Standardbank Cover.indd - Standard Bank - Investor Relations

Group results
in brief
Segmental
reporting
Income statement
analysis
Balance sheet
analysis
Capital
management
Key banking legal
entity information
Other information
and restatements
Shareholder
information
Overview of financial results continued
continued to grow simple embedded products and short-term
insurance policies in line with our focus on increasing the
penetration of insurance products in our existing suite of banking
products. Bancassurance in the rest of Africa continued to do well
and we saw positive traction from the bancassurance product roll
out in countries where bancassurance agreements have
been finalised.
Corporate & Investment Banking (CIB)
CIB had a mixed year in 2012, as a difficult operating environment
placed pressure on earnings. Despite the business delivering
strong revenues, with income up 20% on the prior year, this was
more than offset by cost growth and several large impairment
charges. The improved revenue performance reflects our focus on
strengthening our capabilities and improving co-ordination
to better serve our clients across Africa and selected
emerging markets.
TPS was the outstanding performer, with revenues up 32%.
This is a very promising result given the core role TPS plays across
the wider CIB franchise, being critical to our wholesale client
franchise and African growth ambitions. Cash management, trade
and investor services posted good growth in South Africa. In the
rest of Africa, a strong performance was achieved as we continued
to build the corporate banking platform across the continent, and
was supported by the positive endowment effect in the first half
of the year due to higher interest rates in East Africa and Nigeria.
We continued to invest in key electronic platform capability
in Africa.
Within Global markets, difficult market conditions for the
international activities offset a good performance across Africa.
Higher volumes and increased margins benefited the foreign
exchange and money market desks in Malawi, Mozambique and
Kenya. In South Africa, the foreign exchange desk had a strong
first half but trading slowed in the second half in an illiquid eventdriven
market with some large swings in the USD/ZAR rate.
Revenues from the international commodities business grew,
aided by a strong base metal performance, but regulatory
requirements negatively impacted income as a result of the costs
associated with holding larger liquidity asset buffers.
Investment banking revenues were up 11%, reflecting NII
earned on a large loan book and healthy levels of activity in
Africa. A number of strategically important deals were closed in
the year despite difficult market conditions, and a significant
effort has been made to develop our pipeline of deals across the
continent. NII was well ahead of the prior year due to a larger
loan book and improved interest margins.
gross loans increased from 0.91% in 2011 to 1.46%, and the
balance sheet remains healthy.
Costs in CIB grew 17%, excluding the charge of R758 million
arising from the restructure of our international operations.
Operational cost growth in key parts of our business in the rest of
Africa, primarily driven by our investment in people and technology
in high inflation environments, as well as the costs of regulatory
compliance incurred outside Africa, were the main contributors to
this cost growth. CIB reported headline earnings of R4 784 million,
down 13% on the prior year. Excluding the restructure charge,
headline earnings were down 4% to R5 322 million. ROE declined
to 10.4% (2011: 13.0%).
Liberty
The financial results reported are the consolidated results of our
54.4% investment in Liberty Holdings Limited. Bancassurance
results are included in PBB. Liberty’s normalised headline earnings
for the year ended 31 December 2012 were R3 768 million, of
which R2 033 million was attributable to Standard Bank Group
(2011: R1 428 million). Liberty’s 2012 financial performance
was positive across many indicators. All Liberty’s business units
are performing in line with or ahead of expectation and Liberty
now has a stable platform off which to drive its strategy for
growth. The 2012 performance also reflects Liberty’s more
cohesive nature as it begins to leverage new and current
capabilities to support other businesses through innovation, risk
management and knowledge sharing.
Normalised headline earnings were positively impacted by the
investment performance of Liberty’s shareholder capital
represented by the low risk balanced shareholder investment
portfolio. The operational earnings reflect a 2% increase after
adjusting for investment market performance. However, the
2011 base contains a once-off positive impact of an actuarial
assumption change. After adjusting for this, other once-off
changes and the increase in new business strain in 2012,
operating earnings increased by 15%. Assets under management
across the Liberty group grew by 16% to R528 billion.
Equity value per share of R115 was 15% up on 2011 and
reflected R5,9 billion of equity value profits, or a 21% return on
equity value. This is not only a function of the positive investment
markets, but reflects the growth in value of new business, the
strong operational business unit performances and LibFin’s ability
to add value through its credit origination business.
Credit impairments rose significantly from R1,0 billion to
R2,3 billion, with a credit loss ratio of 63 bps. This was as a result
of a small number of large specific credit impairments on the
Middle Eastern portfolio. Impairments as a percentage of total
8