RNS Number : 6960B
Standard Bank of South Africa Ltd
20 August 2008
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
Unaudited results and dividend announcement
for the six months ended 30 June 2008
Key financial highlights
Normalised IFRS
Return on equity (%) 19,8 21,4
Headline earnings growth (%) 15 22
Headline earnings per share (cents) 481,8 529,2
Headline earnings per share growth (%) 7 10
Cost-to-income ratio (%) 48,7 48,9
Credit loss ratio (%) 1,27 1,28
Dividends per share (cents) 193,0 193,0
Net asset value per share growth (%) 40 44
Overview of financial results
Standard Bank achieved satisfactory results in the first half of 2008, reflecting the diversification and resilience of our businesses
amidst
continued global financial market turmoil. Our strongly capitalised group and healthy liquidity profile has put us in a position to take
advantage of
business opportunities that are unfolding in our chosen growth markets.
The period was characterised by turbulence in financial markets worldwide and cyclically higher inflation and interest rates in South
Africa. Against this backdrop, the group grew headline earnings per share by 10% to 529,2 cents per share, increased net asset value per
share by 44% and achieved a return on equity of 21,4% on an International Financial Reporting Standards (IFRS) basis. On a normalised basis
headline earnings per share grew 7%, net asset value per share increased 40% and a return on equity of 19,8% was achieved.
Whereas the results are prepared on an IFRS basis, normalised results make adjustments for two accounting anomalies that have distorted
the results from
an economic perspective since 2004. These adjustments are explained later in this announcement. The commentary that follows is based on
the normalised results.
In the first half of the year further effects of the sub-prime and resulting credit crises spread through developed economies. Liquidity
continued to evaporate, credit spreads widened and fears of a global recession mounted. In developing economies, inflation increased on the
back of escalating energy and food prices.
In South Africa, consumers continued to come under pressure from rising inflation, falling asset values and tighter borrowing
conditions. The South African Reserve Bank has raised interest rates on ten occasions since June 2006, taking the prime lending rate 500
basis points higher to 15,5% at June 2008. Household spending lost momentum and activity in the residential property and passenger car
markets slowed significantly. However, strong investment spending continued to buoy growth in the corporate sector.
Our strategy to grow businesses in other emerging markets continued to deliver value in the period. Including Liberty Life, headline
earnings from South
Africa grew 1%. Our businesses in the rest of Africa lifted their contribution by 55% and those outside of Africa by 11%. This meant
that our operations outside South Africa grew headline earnings by 30% which enabled the group to achieve growth in headline earnings of 15%
in very difficult trading conditions.
Our breadth of business by product line also showed results. While Personal & Business Banking was not able to grow headline earnings
and Liberty Life's contribution fell 46%, Corporate & Investment Banking grew headline earnings
by a commendable 20%. Liberty Life's earnings are strongly correlated to South African investment market performance and the first half
of 2008 saw markets significantly underperform. This compares to the strong market performance in the first half of 2007.
Key factors impacting the results
* Higher inflation and interest rates in South Africa
Spiralling energy and food prices, together with the 100 basis point increase
in the prime lending rate over the six-month period, placed further strain on local consumers, eroding their ability to repay debt,
resulting in a marked increase in arrears in Personal & Business Banking lending units. These
economic impacts, combined with management actions taken to constrain growth in lending, resulted in a slowdown in asset growth in the
six months under review.
* Subscription for shares by the Industrial and Commercial Bank of China
Limited (ICBC)
On 3 March 2008, ICBC subscribed for 152,5 million newly issued ordinary shares for an aggregate consideration of R15,9 billion. This
new equity capital resulted in additional income that boosted earnings growth. The short-term effect of introducing this capital has been
slightly accretive to earnings per share but dilutive to return on equity (ROE). R4,3 billion of this capital has been used in the
acquisition of minority interests in Liberty Holdings in July 2008. Some capital has been used to fund organic business growth and the
remainder is earmarked for acquisition activity in emerging markets. The business co-operation with ICBC, though still gaining traction, is
progressing well, with numerous business opportunities having been identified.
* Recent acquisitions
Standard Bank acquired controlling interests in BankBoston Argentina on 1 April 2007 and in IBTC Chartered Bank Plc in Nigeria on 24
September 2007. The
results from both these operations are included for the full period adding an incremental R150 million and R234 million respectively to
group headline earnings. A 60% interest in CfC Bank (now renamed CfC Stanbic Holdings) in
Kenya was acquired effective 1 June 2008 and had no material effect on earnings. The integration of this operation into the group is
progressing well.
Banking activities income statement analysis
Net interest income - up 40%
Net interest income grew strongly in Personal & Business Banking and in Corporate & Investment Banking, by 34% and 49% respectively.
Central funding posted 66% growth, reflecting the income earned on the ICBC capital not yet deployed.
Net interest income growth was achieved through strong balance growth, particularly in the corporate customer loan book and a widening
net interest margin which increased by 25 basis points to 3,16%, mainly as a result of the endowment impact of higher interest rates on
shareholders' funds and transactional deposits. This benefit was offset to some extent by the higher cost of term funding as the domestic
bank continued to increase its long-term funding ratio.
Non-interest revenue - up 25%
Net fee and commission revenue grew by 21%. Within Personal & Business Banking account transaction fees grew 11% following price
increases that were lower
than inflation, coupled with a 7% growth in the number of accounts in South Africa and strong volume growth in the expanded branch
networks of our operations in the rest of Africa. Card-based fees rose 19%, helped by our
recent acquisition in Argentina and increased merchant turnover in South Africa. The outcome of the Competition Commission enquiry into
bank charges is expected to have some impact on Personal & Business Banking fees earned in South Africa, although this cannot be quantified
as yet. Corporate & Investment Banking
lifted advisory fees by 48% on the back of increased underwriting fees in Nigeria and higher corporate and structured finance advisory
deal volumes.
Trading revenue increased by 42%. Excellent growth of 90% was achieved in our operations in the rest of Africa with the inclusion of
IBTC Nigeria. In this market, foreign exchange and debt securities trading benefited from higher client volumes. Trading revenue outside
Africa grew 19% underpinned by robust activity in commodity markets and a strong performance from debt securities, as credit spreads
widened. Trading revenue in South Africa was up 24%, with good performances from commodities and foreign exchange trading
due to higher volatility, which was somewhat offset by a slowdown in debt securities trading.
Other non-interest revenue was 7% lower. Other revenue was reduced by unfavourable fair value movements in the group's listed property
investments particularly when compared to the high base set in the comparative period. Income from insurance-related activities benefited
from increased bancassurance commissions and the inclusion of the insurance operations of CfC Stanbic Holdings for the first time. Capital
profit on the partial realisation of Visa shares amounted to R123 million but is excluded
from headline earnings.
Credit impairment charges doubled
Credit impairment charges increased significantly by 113% and the credit loss ratio deteriorated from 0,78% to 1,27%.
The above-mentioned financial pressure on South African consumers brought about by interest rate hikes and declining disposable income
impacted Personal & Business Banking acutely. These factors combined to drive up impaired loans (previously referred to as non-performing
loans) by 122% since June 2007 and by 75% on December 2007, increasing the charge for impaired loans by 137% and resulting in a total credit
loss ratio for Personal & Business Banking of 2,18% (June 2007: 1,31%).
Mortgage loan customers felt the effects of the rising rate cycle and began experiencing difficulty in meeting their full contractual
repayments towards
the end of last year. This effect has been exacerbated by some contraction in house prices, affecting the expected realisation values of
security. The credit loss ratio for mortgages therefore rose from 0,61% to 1,30%. The component of this provision attributable to the
discounting of expected recoveries increased from 25 basis points at June 2007 to 78 basis points.
The credit loss ratio of 2,00% (June 2007: 1,38%) in instalment sale and
finance leases reflected the unremitting pressure on the recovery value of used passenger vehicles in a market that became increasingly
saturated due to the extent of delinquencies and higher fuel prices. The credit loss ratio in card debtors increased from 6,34% to 9,44%.
In Corporate & Investment Banking the credit loss ratio increased from 0,16% to 0,29%, with the increase mostly arising in the rest of
Africa.
Management continue to monitor the group's credit risk actively and closely. Credit extension has been tightened by increasing scorecard
cut-offs across a number of portfolios over the last year and capacity has been strengthened in customer debt management by enhancing
systems and increasing the number of staff.
Operating expenses - up 24%
The group improved the cost-to-income ratio to 48,7% (from 51,8% at June 2007), as a result of the strong income growth achieved. If the
impact of recent acquisitions is excluded, operating expenses grew by 17%.
Staff costs were 21% higher following a 10% increase in headcount and inflationary increases. Excluding the impact of acquisitions,
headcount rose 5% and staff costs 14%. Overall headcount in South Africa increased 3% since June 2007 and was marginally down since
December.
Other operating expenses increased 29% (or 21% excluding recent acquisitions). A 13% growth in IT costs was attributable to systems
developments and enhancements, greater levels of business activity and higher maintenance costs. Premises costs continued to escalate in
line with the group's expansion in its chosen markets. In South Africa, other operating expense growth was limited to 11%.
Balance sheet analysis
Banking assets grew by 30%, and by 26% excluding the effect of recent acquisitions.
Loans and advances growth
Growth
Growth December 2007
June 2007 to June 2008
to June 2008 (Annualised)
% %
Personal & Business Banking 20 16
Mortgage loans 21 15
Instalment sale and finance leases 14 2
Card debtors 13 9
Other loans 27 50
Corporate & Investment Banking 31 42
Banks 26 19
Customers 32 53
Gross loans and advances 25 28
Gross loans and advances increased by 25% from June 2007 with a marked slowdown in new business in personal banking in the period under
review.
Mortgage loans were up 21% on June 2007 mainly due to readvances on existing mortgages and reduced prepayments. New bond values fell by
8% and new bond registration volumes were down 14%, dampening balance growth since December to 15%. Instalment sale and finance leases grew
14% on June 2007, but were only
up 2% from December, mainly due to an increase in the non-motor book. Card debtors increased 13% due to higher average balances, partly
offset by a 2% reduction in the number of accounts. Recent strong growth in other lending relates mainly to a buoyant South African
agriculture sector and increased commercial lending in other countries, mainly on the African continent.
In Corporate & Investment Banking strong growth was achieved in all regions: South Africa by 31%; the rest of Africa by 44%, excluding
new acquisitions;
and outside Africa by 22%. Loans to customers gained momentum primarily due to an increase in specialised term finance and demand for
medium-term financing. Loans and advances to banks reflect placement of surplus liquidity.
Liquidity
Liquidity constraints in international money markets and debt capital markets have eased somewhat during 2008, although ongoing and
prolonged risk aversion
of investors and depositors remains evident. Prudent liquidity management practices continue to be rigorously applied within the bank's
liquidity management framework. The structural liquidity mismatch was managed within
best-practice banking guidelines. Surplus liquidity buffers, comprising unencumbered and readily available marketable and liquid assets,
amounted to
R75 billion as at 30 June 2008.
Capital and Basel II
The group implemented Basel II on 1 January 2008. Over the last year we have enhanced our internal economic capital and stress testing
methodologies significantly, and have improved and formalised our capital assessment process. As previously reported, the conversion to
Basel II led to increased risk-weighted exposures and lower qualifying capital, resulting in lower capital adequacy ratios. Lower
risk-weighted exposures in Personal & Business Banking were more than offset by higher risk-weighted exposures in Corporate & Investment
Banking portfolios and the addition of operational risk which was
not measured under Basel I.
Capital levels were significantly bolstered by the conclusion of the ICBC transaction in March 2008, which added R15,9 billion to group
capital. Capital adequacy ratios for the group at June 2008 were 13,9% and 11,2% for total and tier one ratios respectively.
Dividends
It is currently group policy to declare both interim and year-end dividends
at a cover ratio of 2,5 times normalised headline earnings. This policy remained unchanged and an interim dividend of 193 cents per
share was declared, an increase of 7% on the 2007 interim distribution of 181 cents per share.
Financial Sector Charter
We continue to support the harmonisation process undertaken by the financial sector and other stakeholders to achieve the alignment of
the Financial Sector Charter (FSC) to the Broad-based Black Economic Empowerment Codes of Good Practice legislated in 2007. The bank
maintained an A rating in the overall
FSC Scorecard with an improvement in the area of employment equity. Black managers comprised more than 50% of the bank's management in
South Africa at June 2008, of which 53% are female.
Transaction with Liberty Holdings minorities
The group's offer to acquire the issued ordinary shares of Liberty Holdings Limited that the group did not already own closed on 18 July
2008, at which
time 97,08% of minority shareholders had accepted the offer. Including Liberty Holdings shares bought directly by Standard Bank, the
total investment amounted to R4,3 billion. These transactions increased Standard Bank Group's interest in Liberty Holdings from 63,5% at
June 2008 to 98,9% and its effective share of Liberty Life from 35,0% to 53,2%.
We are pleased to have achieved our objective of increasing our effective economic interest in Liberty as part of a rebalancing of our
portfolio of financial services subsidiaries and to align our economic exposure with our strategic and commercial contribution to Liberty.
Liberty is considering the merits of implementing a holding company structure and Standard Bank has been approached by Liberty to
consider facilitating this structure by allowing Liberty Holdings to become such a listed holding company. Standard Bank, Liberty Holdings,
Liberty and their advisers are considering
this proposal as well as other alternatives in relation to Liberty Holdings.
Zimbabwe
Conditions in Zimbabwe have further deteriorated at both an economic and social level. Stanbic Bank Zimbabwe remains solvent and
profitable when measured in local currency. Despite the recent signing of a memorandum of understanding, political risk in this environment
remains high. The group adopts a
conservative approach in recognising earnings from this subsidiary and no amounts have been included in these results.
Prospects
The global economy has experienced a period of rapid deterioration and the outlook remains uncertain. South Africa's growth potential
for 2008 is being restrained by the potential slowdown in global economic activity. However, strong investment spending, particularly by the
South African government and public sector entities, is expected to support economic growth and should ease the impact of the slowdown.
Reduced disposable income following sharply increased food, transport and borrowing costs, a weaker residential property market and low
recovery values of vehicles are compounding the strain on households' ability to service debt which is likely to increase default experience
in South Africa.
The group publishes its financial objectives annually in March. The principal financial objectives for 2008 published at that stage were
normalised headline earnings per share growth of CPIX plus 5% and a return on equity of 21,0%. Following the significant increase in early
arrears and non-performing loans, which exceeded our expectations, we moderated our outlook at our May annual general meeting and advised
that growth in normalised headline earnings per share was only expected to exceed CPIX. The default experience in our
Personal & Business Banking loan book has worsened further since May and growth in normalised earnings per share, while positive, was
below CPIX for the period under review.
Given our recent experience of South African consumer credit performance and
the potential effects of volatility in international markets, we are currently not in a position to provide reliable guidance on results
for the financial year. In the circumstances, we intend issuing a voluntary trading update and results guidance in late October, following
the next trading quarter.
While the current environment presents challenging trading conditions, our capital position and growing franchise remain healthy and we
will maintain our focus on risk mitigation and cost-saving strategies to protect and grow shareholder wealth. We continually identify and
pursue growth opportunities in our chosen markets to enhance the group's long-term growth prospects.
Jacko Maree Derek Cooper
Chief executive Chairman
Johannesburg
12 August 2008
Normalised results
With effect from 2004, we have adjusted the group's results reported under International Financial Reporting Standards (IFRS) for two
required accounting conventions that do not reflect the underlying economic substance of transactions. Consistent with prior years, to
arrive at the normalised results the IFRS results have been adjusted for the following items:
* preference share funding for the group's Black Economic Empowerment Ownership initiative (Tutuwa) transaction that is deducted from
equity and reduces the shares in issue in terms of IFRS; and
* group companies' shares held for the benefit of Liberty Life policyholders that result in a reduction of the number of shares in issue
and the exclusion
of fair value adjustments and dividends on these shares. The IFRS requirement causes an accounting mismatch between income from
investments and changes in policyholders' liabilities.
Two recent transactions reduced the extent of the normalised adjustments relating to Tutuwa:
* In December 2007 the group externalised R1 billion of preference share financing provided in terms of the Tutuwa initiative, resulting
in the release of 24,7 million ordinary shares previously deemed by IFRS to be "treasury shares"; and
* In March 2008 Tutuwa participants sold 11,1% of their shares to ICBC, partly using the proceeds for the repayment of their preference
share liability, thereby releasing a further 11,0 million ordinary shares previously deemed by IFRS to be "treasury shares".
The result of these adjustments is shown in the table below:
Normalised financial statistics
for the six months ended 30 June 2008
% June June December
change 2008 2007 2007
Standard Bank Group
Cents per ordinary share
Headline earnings 7 481,8 451,1 960,6
Diluted headline earnings
7 477,7 444,5 947,5
Total dividends 7 193,0 181,0 386,0
Basic earnings 2 492,3 481,7 1 028,5
Diluted earnings 3 488,2 474,7 1 014,5
Net asset value 40 5 451 3 904 4 255
Financial performance(%)
ROE 19,8 24,4 24,8
Net interest margin 3,16 2,91 2,97
Credit loss ratio 1,27 0,78 0,78
Cost-to-income ratio 48,7 51,8 51,6
Number of ordinary shares in issue
(000's)
- end of period 11 1 527 810 1 370 740 1 372 597
- weighted average 8 1 474 519 1 366 720 1 369 223
- diluted weighted average
7 1 486 991 1 386 926 1 388 217
Normalised headline earnings contribution by business unit
for the six months ended 30 June 2008
% June June December
Rm change 2008 2007 2007
Personal & Business Banking (3) 2 538 2 623 5 658
Corporate & Investment Banking 20 3 726 3 099 6 732
Central and other 561 (71) (210)
Central and other - IFRS 466 (237) (536)
Tutuwa adjustments 95 166 326
Banking activities 21 6 825 5 651 12 180
Liberty Life (46) 279 514 973
Liberty Life - IFRS 511 448 867
Policyholders' deemed treasury shares and
Tutuwa adjustment (232) 66 106
Standard Bank Group 15 7 104 6 165 13 153
Normalised headline earnings
for the six months Weighted
ended 30 June 2008
Average Growth on
number of Headline 30 June
shares earnings 2007
'000 Rm %
Disclosed on an IFRS basis 1 368 386 7 241 22
Tutuwa initiative 67 293 112
- Initial transaction 99 190
- External financing (24 691)
- Disposal of shares to ICBC (7 206)
Group shares held for the benefit of
Liberty Life policyholders
38 840 (249)
Normalised 1 474 519 7 104 15
Unaudited results prepared in accordance with IFRS
Consolidated income statement
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Income from banking activities
33 28 816 21 695 47 296
Net interest income 41 14 390 10 193 22 549
Non-interest revenue 25 14 426 11 502 24 747
Income from investment management and
life insurance activities
(52) 13 486 28 086 49 834
Total income (15) 42 302 49 781 97 130
Credit impairment charges 113 4 497 2 109 4 590
Benefits due to policyholders
(67) 7 273 21 795 37 153
Income after credit impairment
charges and policyholders' benefits
18 30 532 25 877 55 387
Operating expenses in banking
activities 24 14 167 11 423 24 706
Operating expenses in investment
management and life insurance
activities
11 3 916 3 528 7 423
Net income before goodwill 14 12 449 10 926 23 258
Goodwill impairment/(gain) 2 (390) (376)
Net income before associates and
joint ventures
10 12 447 11 316 23 634
Share of profit from associates and
joint ventures
(19) 187 230 355
Net income before indirect taxation
9 12 634 11 546 23 989
Indirect taxation 26 647 515 1 185
Profit before direct taxation
9 11 987 11 031 22 804
Direct taxation (17) 2 804 3 386 6 232
Profit for the period 20 9 183 7 645 16 572
Attributable to minorities 43 1 531 1 074 2 471
Attributable to preference
shareholders 17 256 219 450
Attributable to ordinary shareholders
16 7 396 6 352 13 651
Basic earnings per share (cents)
5 540,5 517,0 1 109,0
Diluted earnings per share (cents)
7 521,2 486,4 1 044,1
Headline earnings
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Group profit attributable to ordinary
shareholders 16 7 396 6 352 13 651
Headline earnings adjustable items
added back or reversed(1)
(184) (424) (966)
Goodwill impairment/(gain) - IFRS 3
2 (390) (376)
Profit on sale of properties and
equipment - IAS 16
(6) (7) (61)
Impairment of properties and
equipment - IAS 16 28 - 10
Gains on disposal of businesses and
divisions - IAS 27
(17) - (6)
Impairment of intangibles - IAS 38
- 27 26
Gains on disposal of
available-for-sale assets - IAS 39
(191) (54) (559)
Taxation on headline earnings
adjustable items 29 5 32
Minority share of headline earnings
adjustable items - - 4
Headline earnings 22 7 241 5 933 12 721
(1)These headline earnings adjustable items have been included in the calculation of normalised headline earnings disclosed previously.
Segment report
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Revenue contribution by business unit
Personal & Business Banking 28 15 879 12 395 27 075
Corporate & Investment Banking
32 12 047 9 124 19 750
Central and other >100 997 349 818
Banking activities 32 28 923 21 868 47 643
Liberty Life (55) 12 869 28 380 50 320
Standard Bank Group - Normalised
(17) 41 792 50 248 97 963
Adjustments for IFRS 510 (467) (833)
Standard Bank Group - IFRS (15) 42 302 49 781 97 130
Profit and loss attributable to
ordinary shareholders
Personal & Business Banking (3) 2 571 2 644 5 707
Corporate & Investment Banking
21 3 739 3 102 6 772
Central and other >100 670 324 629
Banking activities 15 6 980 6 070 13 108
Liberty Life (46) 279 514 975
Standard Bank Group - Normalised
10 7 259 6 584 14 083
Adjustments for IFRS 137 (232) (432)
Standard Bank Group - IFRS 16 7 396 6 352 13 651
Consolidated balance sheet
as at 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Assets
Cash and balances with central banks
45 23 296 16 096 20 618
Financial investments, trading and
pledged assets
15 361 574 315 602 331 596
Loans and advances 25 735 576 589 773 646 781
Loans and advances to banks
25 107 203 85 585 98 631
Loans and advances to customers
25 628 373 504 188 548 150
Investment property 14 15 405 13 506 14 937
Derivative and other assets
42 189 323 133 267 141 968
Interest in associates and joint
ventures 15 12 435 10 859 12 293
Goodwill and other intangible assets
>100 9 220 2 885 6 666
Property and equipment 29 7 618 5 921 7 216
Total assets 25 1 354 447 1 087 909 1 182 075
Equity and liabilities
Equity 62 97 063 59 770 68 436
Equity attributable to ordinary
shareholders 67 79 921 47 871 53 671
Preference share capital and premium
5 503 5 503 5 503
Minority interest 82 11 639 6 396 9 262
Liabilities 22 1 257 384 1 028 139 1 113 639
Deposit and current accounts
23 779 740 636 405 705 843
Deposits from banks 35 87 231 64 836 72 372
Deposits from customers 21 692 509 571 569 633 471
Derivative, trading and other
liabilities 43 274 665 192 083 200 691
Policyholders' liabilities
(1) 180 493 182 817 186 137
Subordinated debt 34 22 486 16 834 20 968
Total equity and liabilities
25 1 354 447 1 087 909 1 182 075
Contingent liabilities and capital commitments
as at 30 June 2008
June June December
2008 2007 2007
Rm Unaudited Unaudited Audited
Letters of credit 16 219 10 998 14 299
Guarantees 28 122 26 272 31 916
Irrevocable unutilised facilities
57 677 53 096 47 172
102 018 90 366 93 387
Capital commitments
Contracted capital expenditure 847 285 161
Capital expenditure authorised but not yet
contracted 4 861 1 653 4 156
5 708 1 938 4 317
Consolidated cash flow information
for the six months ended 30 June 2008
June June December
2008 2007 2007
Rm Unaudited Unaudited Audited
Net cash from operating activities
15 592 16 775 32 694
Net cash used in operating funds
(24 177) (5 719) (14 956)
Net cash used in investing activities
(2 212) (7 279) (14 001)
Net cash from/(used in) financing activities
12 791 (2 616) (1 115)
Statement of changes in equity
for the six months ended 30 June 2008
Preference
Ordinary share
shareholders' capital and Minority Total
Rm funds premium interest equity
Balance at
1 January 2007 42 916 5 503 6 289 54 708
Total recognised income and
expenses 14 293 450 3 896 18 639
Profit for the year 13 651 450 2 471 16 572
Items accounted for directly
in reserves
642 1 425 2 067
Currency translation movement
and hedging
155 (52) 103
Cash flow hedging and
available-for-sale
revaluations
(423) - (423)
Change in shareholding of
subsidiaries
665 1 384 2 049
Other reserve movements
245 93 338
Issue of share capital and
premium 300 73 373
Share buy-backs - - -
Net decrease in treasury
shares 626 (455) 171
Net distributions paid
(4 464) (450) (541) (5 455)
Balance at
31 December 2007 53 671 5 503 9 262 68 436
Balance at
1 January 2008 53 671 5 503 9 262 68 436
Total recognised income and
expenses 12 202 256 2 404 14 862
Profit for the period
7 396 256 1 531 9 183
Items accounted for directly
in reserves
4 806 873 5 679
Currency translation movement
and hedging
2 998 562 3 560
Cash flow hedging and
available-for-sale
revaluations
1 393 - 1 393
Change in shareholding of
subsidiaries
232 351 583
Other reserve movements
183 (40) 143
Issue of share capital and
premium 16 061 - 16 061
Share buy-backs (128) - (128)
Net decrease in treasury
shares 1 075 368 1 443
Net dividends paid (2 960) (256) (395) (3 611)
Balance at 30 June 2008
79 921 5 503 11 639 97 063
Major business acquisition
Rm CfC Bank
Date of acquisition 1 June 2008
Percentage of voting equity instruments
acquired (%) 60
Carrying amount Fair value
The details of the fair value of the assets and
liabilities acquired and goodwill arising are
as follows(2):
Cash and balances with central banks 329 329
Trading assets and financial investments
1 859 1 851
Loans and advances 2 470 2 464
Property, equipment, intangibles and other
assets 996 1 367
Deposit and current accounts (3 145) (3 145)
Derivatives and other liabilities (1 928) (2 008)
Net asset value 581 858
Less: minority interest (402)
Goodwill(2) 872
Cost of acquisition 1 328
Less: fair value of 36,3% of subsidiary
effectively
disposed to minorities(3) (603)
Cash consideration paid 725
(2)Goodwill represents the premium paid for control of an acquisition. The allocation between goodwill and intangible assets has been
based on preliminary calculations.
(3)Fair value of the equity instruments of the subsidiary was determined with reference to the listed share price of CfC Bank. Stanbic
Africa Holdings Limited, a wholly-owned subsidiary of the group, was allotted 113,3 million
new CfC shares in exchange for Stanbic Bank Kenya, representing 41,4% of the combined entity.
Private equity associates and joint ventures(4)
June December
2008 2007
Rm Unaudited Audited
Cost 236 198
Carrying value 389 317
Fair value 397 383
Loans to associates and joint ventures 818 442
Equity accounted income 34 144
Other income from associates and joint ventures
- -
Profit or loss on disposal of associates and joint
ventures 7 -
(4) These associates and joint ventures are accounted for using the equity method and are subject to the headline earnings exemption for
listed banks, effective for periods ending on or after 31 August 2007.
Financial statistics
for the six months ended 30 June 2008
June June December
% 2008 2007 2007
Rm change Unaudited Unaudited Audited
Standard Bank Group
Number of ordinary shares
in issue (000's)
- end of period 16 1 425 474 1 232 409 1 256 916
- weighted average 11 1 368 386 1 228 666 1 230 961
- diluted weighted average
9 1 419 137 1 305 874 1 307 414
Cents per ordinary share
Headline earnings 10 529,2 482,9 1 033,4
Diluted headline earnings
12 510,2 454,3 973,0
Total dividends 7 193,0 181,0 386,0
Basic earnings 5 540,5 517,0 1 109,0
Diluted earnings 7 521,2 486,4 1 044,1
Net asset value 44 5 607 3 884 4 270
Financial performance (%)
ROE 21,4 26,4 26,7
Net interest margin 3,15 2,88 2,94
Credit loss ratio 1,28 0,79 0,79
Cost-to-income ratio 48,9 52,2 51,9
Capital adequacy (%)
Capital ratio
- tier I capital 11,2 10,3(5) 8,5
- total capital 13,9 13,7(5) 11,3
(5) Based on Basel I.
Declaration of dividends
Notice is hereby given that the following interim dividends have been declared:
* Ordinary dividend No. 78 of 193 cents per ordinary share (share codes: SBK
and SNB, ISIN: ZAE000109815), payable on Monday, 22 September 2008, to ordinary shareholders recorded in the books of the company at the
close of business on the record date, Friday, 19 September 2008. The last day to trade to
participate in the dividend is Friday, 12 September 2008. Ordinary shares will commence trading ex-dividend from Monday, 15 September
2008;
* 6,5% first cumulative preference shares (first preference shares)
dividend No. 78 of 3,25 cents per first preference share (share code: SBKP, ISIN: ZAE000038881), payable on Monday, 15 September 2008,
to holders of first preference shares recorded in the books of the company at the close of business on the record date, Friday, 12 September
2008. The last day to trade to participate in the dividend is Friday, 5 September 2008. First preference
shares will commence trading ex-dividend from Monday, 8 September 2008; and
* Non-redeemable, non-cumulative, non-participating preference shares (second preference shares) dividend No. 8 of 515,58 cents per
second preference share (share code: SBPP, ISIN: ZAE000056339), payable on Monday, 15 September 2008,
to holders of second preference shares recorded in the books of the company at the close of business on the record date, Friday, 12
September 2008. The last day to trade to participate in the dividend is Friday, 5 September 2008. Second preference shares will commence
trading ex-dividend from Monday, 8 September 2008.
The relevant dates for the payment of dividends are as follows:
Non-redeemable,
non-cumulative,
6,5% non-participating
cumulative
preference preference
shares shares
(First (Second
Ordinary preference preference
shares shares) shares)
JSE Limited (JSE)
Share code SBK SBKP SBPP
ISIN ZAE000109815 ZAE000038881 ZAE000056339
Namibian Stock Exchange (NSX)
Share code SNB
ISIN ZAE000109815
Dividend number 78 78 8
Dividend per share (cents)
193 3,25 515,58
Dividend payment dates
Friday Friday Friday
Last day to trade 12 September 5 September 5 September
"CUM" dividend 2008 2008 2008
Monday Monday Monday
Shares trade 15 September 8 September 8 September
"EX" dividend 2008 2008 2008
Friday Friday Friday
19 September 12 September 12 September
Record date 2008 2008 2008
Monday Monday Monday
22 September 15 September 15 September
Payment date 2008 2008 2008
Ordinary share certificates may not be dematerialised or rematerialised between Monday, 15 September 2008 and Friday,
19 September 2008, both days inclusive.
Preference share certificates (first and second) may not be dematerialised or rematerialised between Monday, 8 September 2008 and
Friday, 12 September 2008, both days inclusive.
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 shareholders (first and
second) who have
dematerialised their share certificates will have their accounts at their CSDP or broker credited on Monday, 15 September 2008. Ordinary
shareholders who have dematerialised their share certificates will have their accounts at their CSDP or broker credited on Monday, 22
September 2008.
On behalf of the board
Loren Wulfsohn
Group secretary
Accounting policies
Basis of preparation
The consolidated financial results are prepared in accordance with, and comply with, International Financial Reporting Standards (IFRS)
and the South African Companies Act (61 of 1973). The consolidated financial statements are prepared in accordance with the going concern
principle under the historical cost basis as modified by the fair value accounting of assets and liabilities where required in terms of
IFRS. The interim results are prepared in accordance with IAS 34 - Interim Financial Reporting and have not been audited.
Changes in accounting policies
The accounting policies are consistent with those adopted in the previous year. The following new accounting interpretations became
effective on
1 January 2008:
* IFRIC 12 - Service Concession Arrangements; and
* IFRIC 14 - IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
The adoption of these standards and interpretations has had no material effect on the results, nor has it required any restatements of
the results.
Reclassifications
Reclassifications to the 2007 interim results relate to adjustments to amounts previously disclosed on adoption of IFRS 7 identified
during the finalisation
of the 2007 year end results. These adjustments relate to the reclassification of:
* fee and commission expenses relating to financial instruments and included within other operating expenses to fee and commission
expense;
* loans and advances to customers reclassified to loans and advances to banks;
* deposits from customers to deposits from banks; and
* financial instruments previously disclosed as pledged assets to trading
assets and financial investments.
The reclassifications did not impact equity attributable to ordinary shareholders or profit for the period attributable to ordinary
shareholders.
Directors:
DE Cooper (Chairman), Kaisheng Yang** (Deputy chairman),
SJ Macozoma (Deputy chairman), JH Maree* (Chief executive),
DDB Band, E Bradley, TS Gcabashe, SE Jonah KBE��, Sir Paul Judge�,
KP Kalyan, Yagan Liu**, RP Menell, Adv KD Moroka, AC Nissen,
MC Ramaphosa, MJD Ruck, MJ Shaw, Lord Smith of Kelvin, Kt�,
EM Woods
*Executive director **Chinese �British ��Ghanaian
Group secretary:
L Wulfsohn
Registered office:
9th floor, Standard Bank Centre,
5 Simmonds Street, Johannesburg 2001
PO Box 7725, Johannesburg 2000
Share transfer secretaries in:
South Africa Namibia
Computershare Investor Transfer Secretaries (Proprietary) Limited
Services (Proprietary) Limited
70 Marshall Street, Shop 8, Kaiserkrone Centre, Post Street Mall,
Johannesburg 2001
Windhoek
PO Box 61051, Marshalltown PO Box 2401, Windhoek
2107
Sponsor:
Standard Bank
www.standardbank.co.za
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR IIFVTTIIIFIT
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