676) 143 861 (116 334) 27 527
Trading liabilities 6 479 6 479 (6 477) 2
Deposit and current accounts(6) 56 462 (39 082) 17 380 (6 644) 10 736
247 478 (79 758) 167 720 (129 455) 38 265
Gross
amounts of
recognised
financial
liabilities
Gross offset Financial
amount of in the Net collateral
recognised statement amounts and cash
financial of financial subject collateral Net
assets(1) position(2) to offset(3) received(4,5) amount
Rm Rm Rm Rm Rm
2013
Assets
Derivative assets 104 088 (16 236) 87 852 (73 437) 14 415
Trading assets 19 079 19 079 (18 506) 573
Loans and advances(6) 116 322 (33 743) 82 579 (79 294) 3 285
239 489 (49 979) 189 510 (171 237) 18 273
Gross
amounts of
recognised
financial
assets
Gross offset Financial
amounts of in the Net collateral
recognised statement amounts and cash
financial of financial subject collateral
liabilities(1) position(2) to offset(3) pledged(4,7) Net amount
Rm Rm Rm Rm Rm
2013
Liabilities
Derivative liabilities 107 339 (16 236) 91 103 (72 749) 18 354
Trading liabilities 7 879 7 879 (7 879)
Deposit and current
accounts6 47 696 (33 743) 13 953 (3 932) 10 021
162 914 (49 979) 112 935 (84 560) 28 375
(1) Gross amounts are disclosed for recognised assets and liabilities that are either offset in the statement of financial position or subject to a
master netting arrangement or a similar agreement, irrespective of whether the IFRS offsetting criteria is met.
(2) The amounts that qualify for offset in accordance with the IFRS criteria.
(3) Refer to the reconciliation below.
(4) Recognised financial instruments that do not qualify for offset in terms of the criteria per IFRS, but that are subject to an enforceable master
netting arrangement or similar agreement, including financial collateral (whether recognised or unrecognised).
(5) In most cases, the group is allowed to sell/repledge collateral received.
(6) The most material amounts offset in the statement of financial position pertain to cash management accounts. The cash management accounts
allow holding companies (or central treasury functions) to manage the cash flows of a group by linking the current accounts of multiple legal
entities within a group. It allows for cash balances of the different legal entities to be offset against each other to arrive at a net balance for the
whole group. In addition, it should be noted that all repurchase agreements and reverse repurchase agreements, subject to a master netting
arrangement (or similar agreement), have been included.
(7) In most instances, the counterparty may not sell or repledge collateral pledged by the group.
Reconciliation of net amounts included in the statement of financial position after
application of offset
Amounts
disclosed
per the
Net amounts Amounts statement
subject not subject Held for of financial
to offset to offset Total sale position
Rm Rm Rm Rm Rm
2014
Assets
Cash and balances with central banks 80 879 80 879 16 577 64 302
Derivative assets 129 628 22 649 152 277 90 644 61 633
Trading assets 8 990 110 772 119 762 47 722 72 040
Pledged assets 26 407 26 407 12 222 14 185
Financial investments 451 623 451 623 702 450 921
Loans and advances 102 036 876 023 978 059 49 818 928 241
Non-current assets held for sale (219 958) 219 958
Other financial and non-financial assets 93 838 93 838 2 273 91 565
240 654 1 662 191 1 902 845 1 902 845
Liabilities
Derivative liabilities 143 861 19 743 163 604 91 323 72 281
Trading liabilities 6 479 50 465 56 944 13 183 43 761
Deposit and current accounts 17 380 1 096 437 1 113 817 66 605 1 047 212
Subordinated debt 33 443 33 443 7 922 25 521
Policyholders' liabilities 287 516 287 516 287 516
Non-current liabilities held for sale (182 069) 182 069
Other financial and non-financial liabilities 85 887 85 887 3 036 82 851
167 720 1 573 491 1 741 211 1 741 211
2013
Assets
Cash and balances with central banks 67 409 67 409 14 099 53 310
Derivative assets 87 852 16 042 103 894 39 420 64 474
Trading assets 19 079 96 856 115 935 61 347 54 588
Pledged assets 13 252 13 252 6 539 6 713
Financial investments 395 746 395 746 29 395 717
Loans and advances 82 579 815 597 898 176 58 556 839 620
Non-current assets held for sale (183 284) 183 284
Other financial and non-financial assets 96 517 96 517 3 294 93 223
189 510 1 501 419 1 690 929 1 690 929
Liabilities
Derivative liabilities 91 103 17 362 108 465 39 221 69 244
Trading liabilities 7 879 45 462 53 341 17 973 35 368
Deposit and current accounts 13 953 972 828 986 781 65 043 921 738
Subordinated debt 31 963 31 963 7 447 24 516
Policyholders' liabilities 263 944 263 944 263 944
Non-current liabilities held for sale (134 504) 134 504
Other financial and non-financial liabilities 93 787 93 787 4 820 88 967
112 935 1 425 346 1 538 281 1 538 281
The table below sets out the nature of the agreements and the rights relating to items which do not qualify for offset but
that are subject to either a master netting arrangement or similar agreement.
Financial asset/liability Nature of agreement Related rights to offset
Derivative assets and liabilities International swaps and The agreement allows for offset in the event of default.
derivatives
Trading assets and trading Global master repurchase The agreement allows for offset in the event of default.
liabilities agreements
Loans and advances to banks Customer agreements In the event of liquidation or bankruptcy, offset shall be
and Banks Act enforceable subject to Banks Act requirements being met.
Deposit and current accounts Customer agreements In the event of liquidation or bankruptcy, offset shall be
and Banks Act enforceable subject to Banks Act requirements being met.
Accounting policies
Basis of preparation
The group's 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 and early adoption of new and revised IFRS, as
set out below.
Adoption of new and amended
standards effective for the current
financial year
The accounting policies are consistent with those reported
in the previous year except as required in terms of the
adoption of the following standards and interpretation
effective for the current period:
- IAS 32 Financial Instruments: Presentation –
Amendment to Offsetting Financial Assets and Financial
Liabilities (IAS 32)
- IFRS 10 Consolidated Financial Statements – Investment
Entities amendment (IFRS 10)
- IFRIC 21 Levies (IFRIC 21).
Early adoption of revised standards
- Amendment to IAS 16 Property, Plant and Equipment
(IAS 16) and IAS 38 Intangible Assets (IAS 38) –
Clarification of Acceptable Methods of Depreciation and
Amortisation (2014 amendment)
- IFRS 14 Regulatory Deferral Accounts (2014 issued)
(IFRS 14)
- Annual improvements 2012 – 2014 cycle (excluding
the amendment to IFRS 7 Financial Instruments:
Disclosure).
- Amendments to IFRS 10 Consolidated Financial
Statements, IFRS 12 Disclosure of Interests in Other
Entities and IAS 28 Investments in Associates and
Joint Ventures provide further relief in the particular
circumstance when a parent need not present
consolidated financial statements (2014 amendment).
- The abovementioned IFRS standards and interpretation,
adopted on 1 January 2014, did not have any effect
on the group's previously reported financial results
or disclosures and had no material impact on the
accounting policies.
Acronyms and abbreviations
BCBS Basel Committee on Banking Supervision
bps Basis points
Basel III Basel Capital Accord
Brazil Banco Standard de Investimentos SA
BSI Banco Standard de Investimentos SA
CAGR Compound annual growth rate
CDS Credit default swaps
CIB Corporate & Investment Banking
CSDP Central Securities Depository Participant
DT Dividend withholding tax
FCTR Foreign currency translation reserve
FIC Fixed income and currency
GDP Gross domestic product
HEPS Headline earnings per share
HQLA High quality liquid assets
IAS International Accounting Standards
ICBC The Industrial and Commercial Bank of China Limited
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
Inbursa Grupo Financiera Inbursa SAB
JSE JSE Limited
LCR Liquidity coverage ratio
Liberty Liberty Holdings Group
NAV Net asset value
NII Net interest income
NIR Non-interest revenue
NSFR Net stable funding ratio
NSX Namibian Stock Exchange
OA global markets Outside Africa global markets business
OCI Other comprehensive income
PBB Personal & Business Banking
PIM Principal investment management
RCS RCS Investment Holdings Proprietary Limited
repos Reverse repurchase agreements
ROE Return on equity
SAICA South African Institute of Chartered Accountants
SARB South African Reserve Bank
SB Plc Standard Bank Plc
SBG Standard Bank Group
SENS Stock Exchange News Service
STC Secondary tax on companies
the group Standard Bank Group
Troika Troika Dialog Group Limited
Tutuwa Black economic empowerment ownership initiative
USD United States dollar
Johannesburg, 5 March 2015
Administrative and contact details
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 switchboard
Tel: +27 11 636 9111
Directors
TMF Phaswana (chairman)
Shu Gu** (deputy chairman), RMW Dunne#, F du Plessis,
TS Gcabashe, BJ Kruger* (chief executive),
Adv KD Moroka, AC Parker, ANA Peterside CON##,
SP Ridley*, MJD Ruck, Lord Smith of Kelvin KT#,
PD Sullivan###, BS Tshabalala, SK Tshabalala* (chief executive),
Wenbin Wang**, EM Woods
*Executive director **Chinese #British
### Australian
## Nigerian
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
Please direct all customer queries and comments to:
information@standardbank.co.za
Please direct all shareholder queries and comments to:
InvestorRelations@standardbank.co.za
www.standardbank.com
Date: 05/03/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
