TIDM68IG
RNS Number : 1762J
Standard Bank Group Limited
25 April 2022
Standard Bank Group Limited
25 April 2022
Financial information provided to the Industrial and Commercial
Bank of China Limited ("ICBC") and update on the group's
operational performance for the three months ended 31 March
2022
Financial information provided to ICBC
On a quarterly basis the Standard Bank Group ("the group")
discloses to ICBC sufficient information to enable ICBC to equity
account the group's results. Accordingly, the following
consolidated financial information, prepared on an International
Financial Reporting Standards ("IFRS") basis, is being provided to
ICBC for the three months ended 31 March 2022 (1Q22).
Statement of changes in ordinary shareholders' equity for the
three months ended 31 March 2022
Balance as Earnings Other movements Balance as
at 1 January attributable for the period at 31 March
2022 to ordinary 2022
shareholders
Rm Rm Rm Rm
-------------- -------------- ---------------- -------------
Ordinary share
capital^ 162 6 168
-------------- -------------- ---------------- -------------
Ordinary share
premium^ 17 859 9 424 27 283
-------------- -------------- ---------------- -------------
Foreign currency
translation
and hedging
reserve (2 687) (7 964) (10 651)
------------------------ -------------- -------------- ---------------- -------------
Foreign currency
translation
reserve (FCTR) (1 603) (7 875) (9 478)
-------------- -------------- ---------------- -------------
Foreign currency
net investment
and cash flow
hedging reserve (1 084) (89) (1 173)
------------------------ -------------- -------------- ---------------- -------------
Retained earnings* 178 771 7 402 (12 444) 173 729
-------------- -------------- ---------------- -------------
Empowerment
reserve and
treasury shares (3 260) (733) (3 993)
-------------- -------------- ---------------- -------------
Other 7 987 914 8 901
------------------------ -------------- -------------- ---------------- -------------
Ordinary shareholders'
equity 198 832 7 402 (10 797) 195 437
------------------------ -------------- -------------- ---------------- -------------
^ Other movements for the period in ordinary share capital and
share premium relate to the issuance of 58 million Standard Bank
Group shares in terms of the Liberty minority buyout.
* Other movements for the period in retained earnings primarily
comprises the R8.3 billion ordinary dividends declared in March
2022 and with the majority of the balance relating to goodwill
associated with the Liberty minority buyout.
Update on the group's operational performance for the three
months ended 31 March 2022
The group's earnings attributable to ordinary shareholders were
28% higher in 1Q22 than in the three months to 31 March 2021
("1Q21" or "the comparative period"). The group's performance was
supported by continued core franchise and balance sheet momentum as
well as a strong performance from ICBC Standard Bank Plc (ICBCS)
following an insurance recovery.
Standard Bank activities
Period on period interest rates were higher in Angola, Ghana,
Mauritius, Mozambique, Namibia, South Africa, and Zambia as well as
United States and United Kingdom. In 1Q22, South Africa saw two 25
basis point repo rate increases; one in January and one in March
2022. Higher average interest rates and a larger average balance
sheet supported the group's net interest margin and net interest
income growth period on period. Higher transactional activity
underpinned by a larger client base and less restrictions supported
fee growth. Global market volatility and higher commodity prices
drove client activity and trading revenue. 1Q22 trading revenue was
slightly ahead of the comparative period.
Operating expenses increased period on period driven by annual
salary increases, higher performance-linked incentives, annual
contract increases, and the normalisation of certain costs as
activities returned to pre-pandemic levels e.g. communication,
travel and marketing.
Credit performance in 1Q22 was largely in line with
expectations. Credit impairment charges were lower than in the
comparative period, driven principally by lower charges in the
Consumer and High Net Worth and Business and Commercial Client
segments. The Corporate and Investment Banking Client segment
credit charges reverted from a net recovery in 1Q21 to a net charge
in 1Q22 driven primarily by loan book growth. The group's credit
loss ratio for 1Q22 was at the lower end of the group's
through-the-cycle target range of 70 to 100 basis points.
Liberty Holdings Limited
Liberty Holdings Limited (Liberty) recorded a small profit in
1Q22. Liberty was 100% consolidated from 1 February 2022. Liberty's
contribution was impacted by consolidation entries related to the
treasury shares (SBG shares held by Liberty entities). The SBG
share price was higher as at 31 March 2022 than at 31 December 2021
which results in a negative adjustment. Post the treasury share
adjustments, the contribution from Liberty was negative.
ICBC Standard Bank Plc
As noted in previous announcements on 11 March 2022 and 31 March
2022, ICBCS, as an emerging markets and commodities business, had
exposure to certain entities which were impacted, directly and
indirectly, by the developments in Ukraine and Russia. By 31 March
2022, ICBCS had effectively reduced the impacted counterparty
positions and significantly reduced the related market risk.
As reported on 11 March 2022, ICBCS recorded a post-tax
insurance recovery of USD200 million in January 2022. In addition,
ICBCS generated a small operating profit in 1Q22, excluding the
insurance recovery referred to previously. The group has a 40%
stake in ICBCS.
A strong 1Q22 performance by ICBCS more than offset the negative
contribution from Liberty (post the treasury share adjustments),
boosting group headline earnings growth period on period. Headline
earnings adjustable items were not material in 1Q22.
The group remains well capitalised and liquid.
Outlook
In relation to the pandemic in Africa, while weekly Covid-19
cases have fallen in recent weeks, the risk of further Covid-19
waves persists. Vaccination rollouts continue. In South Africa, 44%
of the adult population has been fully vaccinated.
In recent weeks, war-induced commodity price increases and
broader price pressures have driven inflation higher, the global
economic growth outlook has been downgraded and uncertainty has
increased. The impact thereof is expected to differ across the
countries in which we operate in sub-Saharan Africa. Across the
group's footprint dependence on imports from Russia and Ukraine is
relatively limited. Higher food and fuel prices do pose a risk.
Commodity exporters should benefit from a trade perspective. In
light of the inflationary pressures, monetary tightening is
expected to be faster than previously forecast.
Taking into account the group's footprint and diverse client
base as well as the relatively low interest rates, the group's risk
appetite and credit outlook is unchanged at this stage. Despite
increased uncertainty, we remain committed to delivering positive
jaws and an improving return on equity in 2022.
In April 2022, KwaZulu Natal, a coastal province in South
Africa, recorded widespread flooding and damage to homes and
infrastructure and a loss of over 400 lives. We are actively
reaching out to our customers to provide support during this
difficult time. We have boosted capabilities on the ground and are
focused on processing insurance claims.
Broad-Based Black Economic Empowerment Act: Annual Compliance
Report
In accordance with paragraph 16.20(g) and Appendix 1 to Section
11 of the JSE Listings Requirements, notice is hereby given that
the Standard Bank Group's annual compliance report in terms of
section 13G(2) of the Broad-Based Black Economic Empowerment Act
has been published and is available on the group's website at
https://www.standardbank.co.za/southafrica/personal/about-us .
The information contained in this announcement and that on which
the operational performance update is based has not been reviewed
and reported on by the group's external auditors.
For further information, please contact:
Ann Hunter
Standard Bank Group Limited
9th Floor
5 Simmonds Street, Johannesburg PO Box 2001
South Africa
Telephone number: +27 11 415 4194
DISCLAIMER
This Announcement is not intended to, and shall not, constitute
or contain an offer to sell or solicitation of an offer to purchase
the securities referred to herein by any person in any jurisdiction
where it is unlawful to make an offer or solicitation. The
distribution of the Announcement and the offer or sale of the
securities referred to herein in certain jurisdictions is
restricted by law. This Announcement may not be used for or in
connection with, and does not constitute, any offer to, or
solicitation by, anyone in any jurisdiction or under any
circumstance in which such offer or solicitation is not authorised
or is unlawful.
In the United Kingdom, this Announcement is being distributed
only to, and is directed only at, persons who are (i) investment
professionals, as such term is defined in Article 19(5) of the U.K.
Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (as amended, the Financial Promotion Order); (ii) persons
falling within Article 49(2)(a) to (d) ("high net worth companies,
unincorporated associations, etc.") of the Financial Promotion
Order; (iii) outside the United Kingdom; or (iv) persons to whom an
invitation or inducement to engage in investment activity (within
the meaning of Section 21 of the Financial Services and Markets Act
2000) in connection with the issue or sale of any Notes may
otherwise lawfully be communicated or caused to be
communicated.
The securities referred to herein have not been and will not be
registered under the US Securities Act of 1933, as amended (the
Securities Act), or with any securities regulatory authority of any
state or other jurisdiction of the United States, and may not be
offered or sold in the United States or to US persons (as such term
is defined in Regulation S under the Securities Act) except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the US Securities Act. The issuer
of the securities has not registered, and does not intend to
register, any portion of the offering in the United States, and
does not intend to conduct a public offering of the securities in
the United States.
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END
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