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Financial results for the year ended 31 December 2019
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 ZAE000109815
A2X share code: SBK
SBKP ZAE000038881 (first preference shares)
SBPP ZAE000056339 (second preference shares)
STANDARD BANK GROUP RESULTS ANNOUNCEMENT
for the year ended 31 December 2019
2019 results overview
"Standard Bank Group's results for the 2019 financial year are underpinned by the growth and resilience of
its core operations."
- Sim Tshabalala, Group chief executive
Standard Bank Group's results for the 2019 financial year (FY19) are underpinned by the growth and resilience
of its core operations. The constrained macroeconomic environment, particularly in South Africa, and ICBCS
losses impacted the group's results.
The group's banking operations reported headline earnings up 5% on the prior year (FY18) to R27.2 billion
and a return on equity (ROE) of 18.1%. This result was driven by quality top line growth and continued positive
operating leverage. While Liberty contributed positively to group earnings growth, the group's other banking
interests were a drag. Group headline earnings were R28.2 billion, an increase of 1% on FY18, and ROE was
16.8%. The group's capital position remained strong, with a common equity tier 1 capital adequacy (CET1) ratio
of 14.0%. A final dividend of 540 cents per share has been declared. Total dividends for the year were 2% higher
than the prior year.
Good balance sheet growth underpinned net interest income while non-interest revenue was supported by growth
in transaction volumes and trading revenues. Credit impairment charges increased of a low base in FY18. A
strong focus on cost containment continued throughout the year resulting in below inflation cost growth and
positive jaws of 113 basis points (bps).
Operating environment
In 2019, the US-China trade dispute, increase in geopolitical risks and weaker domestic demand across
multiple economies dampened global economic growth. Weaker demand suppressed inflation across local and
international markets which prompted central banks to reduce policy rates or adopt growth-supportive monetary
policy stances.
Sub-Saharan Africa's economic growth forecasts were revised downwards consecutively. Headwinds on the
external front, alongside the slow pace of reforms, severe weather-related shocks, as well as an increase in
security and political tensions in parts of the region, weighed on economic activity.
In South Africa, load-shedding undermined growth prospects, the pace of policy progress and reform was slow,
and Eskom's fiscal concerns remained unresolved. Business and consumer confidence levels remained low,
constraining spending and demand for credit. The economy shrank 1.4% in 4Q19 which resulted in a second recession
in less than two years. Real GDP growth for the year was 0.2%.
Personal & Business Banking
PBB's headline earnings grew 6% to R16.5 billion, underpinned by continued balance sheet and customer
franchise growth. Net interest income increased 6% to R44.1 billion, supported by balance sheet growth. A
favourable change in product mix and higher average rates in South Africa supported an increase in margin. This
was largely offset by lower average interest rate across the Africa Regions portfolio and the impact of IFRS 16.
This resulted in a net interest margin of 601 bps, 3 bps higher than in FY18. In South Africa, our customers
continued to migrate to our digital platforms, in particular the SBG mobile app. SBG mobile app active users
increased 55% to 2.0 million and the value of transactions executed via our mobile banking platform increased
46% to R382 billion.
Corporate & Investment Banking
CIB 's headline earnings grew 5%, 7% in constant currency change (CCY), to R11.8 billion. The operating
environment remained challenging and market conditions, volatile and fluid. Against this difficult backdrop,
CIB continued to deliver the innovative, bespoke solutions our clients need and have come to expect. As a business
with on-the-ground operations across 20 countries in Africa, and operations in five financial hubs outside of
Africa, it remains uniquely positioned to connect global multinational companies to the African markets and
African businesses to international markets. Strong growth in both average assets and liabilities in
Transactional Products and Services (TPS) and double-digit average asset growth in Investment Banking (IB)
supported revenues. Underlying client revenues grew 7% driven by the Financial Institutions, Mining & Metals,
Power & Infrastructure and Telecoms, Media & Technology sectors.
Other banking interests
Despite the tough operating conditions in Argentina, ICBC Argentina (ICBCA) continued its strong performance
in FY19. In August 2019, the group exercised its option to sell its 20% stake in ICBCA to ICBC. Headline
earnings from the group's 20% stake amounted to R583 million.
ICBC Standard Bank Plc (ICBCS) recorded a disappointing set of results in FY19. The loss of USD248 million
consisted of a single client loss of USD198 million, USD30 million related to restructuring costs and USD20
million of operating losses related to the business operations. The latter was driven by lower revenues on fixed
income and currency trading due to subdued market sentiment. The group's 40% share of the losses equated to
R1.4 billion. ICBC and the group, as shareholders, have had robust conversations and made meaningful progress
with ICBCS management with regards to how best to put the business on a path to sustainable profitability. These
discussions resulted in a number of management actions in ICBCS, including significant headcount reductions
and a reduction by ICBCS of business lines and locations in FY19. Closer integration into and cooperation with
the ICBC group is an important element of the plan to achieve sustainable profit.
Liberty
Liberty is making progress towards re-building a competitive and sustainable business. While the focus on
new business volumes continues, normalised operating earnings improved 10% year on year. In FY19, the
Shareholder Investment Portfolio benefitted from improved investment market returns, particularly in respect of
foreign and local equities. Liberty headline earnings grew 23% to R3.3 billion. The group's share of earnings
amounted to R1.9 billion, up 16% on the prior year.
Prospects
Global economic growth is expected to remain slow and downside risks persist. These risks include, amongst
others, the impact of the COVID-19 outbreak, a rise in geopolitical and social unrest, and further
weather-related disasters. In contrast, subdued inflation and accommodative monetary policy should support
financial conditions and, in turn, emerging market flows. Continued strong growth in East Africa and an ongoing
moderate recovery in West Africa should favour sub-Saharan Africa's economic growth prospects. Conditions are
expected to remain difficult in Malawi, Zambia and Zimbabwe. While the impact of COVID-19 on global growth remains
unknown, it is clear that a China slowdown and a disruption of Sino-Africa trade will negatively impact the
trade balances of sub-Saharan African commodity exporters and be inflationary for importers.
In South Africa, while there were some positive governance and growth-related developments in 2019, there
is still much more to be done. The constraints to growth and productivity are structural and the reforms
required are well understood. In the absence of tangible progress, we foresee sustained economic weakness,
driven by insufficient electricity supply and low confidence.
The macro-economic outlook in the countries in which we operate is uncertain and the operating environment
is expected to remain challenging. Trading conditions are expected to remain difficult, regulatory-imposed
constraints and technological change are set to stay, and competition will continue to intensify. Our top priority
in 2020 is to increase our competitiveness by improving client experience through the seamless delivery of
relevant and personalised financial solutions to our clients in a secure manner via their channel of choice. We
will also continue to exercise tight cost discipline and seek to allocate resources efficiently and in support
of our strategy to build a future-ready Standard Bank Group.
We are a purpose driven organisation: Africa's our home, we drive her growth. We recognise that the role we
play, as the gate-keeper and facilitator of financial flows into and across Africa, is much bigger than
profits alone. Our long-term sustainability is inextricably linked to the social and economic upliftment of the
people and societies in the countries in which we operate. Accordingly, we will continue to contribute positively
to Africa's social, economic and environmental development.
Financial outcome
for the year ended 31 December 2019
Financial statistics
Change 2019 2018
%
Financial indicator (Rm)
Headline earnings 1 28 207 27 865
Banking activities headline earnings 5 27 216 25 847
Cents per ordinary share
Basic earnings per ordinary share (7) 1 593.5 1 722.6
Headline earnings per ordinary share 1 1 766.7 1 748.4
Dividend per ordinary share 2 994 970
Net asset value per ordinary share 3 10 742 10 380
Financial performance
ROE (%) 16.8 18.0
Credit loss ratio on banking activities (bps) 68 56
Cost-to-income ratio on banking activities 1 (%) 56.4 57.0
1 The group has, as permitted by International Financial Reporting Standards (IFRS), including IFRS 16 Leases
(IFRS 16), elected not to restate its comparative financial statements. Therefore comparability will not be
achieved by the fact that the comparative financial information has been prepared on an IAS 17 Leases basis.
Refer to the full results announcement for more detail on the adoption of IFRS16.
Income statement highlights - banking activities
CCY Change 2019 2018 1
% % Rm Rm
Net interest income 6 6 62 919 59 505
Non-interest revenue 4 4 47 542 45 826
Total income 5 5 110 461 105 331
Operating expenses 4 4 (62 335) (60 084)
Operating income 8 6 48 126 45 247
Credit impairment charges 23 23 (7 964) (6 489)
Taxation 1 - (9 894) (9 846)
Other 12 12 349 312
Attributable to non-controlling interests and other equity
instrument holders 1 1 (3 401) (3 377)
Banking activities headline earnings 6 5 27 216 25 847
Banking activities ROE (%) 18.1 18.8
1 Restated, refer to the full results announcement for details on the restatements.
Headline earnings by business unit
CCY Change 2019 2018 1
% % Rm Rm
Personal & Business Banking 6 6 16 510 15 539
Corporate & Investment Banking 7 5 11 795 11 202
Central and other 21 22 (1 089) (894)
Banking activities headline earnings 6 5 27 216 25 847
Other banking interests (over 100) (over 100) (864) 418
Liberty headline earnings 16 16 1 855 1 600
Group headline earnings 3 1 28 207 27 865
1 Where responsibility for individual cost centres and divisions within business units change, the comparative
figures have been reclassified accordingly.
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 has resolved to declare a final gross cash dividend No. 101
of 540 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 2020. The last day to trade to participate in the
dividend is Tuesday, 21 April 2020. Ordinary shares will commence trading ex dividend from Wednesday,
22 April 2020.
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 Wednesday, 22 April 2020,
and Friday, 24 April 2020, 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 2020.
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 dividends:
- 6.5% first cumulative preference shares (first preference shares) dividend No. 101 of 3.25 cents (gross)
per first preference share, payable on Monday, 20 April 2020, 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 2020. The last day to
trade to participate in the dividend is Tuesday, 14 April 2020. First preference shares will commence trading
ex dividend from Wednesday, 15 April 2020.
- Non-redeemable, non-cumulative, non-participating preference shares (second preference shares) dividend
No. 31 of 389.12 cents (gross) per second preference share, payable on Monday, 20 April 2020, 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 2020. The last day to trade to participate in the dividend is Tuesday, 14 April 2020. Second
preference shares will commence trading ex dividend from Wednesday, 15 April 2020.
The salient dates and times for the preference share dividend are set out in the table that follows.
Preference share certificates (first and second) may not be dematerialised or rematerialised between
Wednesday, 15 April 2020, and Friday, 17 April 2020, 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
2020.
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,
non-cumulative,
6.5% cumulative non-participating
Ordinary preference shares preference shares
shares (First preference shares) (Second preference shares)
JSE Limited
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 101 101 31
Dividend per share (cents) 540 3.25 389.12
Last day to trade in
order to be eligible
for the cash dividend Tuesday, 21 April 2020 Tuesday, 14 April 2020 Tuesday, 14 April 2020
Shares trade ex the cash dividend Wednesday, 22 April 2020 Wednesday, 15 April 2020 Wednesday, 15 April 2020
Record date in respect
of the cash dividend Friday, 24 April 2020 Friday, 17 April 2020 Friday, 17 April 2020
Dividend cheques posted and CSDP/broker
account credited/updated (payment date) Tuesday, 28 April 2020 Monday, 20 April 2020 Monday, 20 April 2020
The above dates are subject to change. Any changes will be released on the Stock Exchange News Service 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
20% 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 432 cents per ordinary share, 2.60 cents per first preference share and 311.296 cents per
second preference share. Non-resident ordinary and preference shareholders may be subject to dividends tax at
a rate of less than 20% 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:
- 1 619 709 548 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.
5 March 2020, Johannesburg
Other information
This announcement is a summary of the information contained in the full announcement and does not contain
full or complete details. Any investment decisions by investors or shareholders should be based on a
consideration of the full announcement released on SENS or available at www.standardbank.com/reporting and
also on the following JSE website: https://senspdf.jse.co.za/documents/2020/jse/isse/SBK/SBG2019.pdf
While this report, in itself, is not audited, the consolidated annual financial statements from which this
report is derived were audited by KPMG Inc. and PricewaterhouseCoopers Inc., who expressed an unmodified
opinion thereon. The full audit opinion, including any key audit matters, is available at
www.standardbank.com/reporting. Copies of the full announcement may be requested by emailing
InvestorRelations@standardbank.co.za or by phoning +27 11 636 5039. Copies of this announcement are also
available at Standard Bank Group Limited's registered office at no charge on weekdays from 09:00 to 16:00.
The directors of Standard Bank Group Limited take full responsibility for the preparation of this
announcement including the pro forma constant currency financial information, and that the financial information,
where applicable, has been correctly extracted from the underlying audited group financial statements. Due to its
nature, the pro forma financial information may not be a fair reflection of the group's results of operations.
Refer to the group's full announcement for further details regarding the computation of the group's pro forma
constant currency financial information. This announcement has not been audited. The group financial statements
were audited by KPMG Inc. and PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The
full audit opinion, including any key audit matters, will be available at www.standardbank.com/reporting when
the group's full annual financial statements are released on or about 17 April 2020. The group financial
statements an auditors' report thereon are available for inspection at the company's registered office.
Registered office: 9th floor, Standard Bank Centre, 5 Simmonds Street, Johannesburg 2001,
PO Box 7725, Johannesburg 2000
Independent sponsors: South Africa: JP Morgan Equities (SA) Proprietary Limited,
Namibia: Simonis Storm Securities (Proprietary) Limited
Joint sponsor: The Standard Bank of South Africa Limited (acting through its Corporate & Investment Banking
business unit)
Directors: TS Gcabashe (chairman), A Daehnke*, MA Erasmus1, GJ Fraser-Moleketi, GMB Kennealy, JH Maree
(deputy chairman), NNA Matyumza, KD Moroka, ML Oduor-Otieno 2, AC Parker, ANA Peterside CON 3, MJD Ruck, PD Sullivan 4,
SK Tshabalala* (chief executive), JM Vice, L Wang 5.
All nationalities are South African, unless otherwise specified.
* Executive director 1 British 2 Kenyan 3 Nigerian 4 Australian 5 Chinese
Date: 05-03-2020 07:30:00
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