Wrap Text
Unaudited condensed consolidated interim results and dividend announcement for the six months ended 30 June 2016
Standard Bank Group Limited
Registration number 1969/017128/06
Incorporated in the Republic of South Africa
JSE share code: SBK
ISIN: ZAE000109815
NSX share code: SNB
ISIN: ZAE000109815
Unaudited condensed consolidated interim results and dividend announcement
for the six months ended 30 June 2016
The Standard Bank Group Limited’s (the group) condensed consolidated interim results, including the statement of
financial position, income statement, statement of changes in equity, statement of other comprehensive income and
statement of cash flows, for the six months ended 30 June 2016 (results) are prepared in accordance with the
requirements of the JSE Limited (JSE) Listings Requirements, the requirements of International Financial Reporting
Standards (IFRS) and its interpretations as adopted by the International Accounting Standards Board, the
South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting
Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council and the
requirements of the South African Companies Act, 71 of 2008. This announcement has been prepared in accordance
with IAS 34 - Interim Financial Reporting (IAS 34), excluding paragraph 16A(j) as permitted by the JSE Listings
Requirements. A full analysis of the results for the six months, which includes the full IAS 34 disclosure
requirements, is available for viewing at www.standardbank.com/reporting or from the company’s registered office
upon request.
The accounting policies applied in the preparation of these condensed consolidated interim results are in terms of
IFRS and are consistent with the accounting policies applied in the preparation of the group’s previous audited
consolidated annual financial statements with the exception of changes referred to below.
These interim results have not been audited or independently reviewed by the group’s external auditors. The group’s
2015 annual financial information has been correctly extracted from the underlying audited consolidated annual financial
statements.
The interim results discussed in this announcement are presented on an IFRS basis.
1H16 refers to the first half year results for 2016. 1H15 refers to the first half year results for 2015. FY15 refers
to the full year results for 2015. Change % reflects 1H16 change on 1H15.
All amounts relate to the group’s results unless otherwise specified.
The directors of the group take full responsibility for the preparation of this report.
The preparation of the group’s results was supervised by the group financial director, Arno Daehnke BSc, MSc, PhD,
MBA, AMP.
The results were made publicly available on 18 August 2016.
This report contains pro forma constant currency financial information. For further details refer to below.
In line with changes to the JSE’s Listings Requirements during 2014, the group no longer posts a physical copy of this
document to its shareholders. 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, can be found.
Highlights
- R10 861 million Headline earnings
1H15: R10 373 million
up 5%
- 680 cents Headline earnings per share
1H15: 650 cents
up 5%
- 340 cents Dividend per share
1H15: 303 cents
up 12%
- 9 381 cents Net asset value per share
1H15: 8 832 cents
up 6%
- 14.4% Return on equity (ROE)
1H15: 15.1%
- 13.2% Common equity tier I ratio
1H15: 13.1%
- 56.8% Cost-to-income ratio - banking activities
1H15: 57.3%
- 1.05% Credit loss ratio - banking activities
1H15: 0.99%
All results in this booklet are presented on an IFRS basis. For financial periods up to the end of December 2015, the
group normalised its results to reflect the group’s view of the economics of its Black Economic Empowerment Ownership
(Tutuwa) initiative and the group’s share exposures entered into to facilitate client trading activities and for the
benefit of Liberty policyholders.
Overview of financial results
Group results
Shareholders are reminded that the group has reverted to IFRS as its primary reporting basis in 2016. Unless otherwise
specified, all figures and movements referred to below are prepared on an IFRS basis. In addition, from the 2016
financial reporting period the group’s primary segments comprise the group’s banking activities, which consist of Personal
and Business Banking (PBB), Corporate and Investment Banking (CIB) and Central and other. The group’s banking activities
together with the group’s other banking interests and Liberty Holdings Limited, represent the group’s total operations.
The group’sinterest in ICBC Argentina, previously included in Central and other, and ICBC Standard Bank Plc (ICBCS), previously
included in CIB’s results, now comprise the group’s other banking interests and represent the group’s associate interests
in previously consolidated entities that are held in terms of strategic partnerships with the Industrial and Commercial
Bank of China (ICBC). CIB and Central and other previously reported results have accordingly been restated to exclude the
equity accounted earnings relating to these entities.
Group headline earnings and headline earnings per share increased by 5% to R10 861 million and 680 cents respectively.
An interim dividend of 340 cents per share has been declared, representing a 12% increase on 1H15 and 2.0x dividend
cover. Headline earnings growth of 5% combined with 9% growth in average equity resulted in a decline in group ROE from
15.1% for 1H15 to 14.4% for 1H16. Banking activities recorded an ROE of 15.2% for 1H16.
During 1H16 the group continued to reap the benefits of ongoing growth in its businesses both in South Africa and in
the rest of Africa franchise. Rest of Africa legal entities contributed 31% to banking activities’ total income, relative
to 29% in the prior period, and 27% to the banking activities’ headline earnings, from 28% in the prior period.
The 1H15 headline earnings included the financial impact of a partial recovery in respect of insurance claims relating
to an external fraud on aluminium held in the Qingdao port in China, a write-down of the residual aluminium exposure in
China and cash flow hedge releases relating to the disposal of the group’s interest in Standard Bank Plc (SB Plc) and
Brazil, which together totalled R1,2 billion. Furthermore, in the prior period, group earnings attributable to ordinary
shareholders included R2,8 billion of non-recurring net disposal gains (excluded from headline earnings) relating mainly
to the release from the group’s foreign currency translation reserve (FCTR) on disposal of its controlling interest in
SB Plc which did not recur in 1H16.
The commentary which follows refers to the group’s banking activities. Other banking interests and Liberty’s results
are discussed separately.
Operating environment
The global growth outlook going into 2016 was cautiously positive, with the International Monetary Fund (IMF) forecasting
an improvement in global growth to 3.4% relative to the 3.1% recorded in 2015. The risks highlighted focused on China’s
demand and the speed of its economic re-balancing, sustained low commodity prices and uncertainty leading to overall
weak global demand. In the first quarter, output growth across key markets, other than the US, was better than expected
and the oil markets improved from January lows on the back of a decline in supply, broadly supporting the outlook.
Subsequently, however, the risks highlighted at the beginning of the year have started to materialise, increasing volatility
and uncertainty. Britain’s vote to leave the European Union and the associated lack of clarity has only served to
exacerbate this. Further US monetary tightening, although widely expected at the beginning of the year, has not materialised
and accommodative monetary policy in Europe has continued.
Across sub-Saharan Africa, oil and other commodity export-reliant countries continue to feel the impact of lower prices on
the back of excess supply and subdued China demand. More specifically, oil exporters continue to experience strain as the
oil price stubbornly remains below production cost levels, placing pressure on those countries’ foreign currency reserves
and local currencies. The pace of structural reform, which is required to promote diversification and much needed economic
growth, has been slow. In addition, the prolonged and widespread drought brought by El Niño has affected a number of African
countries, in particular across east, south and central parts of the region. Net oil importing countries have benefited from
the lower oil prices to moderate the inflationary pressures brought by the drought.
In South Africa (SA), the mining and agriculture sector headwinds associated with low commodity prices and the
persistent drought continued to place pressure on the economy into 2016. Whilst the relative currency weakness provided a
boost to trade and manufacturing, it was insufficient to offset the headwinds, resulting in GDP contraction year-on-year
in 1Q16. For most of the period under review, the country operated under the threat of a downgrade of its sovereign rating
to sub-investment grade by ratings agencies. Higher rates and above target inflation throughout the period placed
additional strain on consumers, manifesting in lower confidence levels and a contraction of consumer credit. The rand
strengthened through the period from the low levels of late January 2016. The overall macro deterioration, although marked
and prolonged, has been more gradual than that experienced in the 2008/2009 crisis, enabling businesses and consumers to
better prepare and adjust.
Revenue
Total income grew by 15% in 1H16, with net interest income (NII) increasing by 18% on the back of stronger margins, up
23bps to 372bps. The key drivers of the margin expansion were a positive endowment impact, improved PBB loan pricing,
and a favourable mix impact.
Non-interest revenue (NIR) grew 12% supported by a growing contribution from the rest of Africa. Net fees and commissions
grew by 13% while trading revenue increased by 21% on the back of good growth in fixed income and currencies (FIC)
trading, and equities trading, up 19%, and 61% respectively. Other revenue was 21% lower than in the prior period due to
the non-recurrence of certain gains on the disposal of real estate investments and fair value gains within the
investment portfolio recorded in the prior period.
Credit impairment charges
Total credit impairment charges were 16% higher than the prior period, due primarily to increased credit impairment
charges in CIB and to a lesser extent PBB in the rest of Africa. The total credit loss ratio increased from 99bps in the
prior period to 105bps. CIB’s credit loss ratio increased from 25bps to 49bps and its credit impairment charges increased
from R591 million to R1 298 million, in particular on the back of increases in non-performing loans (NPLs) in the oil &
gas and power & infrastructure sectors.
PBB’s credit loss ratio decreased from 148bps to 141bps, driven by a decline in mortgage related impairment charges
period-on-period on the back of sustained good performance of the book as well as better collections. Impairments in
commercial and business lending declined while card debtors and vehicle and asset finance (VAF) impairments were 10% and
16% higher respectively. Overall personal unsecured impairments rose, reflective of the difficult macro environment in SA
as well as in a number of other countries in which the group operates.
Operating expenses
The group’s cost-to-income ratio improved from 57.3% to 56.8% despite operating expenses increasing by 14% over the
prior period. Staff costs increased by 16% while other operating expenses increased by 12%. Growth in staff costs was
driven by overnight salary increases, the full six month impact of the conversion of temporary staff to permanent employment
which began on 1 April 2015 and increases in headcount to support business growth, innovation and digital banking, and
wealth and investment initiatives. Other operating expenses include a R300 million loss related to the Japan fraud,
increased amortisation of capitalised software and higher premises costs.
The weakness of the rand over the period contributed to 4% of the growth in income and expenses. On a constant
currency basis, total income grew by 11% and operating expenses grew by 10%, resulting in positive JAWs of 1%.
Loans and advances
Gross loans and advances to customers grew by 8% from 1H15 to 1H16. CIB loans to customers continued to grow faster
than PBB, at 15% and 5% respectively. Residential mortgages recorded growth of 4% relative to 1H15 on the back of an
increase in new business registrations. Moderate growth of 2% in card debtors and 3% in personal loans was supplemented
by good growth in business and vehicle and asset finance lending, which grew by 6% and 8% respectively.
Capital, funding and liquidity
The group remains appropriately capitalised with capital levels marginally higher than those at year-end. The group’s
common equity tier I ratio as at 30 June 2016 was 13.2% (FY15: 13.1%) and tier I ratio was 13.6% (FY15: 13.3%). The
group’s capital position remains strong and more than sufficient to meet the capital requirements as prescribed by
regulatory authorities across markets in which the group has a presence.
Deposits and current accounts from customers increased by 7%, compared to the prior period, with retail priced deposits
growing at 9%, outpacing wholesale priced deposits from customers, which grew at 6%. Retail priced deposits were 4% lower
on 30 June 2016 than on 31 December 2015, adversely impacted by the strengthening of the rand against the USD and several
African currencies, most notably the naira. Adjusted for the currency impact, retail priced deposits actually grew slightly
period on period.
The group maintained its strong liquidity position within approved risk appetite and tolerance limits. Total contingent
liquidity amounted to R329,3 billion as at 30 June 2016 (1H15: R300,6 billion), and remains adequate to meet all internal
stress testing, prudential and regulatory requirements. As at 30 June 2016 the group’s quarterly average Basel III
liquidity coverage ratio (LCR) amounted to 104.8%, exceeding the 70% minimum phased-in Basel III LCR requirement. The
group, together with the local banking industry, continues to engage, through the Banking Association South Africa (BASA),
with the South African Reserve Bank (SARB) to ensure that the net stable funding ratio (NSFR) framework aligns to local
industry conditions and requirements.
Gross loans and advances to customers
Change 1H16 1H15 FY15
% Rm Rm Rm
Personal & Business Banking 5 582 076 555 695 576 078
Mortgage loans 4 332 782 319 168 325 867
Vehicle and asset finance 8 80 929 75 229 80 278
Card debtors 2 31 683 31 139 31 174
Other loans and advances 5 136 682 130 159 138 759
Corporate & Investment Banking 15 370 822 323 322 363 596
Corporate loans 14 306 981 270 321 307 546
Commercial property finance 20 63 841 53 001 56 050
Other services (77) (8 534) (4 824) (5 033)
Gross loans and advances to customers 8 944 364 874 193 934 641
Deposits and current accounts from customers
Change 1H16 1H15 FY15
% Rm Rm Rm
Personal & Business Banking 10 486 515 442 915 498 189
Retail priced deposits 9 389 910 356 637 404 341
Wholesale priced deposits 12 96 605 86 278 93 848
Corporate & Investment Banking 5 598 024 571 403 572 635
Other services 6 (4 121) (4 373) (6 477)
Deposits and current accounts from customers 7 1 080 418 1 009 945 1 064 347
Comprising:
Retail priced deposits and current accounts 9 389 910 356 637 404 341
Wholesale priced deposits 6 690 508 653 308 660 006
Deposits and current accounts from customers 7 1 080 418 1 009 945 1 064 347
Headline earnings by business unit
Change 1H16 1H15 FY15
% Rm Rm Rm
Personal & Business Banking 14 5 492 4 834 11 237
Corporate & Investment Banking 13 4 983 4 399 9 094
Central and other (>100) (502) (1) (8)
Banking activities 8 9 973 9 232 20 323
Other banking interests (99) 2 208 (569)
Liberty (5) 886 933 2 433
Standard Bank Group 5 10 861 10 373 22 187
Overview of business unit performance
Personal & Business Banking
PBB’s headline earnings grew 14% to R5 492 million. Strong NII growth of 18% and NIR growth of 14% translated into
total income growth of 16%. Credit impairment charges were 3% higher than in 1H15 while operating expenses increased by
17%, affected by the impact of the increase in permanent employees for the full period, the R300 million Japan fraud, and
higher information technology systems amortisation. PBB’s ROE increased from 16.1% to 16.4%. PBB SA’s earnings rose by
10% to R5,0 billion, PBB Outside Africa increased 48% to R313 million and PBB Rest of Africa increased by R105 million to
R158 million. On a constant currency basis, total income grew by 13% and operating expenses grew by 14%.
Transactional products headline earnings increased 10% relative to the prior period to R1 375 million, despite the
operational risk losses associated with the Japan fraud which dampened earnings. Total income increased by 15% driven by
positive endowment and balance sheet growth, partly offset by lower interchange revenue.
Mortgage lending headline earnings grew by 17% relative to the prior period to R1 225 million. Total income grew 10%
driven by underlying growth in new business and improved pricing. Credit impairments fell 13% and the credit loss ratio
declined from 80bps to 67bps on the back of good performance of the book and better collections.
Card products headline earnings grew 15% to R785 million, supported by strong growth in the rest of Africa. Card products
recorded total income growth of 17% on the back of strong NII and NIR despite the headwinds brought about by interchange
reform. Increasing consumer strain was reflected in the increase in NPLs and credit loss ratio which increased from 463bps
to 495bps.
VAF headline earnings increased 1% to R165 million. SA VAF headline earnings grew 10%; however, this was largely
offset by losses in the rest of Africa where the VAF product is still in a developmental phase. Total income growth was
strong at 16% on the back of a growing book and improving portfolio yield in SA, despite pressure from increased competition
and sharply declining new passenger vehicle sales in SA. The credit loss ratio increased from 141bps to 150bps
reflecting an uptick in NPLs.
Lending products headline earnings grew 13% to R581 million, supported by total income growth of 16%. Advances growth
was driven by growth in revolving credit plans with muted growth across the other portfolios. Lending products’ credit
loss ratio declined from 216bps to 202bps.
Bancassurance and wealth earnings grew 16% to R1 361 million. Total income improved by 25% as a result of margin
earned on increasing loan and deposit balances, higher revenues associated with the bancassurance arrangement with Liberty
and insurance returns.
Corporate & Investment Banking
CIB’s headline earnings grew 13% to R4 983 million. Total income grew 17% to R17 717 million with a strong contribution
from the rest of Africa franchise. NII increased 26%, reflecting the successes of the liability-led model complemented
by targeted credit growth within selected sectors. The tough macro-economic environment impacted customers, in particular
in the oil-reliant West Africa region, requiring increased credit impairment charges resulting in a credit loss ratio
of 49bps (1H15: 25bps). Continued investment in building client capabilities and capacity, coupled with the currency
impact, drove cost growth to 14% and positive JAWs of 3%. CIB ROE improved to 18.2% from a restated 17.7% for the first
six months of 2015.
Global markets recorded excellent headline earnings growth of 26% to R2 590 million during the period with income
growth of 21% on the back of robust client activity across all regions and the ability to take advantage of market
volatility and dislocation. Strong income growth supported positive operating leverage.
Transactional products and services headline earnings were down 5% to R1 327 million. Total income was 21% higher due
to good deposit growth, positive endowment impact of rate increases in SA and a strong performance from our investor
services business. Strong top-line growth was dented somewhat by an increase in impairment charges off a low base, related
primarily to exposures in the rest of Africa portfolio. Continued investment in building the capacity of the business to
support franchise growth, with a particular focus on IT systems, contributed to cost growth of 22%.
Investment banking headline earnings increased 14% to R1 146 million despite large increases in impairment charges.
Strong NII growth, driven by a combination of moderate growth in loans and advances and margin expansion, was partially
offset by a decline in NIR, as difficult market conditions dampened confidence and delayed the closing of transactions.
Sustained low commodity prices and continued macro deterioration have led to higher impairment charges, particularly in
natural resources linked sectors. Costs were well contained resulting in positive JAWs of 6% for the period.
Real estate investments and principal investment management (PIM) recorded a headline loss of R80 million, largely
attributed to the costs associated with the business’ wind down.
Central and other
In the prior period, the Central and other segment included a R515 million gain related to the cash flow hedge releases
on the disposal of the group’s operations in Brazil and the 60% interest in SB Plc. Excluding this amount, headline
earnings would have been a R516 million loss. By comparison, in the current period, the segment recorded a R502 million
loss.
Other banking interests
Headline earnings from the group’s other banking interests fell from R208 million to R2 million. The headline earnings
contribution from the group’s 20% interest in ICBC Argentina grew 52% to R358 million as this operation continued to
trade profitably despite the devaluation of the Argentinean peso in late 2015. In the first half of 2015, the group equity
accounted its investment in ICBCS from 1 February and reported an equity accounted loss of R28 million. This loss
included the group’s share of a partial recovery in respect of aluminium fraud related insurance claims of R347 million,
offsetting an operating loss for the five months of R375 million. For the current six-month period, the equity accounted
loss was R356 million, reflecting the continued difficult operating environment for revenue generation but some improvement
in cost control.
Liberty
The financial results reported are the consolidated results of the group’s 55% investment in Liberty. Bancassurance
results are included in PBB. Liberty’s BEE normalised headline earnings for the six months to June 2016 decreased by 9% to
R1 821 million, of which the IFRS headline earnings attributable to the group was R886 million. Operating earnings were
down by 15% whilst earnings from the shareholder investment portfolio grew by 4%. The fall in operating earnings was as
a result of declines in individual and group arrangements as well as asset management which were partly offset by gains
in LibFin Markets and a reduction in central and other. Liberty’s capital position remains strong despite weaker sales
and earnings in the six months to June 2016.
Prospects
The latest IMF forecasts expect global GDP growth of 3.1% for 2016, down from 3.4% at the beginning of the year.
Although the impact of “Brexit” is expected to be most felt in the United Kingdom and European economies, prolonged
uncertainty regarding the outcome of the separation negotiations could result in downside risk to this forecast. Despite the
economic headwinds, the IMF expects emerging and developing markets to grow at 4.1%, far outstripping the advanced economies
at 1.8%.
Sub-Saharan Africa’s GDP is expected to grow at 1.6% with South Africa trending towards zero growth and a contraction
in Nigeria. East and South & Central regions are expected to continue to fare better than the oil exporting countries in
West Africa. Ahead of South Africa’s next ratings review in December 2016, considerable effort is being spent by
government, business and labour to find ways to promote growth, employment and greater inclusion. We are cognisant of the
constraints under which our customers are currently operating. Despite increasing our credit provisions to reflect this, the
group remains well capitalised and in a position to continue to invest and grow in our targeted sectors and countries.
We continue to monitor developments in the banking sector and financial markets to ensure that we remain appropriately
equipped to deliver on our vision to be the leading financial services organisation in, for and across Africa. We are
focused on delivering effective solutions tailored to our customers’ needs and continue to invest in our franchise, our
products and our people. We are committed to delivering through-the-cycle earnings growth and ROE within our target range
of 15% - 18% over the medium term. This includes a heightened focus on optimising resource allocations across the
group, coupled with tighter management of capital supply, and a diligent focus on costs.
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. 94 of 340,00 cents per ordinary share (the cash dividend) to ordinary shareholders recorded in the register
of the company at the close of business on Friday, 16 September 2016. The last day to trade to participate in the
dividend is Tuesday, 13 September 2016. Ordinary shares will commence trading ex dividend from Wednesday, 14 September 2016.
The salient dates and times for the cash dividend are set out in the table below.
Ordinary share certificates may not be dematerialised or rematerialised between Wednesday, 14 September 2016, and
Friday, 16 September 2016, both days inclusive. Ordinary shareholders who hold dematerialised shares will have their
accounts at their Central Securities Depository Participant (CSDP) or broker credited on Monday, 19 September 2016.
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. 94 of 3,25 cents (gross) per first
preference share, payable on Monday, 12 September 2016, to holders of first preference shares recorded in the books of
the company at the close of business on the record date, Friday, 9 September 2016. The last day to trade to participate
in the dividend is Tuesday, 6 September 2016. First preference shares will commence trading ex dividend from Wednesday,
7 September 2016.
- Non-redeemable, non-cumulative, non-participating preference shares (second preference shares) dividend No. 24 of
396,13 cents (gross) per second preference share, payable on Monday, 12 September 2016, to holders of second preference
shares recorded in the books of the company at the close of business on the record date, Friday, 9 September 2016. The
last day to trade to participate in the dividend is Tuesday, 6 September 2016. Second preference shares will commence
trading ex dividend from Wednesday, 7 September 2016.
The salient dates and times for the preference share distributions are set out in the table below.
Preference share certificates (first and second) may not be dematerialised or rematerialised between Wednesday,
7 September 2016 and Friday, 9 September 2016, both days inclusive. Preference shareholders (first and second) who hold
dematerialised shares will have their accounts at their CSDP or broker credited on Monday, 12 September 2016.
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
Ordinary preference shares preference shares
shares (First preference shares) (Second preference shares)
JSE Limited (JSE)
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 94 94 24
Gross distribution/dividend per share (cents) 340,00 3,25 396,13
Last day to trade in order to be eligible Tuesday, Tuesday, Tuesday,
for the cash dividend 13 September 2016 6 September 2016 6 September 2016
Wednesday, Wednesday, Wednesday,
Shares trade ex the cash dividend 14 September 2016 7 September 2016 7 September 2016
Record date in respect of the Friday, Friday, Friday,
cash dividend 16 September 2016 9 September 2016 9 September 2016
Dividend cheques posted and CSDP/
broker account credited/updated Monday, Monday, Monday,
(payment date) 19 September 2016 12 September 2016 12 September 2016
The above dates are subject to change. Any changes will be released on the 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 South African Income Tax Act, 58 of 1962, the cash dividend will, unless exempt, be subject to dividends
tax that was introduced with effect from 1 April 2012. South African resident ordinary and preference shareholders that
are not exempt from dividends tax, will be subject to dividends tax 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 289 cents per ordinary share,
2,7625 cents per first preference share and 336,7105 cents per second preference share. Non-resident ordinary and preference
shareholders may be subject to dividends tax 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:
- 1 618 175 588 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.
Financial statistics
Change 1H16 1H15 FY15
for the six months ended 30 June 2016 % Unaudited Unaudited Audited
Number of ordinary shares in issue (000’s)
End of period 1 595 627 1 601 792 1 601 417
Weighted average 1 597 746 1 596 273 1 597 399
Diluted weighted average 1 618 260 1 623 184 1 611 522
Cents per ordinary share
Headline earnings 5 679,8 649,8 1 388,9
Continuing operations 6 679,8 639,1 1 394,5
Discontinued operation (100) 10,7 (5,6)
Diluted headline earnings 5 671,2 639,1 1 376,8
Continuing operations 7 671,2 628,6 1 382,4
Discontinued operation (100) 10,5 (5,6)
Dividend 12 340,0 303,0 674,0
Net asset value 6 9 381 8 832 9 433
Financial performance (%)
ROE 14.4 15.1 15.6
Net interest margin on continuing banking activities1 3.72 3.49 3.52
Credit loss ratio on continuing banking activities 1.05 0.99 0.87
Cost-to-income ratio on continuing banking activities2 56.8 57.3 56.5
Capital adequacy ratios (%)
Basel III
Tier I capital adequacy ratio1 13.6 13.6 13.3
Total capital adequacy ratio1 15.9 16.0 15.7
Common equity tier I ratio 13.2 13.1 12.9
1 1H15 has been restated as a result of a calculation methodology change.
2 Comparatives have been restated as a result of a definition change.
Condensed consolidated statement of financial position
1H16 1H15 FY15
Change Unaudited Unaudited Audited
as at 30 June 2016 % Rm Rm Rm
Assets
Cash and balances with central banks 16 73 442 63 066 75 112
Derivative assets 36 79 942 58 931 111 089
Trading assets 47 122 839 83 650 86 219
Pledged assets (37) 18 324 29 149 34 429
Financial investments 1 470 968 464 052 486 704
Current tax assets (11) 721 807 534
Loans and advances 2 1 071 206 1 045 389 1 076 917
Non-current asset held for sale1 (100) 111
Other assets (12) 29 127 32 999 24 552
Interest in associates and joint ventures (4) 8 827 9 162 9 703
Investment property 6 30 955 29 273 30 508
Property and equipment 16 210 16 254 17 670
Goodwill and other intangible assets 6 23 970 22 644 24 031
Deferred tax assets (7) 1 241 1 333 1 881
Total assets 5 1 947 772 1 856 820 1 979 349
Equity and liabilities
Equity 6 176 257 166 729 178 908
Equity attributable to ordinary shareholders 6 149 690 141 470 151 069
Preference share capital and premium 5 503 5 503 5 503
Non-controlling interest 7 21 064 19 756 22 336
Liabilities 5 1 771 515 1 690 091 1 800 441
Derivative liabilities 36 90 951 66 749 133 958
Trading liabilities (25) 46 848 62 675 43 304
Current tax liabilities (16) 7 134 8 509 4 304
Deposits and debt funding 6 1 197 155 1 132 127 1 186 514
Policyholder liabilities 3 305 065 295 353 298 232
Subordinated debt 12 28 438 25 443 27 141
Provisions and other liabilities (4) 95 066 98 823 101 894
Deferred tax liabilities >100 858 412 5 094
Total equity and liabilities 5 1 947 772 1 856 820 1 979 349
1 During 2015, the group’s associate interest in Ünlü Menkul Degerler A.S. was classified as a non-current asset
held for sale and was disposed of on 21 October 2015.
Condensed consolidated income statement
1H16 1H15 FY15
Change Unaudited Unaudited Audited
for the six months ended 30 June 2016 % Rm Rm Rm
Continuing operations
Income from banking activities 15 49 863 43 240 91 113
Net interest income 18 27 775 23 449 49 310
Non-interest revenue 12 22 088 19 791 41 803
Income from investment management and life insurance activities 7 11 695 10 945 23 997
Total income 14 61 558 54 185 115 110
Credit impairment charges 16 (5 815) (5 032) (9 371)
Net income after credit impairment charges 13 55 743 49 153 105 739
Operating expenses in banking activities 14 (28 340) (24 756) (51 434)
Operating expenses in insurance activities 11 (8 433) (7 592) (16 184)
Net income before non-trading and capital related items 13 18 970 16 805 38 121
and equity accounted earnings
Non-trading and capital related items (>100) (214) 142 (1 512)
Share of post tax profit/(loss) from associates and joint ventures (47) 152 287 (323)
Net income before indirect taxation 10 18 908 17 234 36 286
Indirect taxation (5) (1 137) (1 195) (2 739)
Net income before direct taxation 11 17 771 16 039 33 547
Direct taxation 21 (4 716) (3 908) (8 187)
Profit for the period from continuing operations 8 13 055 12 131 25 360
Profit from discontinued operation1 (100) 3 002 2 741
Profit for the period (14) 13 055 15 133 28 101
Attributable to non-controlling interests 19 2 047 1 714 3 970
Attributable to preference shareholders 3 196 190 377
Attributable to ordinary shareholders (18) 10 812 13 229 23 754
Earnings per share from continuing operations and
discontinued operation
Basic earnings per ordinary share (cents) 676,7 828,7 1 487,0
Diluted earnings per ordinary share (cents) 668,1 815,0 1 474,0
Earnings per share from continuing operations
Basic earnings per ordinary share (cents) 676,7 640,7 1 315,5
Diluted earnings per ordinary share (cents) 668,1 630,1 1 303,9
1 Gains and losses relating to SB Plc have been presented as a single amount relating to its post tax profit.
Headline earnings
1H16 1H15 FY15
Change Unaudited Unaudited Audited
for the six months ended 30 June 2016 % Rm Rm Rm
Profit for the period from continuing operations 6 10 812 10 227 21 013
Headline adjustable items added/(reversed) 80 (15) 1 687
Goodwill impairment - IAS 36 333
Loss/(gains) on a disposal of a business - IFRS 10 3 (189) (195)
Loss on sale of property and equipment - IAS 16 5 3 48
Realised foreign currency loss/(profit) on foreign operations
- IAS 21 41 (5)
Impairment of associate - IAS 27/IAS 36 10 112
Impairment of intangible assets - IAS 36 196 113 1 330
Realised (gains)/losses on available-for-sale assets - IAS 39 (134) 17 64
Taxation on headline earnings adjustable items (26) (6) (381)
Non-controlling interests' share of headline earnings
adjustable items (5) (4) (42)
Standard Bank Group headline earnings from continuing
operations 7 10 861 10 202 22 277
Profit for the period from discontinued operation (100) 3 002 2 741
Headline adjustable items reversed (2 831) (2 831)
Loss on disposal of subsidiary - IFRS 10 1 303 1 303
Realised foreign currency profit on foreign operations - IAS 21 (4 054) (4 054)
Net investment hedge gain - IAS 39 (68) (68)
Realised gains on available-for-sale assets - IAS 39 (12) (12)
Standard Bank Group headline earnings from
discontinued operation (100) 171 (90)
Standard Bank Group headline earnings 5 10 861 10 373 22 187
Condensed consolidated statement of other comprehensive income
1H16 1H15 FY15
Unaudited Unaudited Audited
for the six months ended 30 June 2016 Rm Rm Rm
Profit for the period 13 055 15 133 28 101
Other comprehensive income after tax for the period (9 364) (4 828) 3 009
Items that may be reclassified subsequently to profit and loss (9 306) (4 788) 3 109
Exchange differences on translating foreign operations (9 315) (4 303) 4 103
Net change on hedges of net investments in foreign operations (110) (166) (325)
Movement in the cash flow hedging reserve 138 (448) (903)
Net change in fair value of cash flow hedges (1 054) 706 1 551
Realised fair value adjustments of cash flow hedges transferred to 1 192 (1 154) (2 454)
profit or loss
Movement in the available-for-sale revaluation reserve (19) 129 234
Items that may not be reclassified to profit and loss (58) (40) (100)
Defined benefit fund remeasurements (51) (46) (121)
Other (losses)/gains (7) 6 21
Total comprehensive income for the period 3 691 10 305 31 110
Attributable to non-controlling interests (194) 1 474 5 227
Attributable to equity holders of the parent 3 885 8 831 25 883
Condensed consolidated statement of changes in equity
Ordinary Preference Non-
shareholders' share capital controlling Total
equity and premium interest equity
for the six months ended 30 June 2016 Rm Rm Rm Rm
Balance at 1 January 2015 (audited) 136 985 5 503 19 146 161 634
Total comprehensive income for the period 8 641 190 1 474 10 305
Transactions with owners, recorded directly in equity (4 156) (190) (767) (5 113)
Equity-settled share-based payment transactions 89 26 115
Deferred tax on share-based payment transactions 134 134
Transactions with non-controlling shareholders (152) (192) (344)
Net increase in treasury shares 374 (107) 267
Net repurchase of share capital and share premium and
capitalisation of reserves (462) (462)
Redemption of preference shares 1 307 1 307
Net dividends paid (5 446) (190) (494) (6 130)
Unincorporated property partnerships capital reductions
and distributions (97) (97)
Balance at 30 June 2015 (unaudited) 141 470 5 503 19 756 166 729
Balance at 1 July 2015 (unaudited) 141 470 5 503 19 756 166 729
Total comprehensive income for the period 16 865 187 3 753 20 805
Transactions with owners, recorded directly in equity (7 266) (187) (1 126) (8 579)
Equity-settled share-based payment transactions (1 481) 47 (1 434)
Deferred tax on share-based payment transactions (206) (206)
Transactions with non-controlling shareholders (217) (586) (803)
Net decrease in treasury shares (308) 156 (152)
Net repurchase of share capital and share premium and
capitalisation of reserves (179) (179)
Redemption of preference shares 10 10
Net dividends paid (4 885) (187) (743) (5 815)
Unincorporated property partnerships capital reductions
and distributions (47) (47)
Balance at 31 December 2015 (audited) 151 069 5 503 22 336 178 908
Balance at 1 January 2016 (audited) 151 069 5 503 22 336 178 908
Total comprehensive income for the period 3 689 196 (194) 3 691
Transactions with owners, recorded directly in equity (5 068) (196) (970) (6 234)
Equity-settled share-based payment transactions 487 16 503
Deferred tax on share-based payment transactions 47 47
Transactions with non-controlling shareholders (126) (302) (428)
Net increase in treasury shares 561 9 570
Net repurchase of share capital and share premium and
capitalisation of reserves (123) (123)
Redemption of preference shares 65 65
Net dividends paid (5 979) (196) (693) (6 868)
Unincorporated property partnerships capital reductions
and distributions (108) (108)
Balance at 30 June 2016 (unaudited) 149 690 5 503 21 064 176 257
Condensed consolidated statement of cash flows
1H16 1H15 FY15
Unaudited Unaudited Audited
for the six months ended 30 June 2016 Rm Rm Rm
Net cash flows from operating activities 10 839 15 841 35 504
Direct taxation paid (4 745) (4 109) (8 012)
Other operating cash flows 15 584 19 950 43 516
Net cash flows generated from/(used in) investing activities 1 969 (28 435) (31 828)
Capital expenditure (3 123) (3 798) (9 527)
Other investing cash inflows/(outflows) 5 092 (24 637) (22 301)
Net cash flows used in financing activities (5 736) (5 956) (11 509)
Cash outflow from share buybacks net of issue of share capital (123) (462) (641)
Net cash outflow from equity transactions with non-controlling interests (524) (454) (1 118)
Release of empowerment reserve 65 1 307 1 317
Subordinated debt issued 1 714 2 844 4 005
Subordinated debt redeemed (3 061) (3 127)
Dividends paid (6 868) (6 130) (11 945)
Effect of exchange rate changes on cash and cash equivalents (8 742) 737 2 066
Net decrease in cash and cash equivalents (1 670) (17 813) (5 767)
Cash and cash equivalents at beginning of the period 75 112 80 879 80 879
Cash and cash equivalents at the end of the period 73 442 63 066 75 112
Comprising:
Cash and balances with central banks 73 442 63 066 75 112
Notes
Condensed segment report
1H16 1H15 FY15
Change Unaudited Unaudited1 Audited1
for the period ended 30 June 2016 % Rm Rm Rm
Revenue contribution by business unit
Personal & Business Banking 16 33 541 28 875 60 573
Corporate & Investment Banking 17 17 717 15 149 31 388
Central and other 78 (1 395) (784) (848)
Banking activities 15 49 863 43 240 91 113
Other banking interest2
Liberty 7 11 695 10 945 23 997
Standard Bank Group 14 61 558 54 185 115 110
Profit or loss attributable to ordinary shareholders
Personal & Business Banking 13 5 468 4 825 10 638
Corporate & Investment Banking 17 4 959 4 235 8 678
Central and other (>100) (503) 3 028 2 625
Banking activities (18) 9 924 12 088 21 941
Other banking interest2 (99) 2 208 (569)
Liberty (5) 886 933 2 382
Standard Bank Group (18) 10 812 13 229 23 754
Total assets by business unit
Personal & Business Banking 6 677 600 641 314 682 080
Corporate & Investment Banking 7 911 751 854 955 930 644
Central and other (25) (40 059) (32 008) (42 114)
Banking activities 6 1 549 292 1 464 261 1 570 610
Other banking interest2 (5) 7 028 7 361 7 933
Liberty 2 391 452 385 198 400 806
Standard Bank Group 5 1 947 772 1 856 820 1 979 349
Total liabilities by business unit
Personal & Business Banking 5 606 450 577 616 614 614
Corporate & Investment Banking 6 851 516 801 890 871 597
Central and other (1) (52 853) (52 123) (61 748)
Banking activities 6 1 405 113 1 327 383 1 424 463
Other banking interest2
Liberty 1 366 402 362 708 375 978
Standard Bank Group 5 1 771 515 1 690 091 1 800 441
1 Where responsibility for individual cost centres and divisions within business units change, the comparative figures are
reclassified accordingly.
2 For the group's 2016 financial reporting period the group's primary segments comprise the group's banking activities,
which consist of PBB, CIB and central and other. The group's banking activities together with the group's other banking
interests and Liberty, represent the group's total activities and operations. The group's interest in ICBC Argentina,
previously included in Central and other, and ICBCS, previously included in CIB's results, are now included as part of
the group's Other banking interests and represent the group's associate interests in previously consolidated entities that
are held in terms of strategic partnerships with ICBC.
Notes continued
Contingent liabilities and capital commitments
1H16 FY15
Unaudited Audited
as at 30 June 2016 Rm Rm
Letters of credit and bankers' acceptances 11 834 11 437
Guarantees 63 551 67 161
Contingent liabilities 75 385 78 598
Investment property 681 835
Property and equipment 379 405
Other intangible assets 1 014 1 169
Commitments 2 074 2 409
Legal proceedings
In the ordinary course of business, the group is involved as a defendant in litigation, lawsuits and other
proceedings. Management recognises the inherent difficulty of predicting the outcome of defended legal proceedings.
Nevertheless, based on management's knowledge from investigation analyses and after consulting with legal counsel,
management believes that there are no individual legal proceedings that are currently assessed as being 'likely to
succeed and material' or 'unlikely to succeed but material should they succeed'. The group is also the defendant
in some legal cases for which the group is fully indemnified by external third parties, none of which are
individually material.
Management is accordingly satisfied that the legal proceedings currently pending against the group should not have a
material adverse effect on the group's consolidated financial position and the directors are satisfied that the group has
adequate insurance programmes and provisions in place to meet claims that may succeed.
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 2/2015 Headline Earnings, issued by the 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.
1H16 FY15
Unaudited Audited
Rm Rm
Cost 38 48
Carrying value 514 492
Fair value 514 482
Realised gains on disposal for the period included in
headline earnings 45
Attributable income before impairment 29 51
Equity securities
During the period, the group allotted 1 309 717 shares (FY15: 3 813 706 shares) in terms of the group's share
incentive schemes and repurchased 1 386 311 shares (FY15: 3 923 373 shares).
The total equity securities held as treasury shares at the end of the period was 16 798 218 shares (FY15: 11 084 016 shares).
These treasury shares exclude group shares that are held by certain structured entities (SEs) relating to the group's Tutuwa
initiative (refer to the related party note for more detail) since those SEs hold the voting rights on such shares and are
accordingly not treasury shares as defined by the JSE Listings Requirements.
Subordinated debt
During the period the group issued R1.7 billion (FY15: R4 billion) and redeemed Rnil (FY15: R3.1 billion) subordinated
debt instruments.
The terms of the issued bonds include a regulatory requirement which provides for the write-off in whole or in part on
the earlier of a decision by the relevant regulator (SARB) that a write off, or a public sector injection of capital or
equivalent support is necessary, without which the issuer would have become non-viable.
Japan card fraud incident
As announced by the group on 23 May 2016 on SENS, the group's South African banking operations were the victim of a
sophisticated, coordinated fraud incident which involved the withdrawal of cash using a small number of fictitious cards
at various ATMs in Japan. Standard Bank was the target of the fraud and there has been no financial loss for its
customers. Swift action was taken to contain the matter and the gross loss (prior to any potential recoveries) is estimated
at R300 million. This loss has been recognised in operating expenses within the group's banking activities.
Investigations into the cause of the fraud are at an advanced stage. The group is proactively taking steps to prevent
any potential reoccurrence of such an incident.
Foreign currency translation reserve
During the six months ended 30 June 2016 the group's FCTR decreased by R7.1 billion. This decrease was partly
attributable to the weakening of the Nigerian naira (51%) and Mozambicanmetical (40%) against the South African rand
which resulted in an FCTR loss of R2.6 billion and R1 billion respectively relating to the group's investments in Stanbic
IBTC Holdings PLC (SIBTC Holdings) and Standard Bank S.A.R.L, Mozambique(Mozambique). Post 30 June 2016, the Nigerian naira
and the Mozambican metical continued to depreciate which may result in a further decrease of the group's FCTR in the second
half of 2016 should such depreciation be sustained.
The group's goodwill materially comprises of goodwill relating to the group's investment in SIBTC Holdings which is
denominated in Nigerian naira. While the group will, in terms of IFRS, continue to review its investment in Nigeria for
impairment, the weakening of the Nigerian naira did not result in any impairment to the group's investment in SIBTC
Holdings at 30 June 2016. Similarly, the weaker Mozambican metical did not result in any impairment to the group's
investment in Mozambique at 30 June 2016.
SIBTC Holdings financial statements
SIBTC Holdings advised its shareholders through The Nigerian Stock Exchange (NSE) on 24 March 2016 that, due to the
Financial Reporting Council of Nigeria's (FRC) allegations surrounding material misstatements of its 2013 and 2014
financial statements (as referred to in the group's SENS announcements dated 30 October 2015 and 4 November 2015) and the
associated legal proceedings, it would be unable to complete its 2015 audit and issue its 2015 annual report before
31 March 2016. Whilst SIBTC Holdings noted that it intended to finalise its audited financial statements on or before
31 May 2016, this was unable to be achieved. On 27 May 2016, a revised announcement was released through the NSE to
shareholders informing them of this fact as well as stating that the FRC informed KPMG, SIBTC Holding's external auditors,
that it would sanction KPMG if, pending the outcome of litigation about the FRC's allegations on SIBTC Holdings' financial
statements, it issued an audit opinion in respect of the financial statements of SIBTC Holdings or any of its subsidiaries.
SIBTC Holdings and the group's management continues to explore all available avenues to resolve this matter with the FRC,
including through litigation in the courts of Nigeria.
The results of SIBTC Holdings will continue to be included in the group's consolidated results but will not be
individually identifiable or disclosed separately. These developments have not had any material impact on the group's results
for the six months ended 30 June 2016.
Related party transactions
Tutuwa related parties
Tutuwa participants were allowed to access their underlying equity value post the expiry of the lock-in period on
31 December 2014.
Tutuwa share movement since lock-in period ended
1H16 FY15
Unaudited Audited
Issued Weighted Issued Weighted
number of number of number of number of
shares shares shares shares
000's 000's 000's 000's
Shares financed by the group -
beginning of the period 5 751 5 751 27 726 27 726
Less: sale of shares by participants (21 975) (20 127)
Shares financed by the group -
end of the period 5 751 5 751 5 751 7 599
Post-employment benefit plans
Details of transactions between the group and the group's post-employment benefit plans are listed below:
1H16 FY15
Unaudited Audited
Rm Rm
Value of assets under management 12 302 11 776
Investments held in bonds and money market instruments 921 667
Value of ordinary group shares held 534 471
Balances and transactions with ICBCS
The following significant balances and transactions were entered into between the group and ICBCS,
an associate of the group:
1H16 FY15
Unaudited Audited
Rm Rm
Derivative assets 2 483 4 780
Trading assets 31 35
Loans and advances 30 136 29 902
Other assets 1 567 158
Derivative liabilities (3 794) (5 351)
Deposits and debt funding (2 946) (6 756)
Provisions and other liabilities (2 050) (218)
The group entered into certain transitional service level arrangements with ICBCS in order to manage the orderly
separation of ICBCS from the group post the sale of 60% of SB Plc. In terms of these arrangements, services are
delivered to and received from ICBCS for the account of each respective party.
Balances and transactions with ICBC
The following significant balances and transactions were entered into between the group and ICBC,
a 20.1% shareholder of the group:
1H16 FY15
Unaudited Audited
Rm Rm
Trading assets 7
Loans and advances 93 153
Other assets1 502 918
Deposits and debt funding (6 696)
Provisions and other liabilities (71)
1 The group recognised losses in respect of certain commodity reverse repurchase agreements with third parties
prior to the date of conclusion of the sale and purchase agreement relating to SB Plc with ICBC. As a
consequence of the sale and purchase agreement the group holds the right to 60% of insurance and other recoveries,
net of costs, relating to claims for those recognised losses prior to the date of conclusion of the transaction.
Settlement of these amounts will occur based on audited information on pre-agreed anniversaries of the completion
of the transaction and the full and final settlement of all claims in respect of losses incurred. As at 30 June 2016,
a balance of R562 million (FY15: R619 million) is receivable from ICBC in respect of this arrangement. An amount
of R40 million (1H15: R539 million) was recognised in the income statement for the period in respect of this right.
Other related party transactions
Acquisition of investment from an interest in associate
As at 30 June 2016, Liberty held an investment in the South Africa Infrastructure Fund Trust (SAIF), which was
accounted for as an interest in associate measured at fair value through profit or loss. SAIF has commenced a process to
realise its assets. Through this process Liberty, on 4 July 2016, purchased a share in Trans African Concessions (TRAC)
Proprietary Limited from SAIF for an amount of R1.5 billion. This purchase is part of an agreed arrangement with several
partners that will facilitate the establishment of a STANLIB managed infrastructure fund holding various non-controlling
interests in toll road concessions. This fund is likely to be accounted for as a mutual fund subsidiary of both Liberty
and the group.
Proposed sale of hotels businesses to The Cullinan Hotel Proprietary Ltd (Cullinan)
Liberty has entered into a sale of business agreement with Cullinan to dispose of interests in two investment
properties and the accompanying hotel businesses for an aggregate cash consideration of R310 million. The group through
Liberty, has a 40% interest in Cullinan, which is accounted for as an associate measured at fair value through profit
or loss. There will not be significant financial impact to the group's results or statement of financial position
arising from this disposal.
Change in group directorate
The following changes in directorate took place during the six months ended 30 June 2016:
Retirements
S Ridley as financial director 30 April 2016
Appointments
A Daehnke as financial director 1 May 2016
Offsetting and other similar arrangements
Financial instruments subject to offsetting, enforceable master netting arrangements or similar agreements
IFRS requires a financial asset and a financial liability 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.
There are no instances where the group has a current legally enforceable right to offset without 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 the required disclosures where 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 below.
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.
Net amounts
of financial
Financial assets
liabilities presented
Gross amount set off in the in the
of recognised statement statement of
financial of financial financial Collateral Net
assets1 position2 position3 received4 amount
Rm Rm Rm Rm Rm
Assets
30 June 2016 (unaudited)
Derivative assets 57 108 57 108 (50 913) 6 195
Trading assets 31 102 31 102 (29 079) 2 023
Loans and advances5 124 267 (32 116) 92 151 (90 607) 1 544
212 477 (32 116) 180 361 (170 599) 9 762
31 December 2015 (restated)6
Derivative assets 74 455 74 455 (68 533) 5 922
Trading assets 23 577 23 577 (21 242) 2 335
Loans and advances5 110 748 (34 862) 75 886 (74 256) 1 630
208 780 (34 862) 173 918 (164 031) 9 887
Net amount
of financial
Financial liabilities
assets presented
Gross amount set off in the in the
of recognised statement statement of
financial of financial financial Collateral Net
liabilities1 position2 position3 pledged4 amount
Rm Rm Rm Rm Rm
Liabilities
30 June 2016 (unaudited)
Derivative liabilities 69 421 69 421 (57 560) 11 861
Trading liabilities 15 880 15 880 (15 880)
Deposits and debt funding5 37 473 (32 116) 5 357 5 357
122 774 (32 116) 90 658 (73 440) 17 218
31 December 2015 (restated)6
Derivative liabilities 90 316 90 316 (72 405) 17 911
Trading liabilities 34 225 34 225 (31 890) 2 335
Deposits and debt funding5 45 463 (34 862) 10 601 (4 417) 6 184
170 004 (34 862) 135 142 (108 712) 26 430
1 Gross amounts are disclosed for recognised financial assets and financial liabilities that are either offset in the statement
of financial position or are subject to a master netting arrangement or a similar agreement, irrespective of whether the
offsetting criteria is met.
2 Gross amounts of recognised financial assets or financial liabilities that qualify for offset in accordance with the criteria
per IFRS.
3 Related amounts not offset in the statement of financial position that are subject to a master netting arrangement or similar
agreement, including financial collateral (whether recognised or unrecognised) and cash collateral. In most cases the group is
allowed to sell or repledge collateral received.
4 Related amounts not offset in the statement of financial position that are subject to a master netting arrangement or similar
agreement, including financial collateral (whether recognised or unrecognised) and cash collateral. In most instances, the
counterparty may not sell or repledge collateral pledged by the group.
5 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 of companies. 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.
6 A reassessment of financial instruments subject to master netting arrangements resulted in a restatement of amounts presented
at December 2015. The restatement improves the comparability of the financial information and did not affect the group's
statement of financial position.
Offsetting and other similar arrangements continued
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 derivatives The agreement allows for offset in the
event of default.
Trading assets and trading liabilities Global master repurchase agreements The agreement allows for offset in the
event of default.
Loans and advances to banks Customer agreement and Banks Act In the event of liquidation or bankruptcy,
offset shall be enforceable subject to
Banks Act requirements being met.
Deposits and debt funding Customer agreement and Banks Act In the event of liquidation or bankruptcy,
offset shall be enforceable subject to
Banks Act requirements being met.
Accounting policies and restatements
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 audited annual financial statements, except for changes as required by the mandatory
and early adoption of new and revised IFRS and circular, as set out below.
Adoption of new and amended standards and circular 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 amendments effective for the current period:
- Amendment to IFRS 11 Joint Arrangements (IFRS 11)
- SAICA Headline Earnings circular (Circular 2/2015)
- IAS 27 Separate Financial Statements (IAS 27): amendment which allows entities preparing separate financial
statements to utilise the equity method to account for investments in subsidiaries, joint ventures and associates.
The standard will be applied retrospectively.
Early adoption of revised standards:
- Amendment to IAS 7 Statement of Cash Flow (IAS 7)
- Amendment to IAS 12 Income Taxes (IAS 12)
The above mentioned amendments to the IFRS standards and circular, adopted on 1 January 2016, did not have any effect
on the group's previously reported financial results or disclosures and had no material impact on the group's accounting
policies. However, the group has elected to change the accounting policy for investments in associates and joint ventures
only to both Standard Bank Group Limited and The Standard Bank of South Africa's separate financial statements as a result
of the IAS 27 amendment from the cost method to the equity accounting method. The amendment has been applied retrospectively.
The amendment to IAS 1 Presentation of Financial Statements (IAS 1) which was early adopted at the 31 December 2015
reporting period, resulted in the following changes to the group's 30 June 2016 interim report:
- Changes to the ordering of line items in the financial statements, notably in the statement of financial position to
better reflect liquidity
- The application of materiality to items in the income statement, together with the development of a revised income
statement format, resulted in changes to the income statement's previously reported results as set out in the following
table:
As previously presented Revised presentation
1H15 1H15
Unaudited Unaudited
Rm Rm
Description Gain/(loss) Description Gain/(loss)
Non-interest revenue 19 796 Non-interest revenue1 19 791
Revenue sharing agreements with
discontinued operation (5)
Income from investment management
and life insurance activities 35 550
Income from investment management 10 945
Benefits due to policyholders (24 605) and life insurance activities2
Operating expenses in banking activities (24 762) Operating expenses in banking activities3 (24 756)
Share of post tax profit/(loss) from Share of post tax profit/(loss) from
associates and joint ventures 174 associates and joint ventures3 287
Gains on disposal and liquidation
of subsidiaries 261 Non-trading and capital related items3 142
1 Inclusion in total income of revenue sharing agreements with discontinued operation.
2 In determining net income from investment management and life insurance activities, benefits due to policyholders is
now presented together with income from investment management and life insurance activities.
3 A new line item, namely 'non-trading and capital related items', has been included in the income statement.
This line item replaces the previously disclosed income statement line items relating to, where applicable, goodwill
impairment and gain on disposal and liquidation of subsidiaries includes the impairment of intangible assets and the
loss on disposal of property and equipment that were previously included in operating expenses; and further includes
the net impairment of associates and gains on disposals of associates previously included in the share of profit
from associates and joint ventures.
Pro forma constant currency financial 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 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 material currencies. The pro forma constant currency financial information
has not been reviewed and reported on by the group's external auditors.
The following average exchange rates were used in the determination of the pro forma constant currency information.
US Nigerian Kenyan Zambian Ugandan
dollar naira shilling kwacha shilling
1H16 average exchange rate 15,400 0,076 0,152 1,443 0,005
1H15 average exchange rate 11,915 0,061 0,127 1,682 0,004
Acronyms and abbreviations
ATM Automated teller machine
BASA The Banking Association South Africa
Basel III Basel Capital Accord
BEE Black Economic Empowerment
bps Basis points
Brazil Banco Standard de Investimentos SA
CAGR Compound annual growth rate
CDS Credit default swaps
CIB Corporate & Investment Banking
CSDP Central Securities Depository Participant
Cullinan The Cullinan Hotel Proprietary Ltd
FCTR Foreign currency translation reserve
FIC Fixed income and currencies
FRC Financial Reporting Council of Nigeria
GDP Gross domestic product
IAS International Accounting Standards
ICBC The Industrial and Commercial Bank of China Limited
ICBCS The Industrial and Commercial Bank of China Standard Bank Plc
IFRS International Financial Reporting Standards
IMF International Monetary Fund
JAWs Difference between income and expense growth rate
JSE JSE Limited
LCR Liquidity coverage ratio
Liberty Liberty Holdings Group
NII Net interest income
NIR Non-interest revenue
NPL Non-performing loans
NSE Nigeria Stock Exchange
NSFR Net stable funding ratio
NSX Namibian Stock Exchange
PBB Personal & Business Banking
PIM Principal investment management
ROE Return on equity
SA South Africa
SAICA South African Institute of Chartered Accountants
SAIF South Africa Infrastructure Fund
SARB South African Reserve Bank
SB Plc Standard Bank Plc
SE Structured entities
SENS Stock Exchange News Service
SIBTC Holdings Stanbic IBTC Holdings Plc
the group Standard Bank Group
Tutuwa The group's black economic empowerment ownership initiative
US United States
VAF Vehicle and asset finance
Johannesburg, 18 August 2016
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
Zola.Stephen@standardbank.co.za
Head: Investor relations
Sarah Rivett-Carnac
Tel: +27 11 631 6897
Sarah.Rivett-carnac@standardbank.co.za
Group financial director
Arno Daehnke
Tel: +27 11 636 3756
Arno.Daehnke@standardbank.co.za
Head office switchboard
Tel: +27 11 636 9111
Directors
TS Gcabashe (Chairman), Shu Gu** (Deputy Chairman),
Dr A Daehnke*, RMW Dunne°, BJ Kruger* (Chief Executive), Adv KD Moroka, Dr ML Oduor-Otieno°°, AC Parker, ANA Peterside
CON^, MJD Ruck, PD Sullivan^^, BS Tshabalala, SK Tshabalala* (Chief Executive),
Wenbin Wang**, EM Woods
*Executive Director **Chinese °British °°Kenyan ^Nigerian ^^Australian
All nationalities are South African, unless otherwise specified as above.
Share transfer secretaries in South Africa
Computershare Investor Services
Proprietary Limited
Ground floor, 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, Namibia
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
ISIN: 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).
Please direct all customer queries and comments to: information@standardbank.co.za
Please direct all shareholder queries and comments to: InvestorRelations@standardbank.co.za
Date: 18/08/2016 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.