Wrap Text
Provisional results and dividend announcement for the year ended 31 December 2015
Standard Bank Group Limited
Registration No. 1969/017128/06
Incorporated in the Republic of South Africa
Share codes
JSE share code: SBK ISIN: ZAE000109815
NSX share code: SNB
NSX share code: SNB ZAE000109815
SBKP ZAE000038881 (First preference shares) SBPP ZAE000056339 (Second preference shares)
Provisional results and dividend announcement for the year ended 31 December 2015
The Standard Bank Group Limited's (group) summary consolidated financial statements for the year ended 31 December
2015 (results) are prepared in accordance with the requirements of the JSE Limited (JSE) Listings Requirements for
provisional reports, 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, the presentation requirements of IAS 34
Interim Financial Reporting and the requirements of the South African Companies Act, 71 of 2008 applicable to summary
financialstatements.
The accounting policies applied in the preparation of these 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 annual financial statements with the exception of changes referred to below.
While this report is itself not audited, the consolidated annual financial statements from which the summary
consolidated annual financial statements on pages 15 to 55 were derived were audited by KPMG Inc. and PricewaterhouseCoopers
Inc., who expressed an unmodified opinion thereon. That audit report does not necessarily report on all of the information
contained in this report.
Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor's
engagement and, more specifically, the nature of the information that has been audited, they should obtain a copy of the
auditors' report together with the accompanying audited consolidated annual financial statements, both of which are
available for inspection at the company's registered office.
The directors of Standard Bank Group Limited take full responsibility for the preparation of this report and that the
selected financial information has been correctly extracted from the underlying consolidated annual financial
statements.
The results discussed in this announcement are presented on a normalised basis, unless indicated as being on an IFRS
basis. For further explanation, refer to below.
The preparation of the group's results was supervised by the group financial director, Simon Ridley, BCom (Natal),
CA(SA), AMP (Oxford).
The results were made publicly available on 3 March 2016.
This report contains pro-forma financial information. For further details refer 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.
The group's reporting suite, including the Standard Bank Group integrated report and annual financial statements will
be made available during April 2016. Copies can be requested from our registered office or downloaded from the
website above.
Financial highlights
- R22 002 million
Headline earnings +27%
2014: R17 323 million
- 1 359 cents
Headline earnings per share +27%
2014: 1 070 cents
- 15.3%
Return on equity
2014: 12.9%
- 56.7%*
Cost-to-income ratio
2014: 55%
- R22 056 million
Headline earnings -
pro-forma continuing operations +13%
2014: R19 570 million
- 674 cents
Dividend per share +13%
2014: 598 cents
- 13.3%*
Tier I capital adequacy ratio
2014: 12.9%
- 0.87%*
Credit loss ratio
2014: 1.00%
*Banking activities.
Overview of financial results
Group results
Group headline earnings and headline earnings per share (HEPS) increased by 27% to R22 002 million and 1 359 cents
respectively. Net asset value per share increased by 9% and group return on equity (ROE) increased to 15.3% from
12.9% in FY14. A total dividend of 674 cents per share has been declared, a 13% increase on FY14.
During the period covered by the results, the group completed the disposal of its controlling interest in Standard
Bank Plc (SB Plc) on 1 February 2015 (the disposal), which was classified as a discontinued operation up to the date
of the transaction's completion. Subsequent to the transaction SB Plc was renamed ICBC Standard Bank Plc (ICBCS) and the
group's remaining 40% interest has been included as an associate, with equity accounted results included in the group's
continuing operations from the disposal date. As a result of the disposal, earnings attributable to ordinary shareholders
include R2,8 billion of net disposal gains which have been excluded from headline earnings, primarily consisting of
releases to the income statement from the group's foreign currency translation reserve.
Headline earnings for the year reported within the group's discontinued operation include the effects of a write-down
of the residual aluminium exposure in China; a partial recovery in respect of insurance claims relating to the external
fraud in the Qingdao port in China; and cash flow hedge releases relating to the disposal. The loss from the
discontinued operation within headline earnings amounts to R90 million. Headline earnings from operations excluding the
discontinued operation (continuing operations) increased by 5% to R22 092 million. The commentary which follows refers
to the group's continuing banking operations. Liberty Holding Limited's (Liberty) results are discussed separately.
Operating environment
In 2015 global economic growth remained moderate at 3.1% with growth in emerging market and developing economies
expected by the International Monetary Fund (IMF) to have declined for the fifth consecutive year. A modest recovery
has continued in advanced economies with a gradual monetary tightening in the United States (US) as several other major
advanced economy central banks continue to ease monetary policy. Market concerns about the outlook for the Chinese economy
have affected other economies through weaker commodity prices, diminishing confidence, and increasing volatility in
financial markets. Manufacturing activity and trade remained weak globally, not only due to developments in China, but
also because of subdued global demand and investment more broadly.
Sub-Saharan Africa economic growth is estimated to have reduced sharply to 3.5% in 2015 from 5.0% in 2014 as lower
commodity prices impacted net exports and placed pressure on economic activity even as lower oil prices eased energy
import costs. While economic activity remains more robust than in many other developing regions of the world, the strong
growth momentum evident in the region in recent years has dissipated, particularly within oil-exporting countries.
2015 economic growth forecasts for South Africa were marked down progressively during the year as the full impact of
commodity price deflation, and weakening business and consumer confidence limited demand. Although there was notable
stabilisation of electricity supply in the second half of 2015, unfolding drought conditions, higher interest rates and
policy uncertainty subdued investment and cyclical consumption; economic growth is expected to have been 1.3% in 2015
from 1.5% in 2014. A sharply weaker exchange rate in response to investment portfolio outflows and a continued current
account deficit accompanied broad acceleration in market volatility towards the end of the year, exacerbated by market
concerns related to the unexpected removal of South Africa's minister of finance in December.
Revenue
Total income increased by 8% in FY15, with net interest income (NII) growing by 9% primarily due to a 17% increase in
average interest-earning assets, driven mainly by growth in higher quality but lower-yielding Corporate & Investment
Banking (CIB) assets. Margin compression of 30 basis points resulted mainly from significantly higher growth in CIB
assets relative to Personal & Business Banking (PBB) assets. Higher funding costs and the requirement to hold higher
levels of high quality liquid assets (HQLA) were largely offset by higher average South African interest rates.
Non-interest revenue (NIR) grew 8% due to good growth in trading and other income. Fees and commissions were 3% higher
than in FY14 as knowledge-based fees and commissions declined by 9% due to weaker corporate activity conditions in the
rest of Africa and a high base in FY14. Trading revenue increased by 20% due mainly to good growth in fixed income and
currency trading which was up 15%, as well as a good performance from equities trading, up 51%.
Other revenue growth of 10% benefited from fair value gains and profit on disposal of equity investments, partly
offset by the non-recurrence of gains from property disposals and lower rentals received.
Credit impairments
Total credit impairments were 4% higher than in FY14 and the credit loss ratio declined to 0.87% from 1.00%. Credit
impairments in CIB increased to R1 279 million from R804 million in the prior period with its credit loss ratio
rising to 0.24% from 0.22%.
In PBB, credit impairments were 5% lower than in the prior year and its credit loss ratio improved to 1.27% from
1.41%. Impairments in mortgage lending declined by R327 million while those in the vehicle and asset finance business
were largely unchanged as lower impairments in South Africa were offset by higher provisioning required in the rest of
Africa portfolio. Personal lending impairments declined by R83 million due mainly to lower charges required for access
loans, while card debtors' impairments were 23% higher reflecting a higher level of stress across the portfolio.
Business lending impairments fell by R270 million due to the non-recurrence of a few larger account impairments in
2014, offset partially by higher charges required in the agriculture sector. Impairments in PBB's rest of Africa
operations increased by 22% and the credit loss ratio increased to 2.02% from 1.83% in FY14.
Operating expenses
Operating expenses increased by 10% over the prior year and the group's cost-to-income ratio increased to 56.7% from
55.0%. Staff expenses increased by 12% while other operating expenses increased by 8%. Growth in staff expenses was
affected by the conversion of approximately 4 400 people from temporary to permanent staff, mainly in South Africa.
Other operating expenses were affected by higher IT expenses related to core banking systems taken into production,
including increased amortisation of capitalised software assets.
Loans and advances
Gross loans and advances to customers increased by 15% in FY15. PBB balances with customers grew by 6%, and CIB
balances grew by 29% including a higher level of loans granted under resale. Residential mortgages grew by 3%, and
vehicle and asset finance reached 11% growth in a softer overall market. Card debtors grew by a moderate 4% with
personal loans 3% higher than FY14 reflecting tighter monetary conditions in South Africa. Business and corporate
loans showed higher levels of growth at 18% and 22% respectively.
Capital, funding and liquidity
The group maintains appropriate levels of capital with tier I and total capital levels at 13.3% (FY14: 12.9%) and
15.7% (FY14: 15.5%) respectively. The group remains well placed to meet the higher regulatory requirements across
markets in which the group operates.
Deposits and current accounts from customers increased by 10% with 20% growth in retail priced deposits significantly
higher than the 5% growth in wholesale priced deposits from customers. Good growth in retail priced deposits in the
rest of Africa and outside Africa was aided by significant rand depreciation over the year.
The group maintained its liquidity positions within the approved risk appetite and tolerance limits. The average group
Basel III liquidity coverage ratio (LCR) during the final quarter of 2015 was 93.7%. The group continues to evaluate
the funding impact of the Basel III net stable funding ratio (NSFR). Areas of national discretion pertaining to the
NSFR are expected to be finalised by the South African Reserve Bank during the course of 2016.
Overview of business unit performance
Headline earnings by business unit
Change 2015 2014 1
%
Rm Rm
Personal & Business Banking 15 11 232 9 797
Corporate & Investment Banking 59 7 923 4 980
Central and other 54 596 388
Banking activities 30 19 751 15 165
Liberty 4 2 251 2 158
Standard Bank Group 27 22 002 17 323
1 Where responsibility for individual cost centres and divisions within business units change, the comparative figures
are reclassified accordingly.
Personal & Business Banking
PBB's FY15 headline earnings of R11 232 million increased by 15% compared with FY14. NII grew by 11% and moderate
growth of 7% in NIR resulted in total income growth of 9%. Credit impairment charges were 5% lower than in FY14 and
operating expenses, which were affected by the conversion of temporary employees to permanent employees during the year,
increased by 10%. PBB's ROE was maintained at 18.1%. PBB South Africa earnings increased by 13% while PBB rest of Africa
earnings improved to R192 million from R104 million in FY14. Good growth of 51% in PBB outside Africa earnings, which
amounted to R461 million, was achieved and assisted further by rand depreciation during the year.
Transactional products total income increased by 11% assisted by higher average domestic interest rates and balance
sheet growth driven by higher cash management, savings and investment portfolio balances, offset partially by reduced
interchange rates on debit cards in South Africa. Earnings of R3 204 million were 9% higher than in the prior period.
Mortgage lending headline earnings increased by 25% to R2 450 million. Total income growth of 8% reflected the effect
of higher average balances and continued improved average pricing relative to funding costs. Credit impairments fell
by 13% and the credit loss ratio declined to 66bps from 79bps due to improved collection capabilities. Non-performing
loans increased by 6% mainly as a result of the required regulatory change in the treatment of restructured loans.
The improvement in vehicle and asset finance profitability continued during the year as headline earnings of
R306 million were 79% higher than in FY14. Total income growth of 7% in a challenging market was supplemented by
an improvement in the credit loss ratio to 1.50% from 1.55%. New business quality continued to improve, assisted
by the positive impact of investment in online dealer origination capabilities.
Card products increased headline earnings by 9% to R1 535 million during the year. Higher domestic yields and
increased activity in the rest of Africa largely offset lower average interchange fees to lift total income by 12%.
Higher average interest rates and a slowing domestic economy have affected contractual repayments by customers and
credit impairments grew by 23% with the credit loss ratio rising to 4.83% from 4.08% in the prior year.
Lending products improved headline earnings by 14% to R1 442 million. Total income growth of 3% benefited from good
growth in business lending balances offset by lower growth in personal products lending. Credit impairments were 10%
lower than in the previous year with the credit loss ratio declining to 1.68% from 2.05% in FY14.
Bancassurance and wealth increased headline earnings by 11% to R2 295 million. Total income improved by 12% due to
an increase in the client asset base, good growth in assets under management in Nigeria and the Offshore group as
well as a better short-term insurance underwriting performance.
Corporate & Investment Banking
CIB increased headline earnings by 59% to R7 923 million, resulting in a ROE of 14.3% from 10.2%. The business
delivered respectable revenue growth of 7% in the context of significant market volatility. Continued investment in
major online programmes resulted in costs growing by 10%. Impairments increased by 59%, reflective of increased strain
experienced in the oil & gas and mining & metals sectors. Earnings were materially impacted by the 40% associate share
in the loss incurred by ICBCS for the 11 months ended December 2015, amounting to R1 173 million, which also included
40% of the fine paid in respect of a Deferred Prosecution Agreement agreed with the Serious Fraud Office in the
United Kingdom.
The headline earnings loss within the discontinued operation, being the outside Africa global markets business,
amounted to R104 million from a loss of R3 745 million in FY14, mainly due to the non-recurrence of the fair value
adjustment on repo positions relating to aluminium financing in China. A partial recovery in respect of insurance claims
relating to this matter received during the year was largely offset by final balance sheet adjustments relating to the
disposal of the discontinued operation and SB Plc's January 2015 operating loss.
Transactional products and services grew headline earnings by 4% to R2 662 million. Total income increased by 8% on
good cash management deposit growth, offset by reduced investor services demand in Nigeria as its investment environment
deteriorated. Expenses were adversely affected by higher staff costs in the rest of Africa to support increased systems
investment and franchise growth.
Global markets recorded headline earnings growth of 19% to R3 889 million in FY15. Income growth of 12% benefited from
higher client volumes in fixed income trading, good risk positioning on the back of client facilitation in equity
derivatives as well as improved commodities trading. Expenses were well controlled during the year resulting in positive
operational leverage.
Investment banking headline earnings increased by 1% to R2 598 million as total income increased by 6% following a
good debt origination performance in 2H15. Depressed commodity prices and deteriorating economic conditions in
resource-focused countries in the rest of Africa required higher impairment charges particularly related to exposures
in the oil & gas and power & infrastructure sectors.
Real estate and principal investment management (PIM) recorded headline earnings of R51 million from R312 million in
FY14 as property disposals and fair value gains within the property investment portfolio income did not recur. The PIM
portfolio continues to be gradually wound down.
Liberty
The financial results reported are the consolidated results of the group's 54% investment in Liberty.
Bancassurance results are included in PBB. Liberty BEE normalised headline earnings of R4 128 million were 4% higher,
representing 7% growth in operating earnings and a 2% decrease in earnings from the LibFin Investments - Shareholder
Investment Portfolio (SIP). The growth in operating earnings was supported by strong performances from Individual
Arrangements, Liberty Corporate, a division of Group Arrangements, and LibFin Markets. The SIP gross performance of
9.6% (2014: 10.3%) was substantially ahead of benchmark, supported by overweight exposure to foreign assets.
The BEE normalised return on equity at 19.5% (2014: 20.4%) reflects ongoing efficient capital management.
The life operations benefited from continued positive operating variances against modelled expectations which
supported good cash generation in 2015. Net customer cash inflows were substantially higher at R15,2 billion
(2014: R4,2 billion) due to significantly improved Stanlib asset management cash flows. This included external
inflows of R8,4 billion (2014: outflows of R7,3 billion) into the asset management operations. Total assets under
management increased to R668 billion (2014: R633 billion), reflecting net external customer inflows and relatively
low incremental growth from investment market returns.
Prospects
Global growth is projected by the IMF to accelerate to 3.4% in 2016 and 3.6% in 2017 although the pickup in global
activity is projected to be more gradual than previously anticipated, especially in developing economies. In advanced
economies, a modest and uneven recovery is expected to continue. Risks to the global outlook remain tilted to the
downside influenced strongly by a broad-based slowdown in emerging market economies, China's rebalancing, lower
commodity prices, and the gradual exit from accommodative monetary conditions in the United States.
Most countries in sub-Saharan Africa are expected to experience a gradual pickup in economic growth, but at rates that
are lower than those seen over the past decade. This mainly reflects the continued adjustment to lower commodity prices
and higher borrowing costs, which are affecting some of the region's largest economies, as well as a number of smaller
commodity exporters. In South Africa, the growth outlook for 2016 has slipped to below 1% due mainly to the effect of
the drought and tighter financial conditions and the risk of further economic growth disappointment remains elevated.
The year ahead is likely to provide a demanding operating environment in which consumers and businesses will have to
adapt to higher interest rates and the full effect of currency weakness. The group's strategic market positioning,
well-capitalised and liquid balance sheet, and committed employees are able to withstand uncertain macro developments
and volatile markets for the sustained benefit of our customers. Our medium-term ROE target of between 15% and 18%
remains intact. The group's ROE performance will however be affected by factors such as economic growth in South Africa
and the rest of Africa, and the retention of a South African investment grade sovereign credit rating. As such, we are
working closely with the authorities to promote a stable, growth-friendly domestic environment.
Sim Tshabalala
Group chief executive
Ben Kruger
Group chief executive
Thulani Gcabashe
Chairman
2 March 2016
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. 93 of 371,00 cents per ordinary share (the cash dividend) to ordinary shareholders recorded in the register
of the company at the close of business on Friday, 22 April 2016. The last day to trade to participate in the dividend
is Friday, 15 April 2016. Ordinary shares will commence trading ex dividend from Monday, 18 April 2016.
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 Monday, 18 April 2016, and Friday
22 April 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, 25 April 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. 93 of 3,25 cents (gross) per first
preference share, payable on Monday, 18 April 2016, to holders of first preference shares recorded in the books of the
company at the close of business on the record date, Friday 15 April 2016. The last day to trade to participate in the
dividend is Friday, 8 April 2016. First preference shares will commence trading ex dividend from Monday, 11 April 2016.
- Non-redeemable, non-cumulative, non-participating preference shares (second preference shares) dividend No. 23 of
369,76 cents (gross) per second preference share, payable on Monday, 18 April 2016, to holders of second preference
shares recorded in the books of the company at the close of business on the record date, Friday, 15 April 2016.
The last day to trade to participate in the dividend is Friday, 8 April 2016. Second preference shares will commence
trading ex dividend from Monday, 11 April 2016.
The salient dates and times for the preference share distributions are set out in the table that follows.
Preference share certificates (first and second) may not be dematerialised or rematerialised between Monday, 11 April
2016 and Friday, 15 April 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, 18 April 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,
non-cumulative,
6.5% non-participating
cumulative preference shares
Ordinary preference shares (Second preference
shares (First preference 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 93 93 23
Gross distribution/dividend 371,00 3,25 369,76
per share (cents)
Last day to trade in order to be Friday, Friday, Friday,
eligible for the cash dividend 15 April 2016 8 April 2016 8 April 2016
Share trade ex the cash dividend Monday, Monday, Monday,
18 April 2016 11 April 2016 11 April 2016
Record date in respect of the Friday, Friday, Friday,
cash dividend 22 April 2016 15 April 2016 15 April 2016
Dividend cheques posted and CSDP/ Monday, Monday, Monday,
broker account credited/updated 25 April 2016 18 April 2016 18 April 2016
(payment date)
The above dates are subject to change. Any changes will be released on the Stock Exchange News Service (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 315,35000 cents per ordinary share, 2,76250 cents per first preference share and 314,29600 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:
- 1 618 252 182 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.
Normalised results
With effect from 2004, the group's IFRS results have been normalised to reflect the group's view of the economic
and legal substance of the following arrangements (normalised results)1:
- Preference share funding provided by the group for the group's Tutuwa transaction is deducted from equity as a
negative empowerment reserve and reduces the shares in issue in terms of IFRS.
- Group company shares held for the benefit of Liberty policyholders 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.
- The group also enters into transactions on its own shares to facilitate client trading activities. As part of its
normal trading operations, a group subsidiary offers to its clients trading positions over listed shares, including
its own shares. To hedge the risk on these trades, the group buys (sells short) its own shares in the market. Although
the share exposure on the group's own shares is deducted/(added) from/(to) equity and the related fair value movements
are reversed in the income statement, the client trading position and fair value movements are not eliminated, resulting
in an accounting mismatch. The shares purchased (sold short) also reduce (increase) the number of shares in issue.
A common element in these transactions relates to shares in issue which are deemed by IFRS to be treasury shares.
Consequently, the net value of the shares is recognised in equity and the number of shares used for per share calculation
purposes is materially lower than the economic substance, resulting in inflated per share ratios. The normalisation
adjustments reinstate the shares as issued, recognise the related transaction in the statement of financial position as
an asset or liability (as appropriate) and recognise the changes in the value of the related transaction (together with
dividend income) in the income statement.
The normalised results reflect the basis on which management manages the group and is consistent with that reported in
the group's segmental report, where the normalised adjustments have been made within Liberty, and central and other.
The results of the other business units are unaffected.
The group's normalised statement of financial position and income statement have been presented hereafter.
The lock-in period for the group's Tutuwa transaction ended on 31 December 2014, allowing participants to trade in the
group shares in the scheme. For further information, refer to below.
The result of these normalised adjustments is shown in the table below.
Weighted
average
number of Headline Growth
Normalised headline earnings shares earnings on 2014
for the year ended 31 December 2015 '000 Rm %
Disclosed on an IFRS basis 1 597 399 22 187 29
Tutuwa initiative 7 599 15
Share exposures held to facilitate client trading activities 695 1
Group shares held for the benefit of Liberty policyholders 12 965 (197)
Other IFRS adjustments (4)
Normalised 1 618 658 22 002 29
1 Refer to the group analysis of financial results at www.standardbank.com/reporting for further details
regarding the normalised adjustments.
Normalised condensed group statement of financial position
Change 2015 2014
as at 31 December 2015 % Rm Rm
Assets
Cash and balances with central banks 17 75 112 64 302
Derivative assets 80 111 089 61 633
Trading assets 20 86 285 72 121
Pledged assets >100 34 429 14 185
Financial investments 8 488 124 453 398
Loans and advances 16 1 077 167 929 544
Non-current assets held for sale 1 (100) 219 958
Other assets 18 26 967 22 904
Interest in associates and joint ventures >100 9 703 3 727
Investment property 13 30 508 27 022
Property and equipment 6 17 670 16 737
Goodwill and other intangible assets 13 24 031 21 175
Total assets 4 1 981 085 1 906 706
Equity and liabilities
Equity 9 180 530 165 367
Equity attributable to ordinary shareholders 9 152 042 139 588
Preference share capital and premium 5 503 5 503
Non-controlling interest 13 22 985 20 276
Liabilities 3 1 800 555 1 741 339
Derivative liabilities 85 133 958 72 281
Trading liabilities (1) 43 304 43 761
Deposits and debt funding 13 1 186 514 1 047 212
Non-current liabilities held for sale1 (100) 182 069
Policyholder liabilities 4 298 232 287 516
Subordinated debt 6 27 141 25 521
Provisions and other liabilities 34 111 406 82 979
Total equity and liabilities 4 1 981 085 1 906 706
1 Global markets outside Africa's (GMOA) and Banco Standard de Investimentos S.A's (Brazil) total
assets and liabilities are presented as held for sale in 2014 in accordance with IFRS. Both were
disposed of during 2015. Refer to the relevant section of this announcement.
Normalised condensed group income statement
Change 2015 2014
for the year ended 31 December 2015 % Rm Rm
Net interest income 9 49 314 45 256
Non-interest revenue 8 41 801 38 813
Total income 8 91 115 84 069
Credit impairment charges (4) (9 371) (9 009)
Income after credit impairments 9 81 744 75 060
Operating expenses in banking activities (10) (51 434) (46 596)
Staff costs (12) (27 968) (24 961)
Other operating expenses (8) (23 466) (21 635)
Net income before non-trading and 6 30 310 28 464
capital related items
Non-trading and capital related items (>100) (1 402) 986
Net income before equity accounted earnings (2) 28 908 29 450
Share of profit/(loss) from associates and (>100) (340) 612
joint ventures
Net income before taxation (5) 28 568 30 062
Taxation (7 851) (7 869)
Profit for the period from continuing (7) 20 717 22 193
operations
Profit/(loss) from discontinued operation 1 >100 2 741 (4 048)
Profit for the period 29 23 458 18 145
Attributable to non-controlling interests (8) 1 704 1 848
Attributable to preference shareholders 6 385 364
Attributable to ordinary shareholders 34 21 369 15 933
Headline adjustable items - banking activities (>100) (1 618) (768)
Headline earnings - banking activities 30 19 751 15 165
Headline earnings - Liberty 4 2 251 2 158
Standard Bank Group headline earnings 27 22 002 17 323
Standard Bank Group headline earnings 5 22 092 21 068
- continuing operations
Standard Bank Group headline earnings - pro-forma 13 22 056 19 570
continuing operations
1 Gains and losses relating to SB Plc have been presented as a single amount relating to their after-tax gains/(losses).
Pro-forma financial information
The following pro-forma financial information is the responsibility of the group's directors. Because of its nature,
the pro-forma financial information may not be a fair reflection of the group's results of operation. The pro-forma
financial information contained in this announcement has been reviewed by the group's external auditors and their
unmodified review report is available for inspection at the company's registered office.
Group's continuing operations' results including 40% retained interest in ICBCS
On 1 February 2015, the group completed the disposal of its controlling interest in SB Plc and thereafter reports
its retained 40% interest in ICBCS within the group's continuing operations' results. In the group's 2014 results,
and for the current year up to the date of disposal, SB Plc's net headline earnings/(loss) were included in the
group's income statement as a discontinued operation.
Since the group retains a 40% interest in the discontinued operation following the date of disposal, and in order to
illustrate the group's future continuing operation's base, the group has disclosed a pro-forma continuing operations'
result to include 40% of the discontinued operation's headline earnings result as follows:
Pro-forma headline earnings - reconciliation
2015 2014
Rm Rm
Headline earnings - continuing operations
as reported 22 092 21 068
Adjustment 1 (36) (1 498)
Headline earnings pro-forma 22 056 19 570
1 40% of the discontinued operation's headline earnings loss.
Provisional results in accordance with IFRS
Financial statistics
Change 2015 2014
for the year ended 31 December 2015 %
Number of ordinary shares in issue
(000's)
End of period 1 1 601 417 1 577 828
Weighted average 1 1 597 399 1 584 720
Diluted weighted average 1 611 522 1 617 008
Cents per ordinary share
Headline earnings 28 1 388,9 1 081,4
Continuing operations 6 1 394,5 1 317,7
Discontinued operation 98 (5,6) (236,3)
Diluted headline earnings 30 1 376,8 1 059,8
Continuing operations 7 1 382,4 1 291,4
Discontinued operation 98 (5,6) (231,6)
Dividend 13 674 598
Net asset value 9 9 433 8 682
Financial performance (%)
ROE - group 15.6 13.0
Net interest margin on continuing operations 3.5 3.8
Credit loss ratio on continuing operations 0.9 1.0
Cost-to-income ratio on continuing operations 56.7 55
Capital adequacy ratios (%)
Basel III
Tier I capital 13.3 12.9
Total capital 15.7 15.5
Condensed consolidated statement of financial position
Change 2015 2014
as at 31 December 2015 % Rm Rm
Assets
Cash and balances with central banks 17 75 112 64 302
Derivative assets 80 111 089 61 633
Trading assets 20 86 219 72 040
Pledged assets >100 34 429 14 185
Financial investments 8 486 704 450 921
Current tax assets 7 534 498
Loans and advances 16 1 076 917 928 241
Non-current assets held for sale 1 (100) 219 958
Other assets 19 24 552 20 691
Interest in associates and joint ventures >100 9 703 3 727
Investment property 13 30 508 27 022
Property and equipment 6 17 670 16 737
Goodwill and other intangible assets 13 24 031 21 175
Deferred tax assets 10 1 881 1 715
Total assets 4 1 979 349 1 902 845
Equity and liabilities
Equity 11 178 908 161 634
Equity attributable to ordinary shareholders 10 151 069 136 985
Preference share capital and premium 5 503 5 503
Non-controlling interest 17 22 336 19 146
Liabilities 3 1 800 441 1 741 211
Derivative liabilities 85 133 958 72 281
Trading liabilities (1) 43 304 43 761
Current tax liabilities (4) 4 304 4 505
Deposits and debt funding 13 1 186 514 1 047 212
Non-current liabilities held for sale1 (100) 182 069
Policyholder liabilities 4 298 232 287 516
Subordinated debt 6 27 141 25 521
Provisions and other liabilities 38 101 894 73 871
Deferred tax liabilities 14 5 094 4 475
Total equity and liabilities 4 1 979 349 1 902 845
1 GMOA’s and Brazil’s total assets and liabilities are presented as held for sale in 2014 in accordance
with IFRS. Both were disposed of during 2015. During 2015, the group’s associate interest in Ünlü Menkul
Degerler A.S. was classified as a non-current asset held for sale and disposed of on 21 October 2015.
Condensed consolidated income statement
Change 2015 2014
for the year ended 31 December 2015 % Rm Rm
Continuing operations
Income from banking activities 8 91 113 84 043
Net interest income 9 49 310 45 152
Non-interest revenue 7 41 803 38 891
Income from investment management and
life insurance activities 13 23 997 21 209
Total income 9 115 110 105 252
Credit impairment charges (4) (9 371) (9 009)
Income after credit impairment charges 10 105 739 96 243
Operating expenses in banking activities (10) (51 434) (46 596)
Operating expenses in insurance activities (11) (16 184) (14 546)
Net income before non-trading and capital related
items and equity accounted earnings 9 38 121 35 101
Non trading and capital related items (>100) (1 512) 986
Share of post tax (loss)/gain of associates and
joint ventures (>100) (323) 626
Net income before indirect taxation (1) 36 286 36 713
Indirect taxation (12) (2 739) (2 439)
Net income before direct taxation (2) 33 547 34 274
Direct taxation (0) (8 187) (8 061)
Profit for the year from continuing operations (3) 25 360 26 213
Profit/(loss) for the period from discontinued
operation 1 >100 2 741 (4 048)
Profit for the year 27 28 101 22 165
Attributable to non-controlling interests 2 3 970 3 904
Attributable to preference shareholders 6 377 356
Attributable to equity holders of the parent 33 23 754 17 905
Earnings per share from continuing
operations and discontinued operation
Basic earnings per ordinary share (cents) 1 487,0 1 129,9
Diluted earnings per ordinary share (cents) 1 474,0 1 107,3
Earnings per share from continuing operations
Basic earnings per ordinary share (cents) 1 315,5 1 385,3
Diluted earnings per ordinary share (cents) 1 303,9 1 357,6
1 Gains and losses relating to GMOA have been presented as a single amount relating to
their after-tax profit/(losses).
Headline earnings
Change 2015 2014
for the year ended 31 December 2015 % Rm Rm
Profit for the year from continuing operations (4) 21 013 21 953
Headline adjustable items added/(reversed) 1 687 (1 017)
Goodwill impairment - IAS 36 1 333 4
Loss on sale of property and equipment - IAS 16 48 16
Gains on disposal of businesses - IAS 27 (195) (62)
Realised foreign currency profit on foreign operations - IAS 21 (5) (1 203)
Impairment of associate - IAS 27/IAS 36 112
Impairment of intangible assets - IAS 36 2 1 330 257
Realised gains on available-for-sale assets - IAS 39 64 (29)
Taxation on headline earnings adjustable items (381) (81)
Non-controlling interests' share of headline earnings adjustable items (42) 27
Standard Bank Group headline earnings from continuing operations 7 22 277 20 882
Profit for the year from discontinued operation (>100) 2 741 (4 048)
Headline adjustable items (reversed)/added (2 831) 346
Impairment of intangible assets - IAS 38 193
Loss on disposal of subsidiary - IFRS 10 1 303
Realised foreign currency profit on foreign operations - IAS 21 (4 054)
Net investment hedge gain - IAS 39 (80)
Impairment of non-current assets held for sale - IFRS 5 153
Taxation on headline earnings adjustable items (43)
Standard Bank Group headline earnings
from discontinued operation (98) (90) (3 745)
Standard Bank Group headline earnings 29 22 187 17 137
1 Relates to the impairment of the goodwill included in the group’s investment in Nigeria of R333 million.
2 Impairments of intangible assets followed a comprehensive review of all system related assets particularly
where there had been any changes in the strategy related to these projects. Included are R555 million of
impairments related to PBB South Africa’s core-banking system where ring-fenced components were identified
as obsolete due to changes in the direction of the core banking journey and R342 million related to a
decision made to streamline all sub-ledgers across the group, both in South Africa and the rest of Africa.
Condensed consolidated statement of other comprehensive income
2015 2014
for the year ended 31 December 2015 Rm Rm
Profit for the year 28 101 22 165
Other comprehensive income after tax for the year 3 009 (888)
Items that may be reclassified subsequently to profit and loss 3 109 (757)
Exchange differences on translating foreign operations 4 103 (5)
Net change on hedges of net investments in foreign operations (325) (147)
Movements in the cash flow hedging reserve (903) (379)
Net change in fair value of cash flow hedges before reclassification 1 551 272
Realised fair value adjustments of cash flow hedges transferred to
profit or loss (2 454) (651)
Movements in the available for sale revaluation reserve 234 (226)
Net change in fair value of available-for-sale financial assets before
reclassification 117 (208)
Realised fair value adjustments on available-for-sale financial assets
transferred to profit or loss 117 (18)
Items that may not be reclassified to profit and loss (100) (131)
Defined benefit fund remeasurements (121) (99)
Other losses 21 (32)
Total comprehensive income for the year 31 110 21 227
Attributable to non-controlling interests 5 227 2 689
Attributable to equity holders of the parent 25 883 18 588
Condensed consolidated statement of changes in equity
Ordinary Preference Non-
shareholders’ share capital controlling Total
for the year ended equity and premium interest equity
31 December 2015 Rm Rm Rm Rm
Balance at 1 January 2014 128 936 5 503 18 209 152 648
Total comprehensive income
for the period 18 232 356 2 689 21 277
Transactions with owners,
recorded directly in equity (10 183) (356) (1 673) (12 212)
Equity-settled share-based
payment transactions 221 48 269
Deferred tax on share-based
payment transactions 150 150
Transactions with
non-controlling shareholders (416) (26) (442)
Net repurchase of share capital
and share premium and capitalisation of reserves (599) (599)
Net increase in treasury shares (592) (304) (896)
Dividends paid (8 947) (356) (1 391) (10 694)
Unincorporated property (79) (79)
partnerships capital
reductions and distributions
Balance at 31 December 2014 136 985 5 503 19 146 161 634
Balance at 1 January 2015 136 985 5 503 19 146 161 634
Total comprehensive income 25 506 377 5 227 31 110
for the period
Transactions with owners,
recorded directly in equity (11 422) (377) (1 893) (13 692)
Equity-settled share-based
payment transactions (1 392) 73 (1 319)
Deferred tax on share-based
payment transactions (72) (72)
Transactions with
non-controlling shareholders (369) (778) (1 147)
Net decrease in treasury shares 66 49 115
Net repurchase of share capital
and share premium and capitalisation of reserves (641) (641)
Redemption of preference shares 1 317 1 317
Net dividends paid (10 331) (377) (1 237) (11 945)
Unincorporated property
partnerships capital
reductions and distributions (144) (144)
Balance at 31 December 2015 151 069 5 503 22 336 178 908
Condensed consolidated statement of cash flows
2015 2014
for the year ended 31 December 2015 Rm Rm
Net cash flows from operating activities 35 504 29 654
Cash flows used in operations (16 179) (21 943)
Direct taxation paid (8 012) (8 070)
Other operating cash flows 59 695 59 667
Net cash flows used in investing activities (31 828) (8 298)
Capital expenditure (9 527) (8 426)
Other investing cash flows (22 301) 128
Net cash flows used in financing activities (11 509) (10 262)
Proceeds from issue of share capital net of buybacks (641) (599)
Net cash flow from equity transactions with
non-controlling interests (1 118) (617)
Release of empowerment reserve 1 317
Subordinated debt issued 4 005 4 385
Subordinated debt redeemed (3 127) (2 425)
Dividends paid (11 945) (10 694)
Net cash flows used in financing activities in (312)
discontinued operations
Effect of exchange rate changes on cash 2 066 2 376
and cash equivalents
Net (decrease)/increase in cash and cash equivalents (5 767) 13 470
Cash and cash equivalents at the beginning of the period 80 879 67 409
Cash and cash equivalents at the end of the period 75 112 80 879
Comprising:
Cash and balances with central banks 75 112 64 302
Cash and balances with central banks held for sale 16 577
Cash and cash equivalents at the end of the period 75 112 80 879
Notes
Condensed segment report
Change 2015 2014 1
for the year ended 31 December 2015 % Rm Rm
Revenue contribution by business unit
Personal & Business Banking 9 60 393 55 399
Corporate & Investment Banking 7 31 319 29 171
Central and other 19 (597) (501)
Banking activities 8 91 115 84 069
Liberty 10 23 650 21 486
Standard Bank Group - normalised 9 114 765 105 555
Adjustments for IFRS (>100) 345 (303)
Standard Bank Group - IFRS 9 115 110 105 252
Profit or loss attributable to ordinary
shareholders
Personal & Business Banking 10 10 633 9 662
Corporate & Investment Banking 54 7 507 4 876
Central and other >100 3 229 1 395
Banking activities 34 21 369 15 933
Liberty 2 2 200 2 158
Standard Bank Group - normalised 30 23 569 18 091
Adjustments for IFRS (>100) 185 (186)
Standard Bank Group - IFRS 33 23 754 17 905
Total assets by business unit
Personal & Business Banking 10 682 080 621 299
Corporate & Investment Banking (2) 936 480 954 063
Central and other 58 (39 701) (25 101)
Banking activities 2 1 578 859 1 550 261
Liberty 13 402 226 356 445
Standard Bank Group - normalised 4 1 981 085 1 906 706
Adjustments for IFRS (55) (1 736) (3 861)
Standard Bank Group - IFRS 4 1 979 349 1 902 845
Total liabilities by business unit
Personal & Business Banking 9 614 614 562 906
Corporate & Investment Banking (3) 871 427 900 059
Central and other (14) (61 461) (53 683)
Banking activities 1 1 424 580 1 409 282
Liberty 13 375 975 332 057
Standard Bank Group - normalised 3 1 800 555 1 741 339
Adjustments for IFRS (11) (114) (128)
Standard Bank Group - IFRS 3 1 800 441 1 741 211
1 Where responsibility for individual cost centres and divisions within business units
change, the comparative figures are reclassified accordingly.
Contingent liabilities and capital commitments
2015 2014
as at 31 December 2015 Rm Rm
Letters of credit and bankers' acceptances 11 437 16 162
Guarantees 67 161 53 365
Contingent liabilities 78 598 69 527
Investment property 835 2 934
Property,plant and equipment 405 456
Other intangible assets 1 169 826
Commitments 2 409 4 216
Legal proceedings
In the ordinary course of business, the group is involved in litigation, lawsuits and other proceedings. While
recognising the inherent difficulty of predicting the outcome of defended legal proceedings, management believes,
based upon current knowledge and after consulting with legal counsel, that the legal proceedings currently pending
against it should not have a material adverse effect on the group’s consolidated financial position. The directors
are satisfied, based on present information and the assessed probability of claims eventuating, that the group has
adequate insurance programmes and provisions in place to meet such claims.
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 2/2013 Headline Earnings, issued by the South African Institute of Chartered Accountants (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.
2015 2014
Rm Rm
Cost 48 94
Carrying value 492 625
Fair value 482 589
Attributable income before impairment 51 64
Equity securities
During the period, the group allotted 3 813 706 shares (2014: 4 879 268 shares) in terms of the group’s share incentive
schemes and repurchased 3 923 373 shares (2014: 4 361 547 shares). The total equity securities held as treasury shares
at the end of the period was 11 084 016 shares (2014: 12 807 677 shares).
Subordinated debt
During the period the group issued R4 billion (2014: R4,4 billion) and redeemed R3,1 billion (2014: R2,4 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.
Disposal of subsidiaries
During the period the group disposed of the following material subsidiaries:
Brazil
In April 2015, the group completed the disposal of Banco Standard de Investimentos S.A., the group’s Brazilian-licensed
banking subsidiary, to Grupo Financiero Inbursa SAB, a listed Mexican banking group. The final disposal proceeds amounted to
R581 million. The net gain on the disposal of R262 million (of which R111 million is included in headline earnings) has been
included in the group’s income statement as part of its continuing operation’s results.
Standard Bank Plc
The group disposed of 60% of SB Plc to ICBC on 1 February 2015. SB Plc was, subsequent to the transaction, renamed to
ICBCS. The final cash proceeds on this 60% disposal, which was based on a discount to the 31 January 2015 net asset
value (this net asset value was impacted by the valuation of certain aluminium claims as disclosed below), amounted to
USD675 million (R7 828 million). The final tranche of payment in this respect was made, in terms of the transaction
agreements, in early July 2015. SB Plc’s financial results, together with the net gain on disposal, have been reported as
part of the group’s discontinued operation’s results up to the date of completion of the transaction.
ICBC has a five-year call option to purchase a further 20% of the outstanding shares of SB Plc, exercisable from
1 February 2017. Contingent upon ICBC exercising its call option and from six months after such exercise, the group has a
five-year option to require ICBC to acquire its residual shareholding for cash.
The group retained a 40% interest in SB Plc (subsequently renamed ICBCS), with this interest being recognised as
investment in an associate from 1 February 2015. The associate was recognised at an initial value of USD450 million
(R5 219 million) on this date. This value was determined to be the fair value based on the terms of the disposal transaction. The
results from the group’s remaining 40% interest in ICBCS have been included, with effect from 1 February 2015, in the
group’s continuing operation’s results.
As part of the disposal of SB Plc, the group provided ICBC with certain indemnities to be paid in cash to ICBC or, at
ICBC’s direction, to any SB Plc group company, a sum equal to the amount of losses suffered or incurred by ICBC arising
from certain circumstances. Where an indemnity payment is required to be made by the group to SB Plc, such payment would
be grossed up from ICBC’s shareholding at the time in SB Plc to 100%. Such payments may arise as a result of the
ownership, conduct or operation of all or any part of the businesses that have, in terms of the transaction agreements, been
transferred from SB Plc to the group prior to disposal (excluded business) or from an enforcement action, the cause of
which occurred prior to the completion date of 1 February 2015. Enforcement actions include actions taken by regulatory or
governmental authorities to enforce the relevant laws in any jurisdiction. The indemnities provided are uncapped and of
unlimited duration as they reflect that the risks of ownership and conduct of the excluded business, and pre-completion
regulatory risks attaching to the GMOA business, remain with the group post completion.
Deferred prosecution agreement
As explained in the announcement made to shareholders via SENS on 30 November 2015, the group’s former subsidiary, SB
Plc (now ICBCS), entered into a Deferred Prosecution Agreement (DPA) with the United Kingdom Serious Fraud Office (SFO)
with the approval of the President of the Queen’s Bench Division of the High Court of England and Wales.
The DPA relates to allegations that SB Plc failed to prevent two executives of Stanbic Bank Tanzania Limited (Stanbic)
from engaging a local partner with the intent that the engagement would induce Tanzanian Government representatives
into acting partially in awarding a capital raising mandate to SB Plc and Stanbic. SB Plc self-reported this suspicious
transaction to the SFO in 2013. In terms of the DPA, prosecution has been suspended and will be withdrawn after three years
provided that SB Plc has complied with its obligations under the DPA. In the same announcement, it was confirmed that
SB Plc had reached a settlement agreement with the United States Securities and Exchange Commission (SEC) in relation to
allegations of negligence relating to the same matter.
The total cost relating to the DPA and the SEC settlement, including penalties, compensation payments and legal costs,
amounted to USD40.3 million (R562 million). As noted in terms of the completion of the disposal by the group of a controlling
interest in SB Plc to ICBC, the group indemnified ICBC against costs of this nature. USD16.1 million (R226 million) of the total
cost has been recognised within the group’s continuing operations through the equity accounted earnings of its 40% interest
in ICBCS and USD24.2 million (R336 million) has been included in the group’s discontinued operation’s results.
Black economic empowerment (BEE) transactions
In 2004, the group entered into a series of transactions whereby investments were made in cumulative redeemable
preference shares issued by BEE entities. The group’s banking operations’ BEE initiative is referred to as Tutuwa and
Liberty’s is referred to as Lexshell. A key feature of these BEE initiatives is that all participants were subject to a 10-year
lock-in restriction which expired on 31 December 2014.
To the extent that the Tutuwa participants accessed their underlying equity value and to the extent that those equity
shares are financed by the group, a proportionate amount of the group’s negative empowerment reserve is released through
the payment of the underlying debt owing on the preference shares by the participants. From January 2015 to December
2015, R1,3 billion was released from the group's negative empowerment reserve.
Aluminium reverse repurchase agreement
During the year, a settlement agreement was concluded with the majority of the group’s third-party insurers in respect
of the losses suffered as a consequence of the fraud in Qingdao port relating to certain aluminium reverse repurchase
agreements, and an amount of approximately USD70,5 million was received by ICBCS with respect to this settlement.
Pursuant to the amendments to the disposal agreement with ICBC in relation to ICBCS, the group enjoys the full economic benefit
of this subsequent recovery.
Efforts continue through a number of avenues to recover amounts owing from the remaining third-party insurer and to
pursue other recovery mechanisms from other counterparties, and to access metal stocks held by the authorities in China.
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.
As reported on SENS on 16 February 2015, key management personnel sold 324 001 of the group’s ordinary shares out of the Tutuwa
structure in order to settle employees' tax, associated funding and transaction costs arising from the expiry of the lock-in
period. In addition key management personnel sold a further 11 112 shares on the 25 March 2015.
Tutuwa share movement since lock-in period ended
2015
Issued Weighted
number number of
of shares shares
000’s 000’s
Shares financed by Standard Bank Group - 1 January 2015 27 726 27 726
Less: sale of shares by participants (21 975) (20 127)
Shares financed by Standard Bank Group - 31 December 2015 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:
2015 2014
Rm Rm
Value of assets under management 11 776 9 077
Investments held in bonds and money market instruments 667 655
Value of ordinary group shares held 471 330
Balances and transactions with ICBCS
On 1 February 2015 the group disposed of its controlling interest in SB Plc to ICBC. With effect from that date SB Plc
was renamed to ICBCS and became a supported subsidiary of ICBC. The group’s retained 40% interest in ICBCS was, with
effect from the disposal date, classified as an interest in an associate and equity accounted thereafter. During the
period ended 31 December 2015 the group both maintained and entered into new lending, deposit, derivative and other
trading-related transactions with ICBCS on market-related terms as follows:
2015
Rm
Derivative assets 4 780
Trading assets 35
Loans and advances 29 902
Other receivables 158
Derivative liabilities (5 351)
Deposits (6 756)
Other payables (218)
During the year transactions were entered into with ICBCS that resulted in: interest income of R197 million, other
income of R33 million, interest expense of R128 million and fee and commission expense of R89 million. In addition as part
of the group’s divesture of ICBCS, 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% thereof. In terms of these arrangements,
services are delivered to and received from ICBCS for the account of each respective party under formal service level agreements.
Revenue and expenses recognised in respect of these arrangements amounted to R402 million and R58 million respectively as at
31 December 2015.
Balances and transactions with ICBC
The following transactions took place between the group and ICBC, a 20.1% shareholder of Standard Bank Group Limited:
2015 2014
Rm Rm
Loans and advances
Loans and advances at beginning of the year 1 462
Loans and advances granted/(repaid) during the year (1 309) 1 462
Loans and advances outstanding at the end of the year 153 1 462
Loans and advances to ICBC includes fixed terms loans with a maturity of less than 12 months from the reporting date, current
account balances and confirmed letters of credit. Interest income from these arrangements amounted to R39 million for 2015
(2014: R60 million).
2015 2014
Rm Rm
Other receivables and payables
Aluminium indemnification receivable1 619
Bank amount with ICBC 299 2 087
Other payables (71)
1 The group recognised losses in respect of certain commodity reverse repurchase
agreements (repos) with third parties prior to the completion of the disposal
of SB Plc to ICBC. As a consequence of the amendments made to the sale and
purchase agreement relating to the repos, the group has a right to 60% of any
related insurance and other recoveries, net of costs, relating to these repos
from ICBC. Settlement of these amounts will occur based on audited information
on pre-agreed anniversaries of the completion of the transaction and also on the
full and final settlement of all claims in respect of losses incurred. As at
31 December 2015 a balance of USD40 million (R619 million) is receivable from
ICBC in respect of this arrangement. An amount of R595 million was recognised as
part of the group’s results from the discontinued operations.
2015 2014
Rm Rm
Trading assets
Trading assets outstanding at beginning of the year 20
Net trading positions opened during the year (13) 20
Trading assets outstanding at the end of the year 7 20
During the year, the group entered into commodity leasing transactions with ICBC at
market-related terms and conditions, from which gross trading revenue of R74 million
was recognised (2014: R94 million).
Letters of credit
The group has off-balance sheet letters of credit exposure issued to ICBC as at 31 December 2015 of R216 million
(2014: R646 million). The group received R2 million in fee and commission income relating to these transactions
(2014: R2 million).
Change in group directorate
The following changes in directorate took place during the year ended 31 December 2015 and subsequently up to
2 March 2016:
Appointments
T Gcabashe as chairman 28 May 2015
Dr ML Oduor-Otieno as director 1 January 2016
Resignation and retirements
F du Plessis as director 28 May 2015
F Phaswana as chairman 28 May 2015
Lord Smith of Kelvin, KT as director 28 May 2015
Day one profit or loss
The table below sets out the aggregate net day one profits yet to be recognised in profit or loss at the beginning and
end of the period with a reconciliation of changes in the balances during the period.
Derivative Trading
instruments1 assets2 Total
Rm Rm Rm
Balance as at 1 January 2014 2 2
Additional net profit on new transactions during the year 144 144
Recognised in profit or loss during the year (85) (40) (125)
Additional net profit on new transaction 68 68
Transfers 390 390
Balance as at 31 December 2014 61 418 479
Balance as at 1 January 2015 61 418 479
Additional net profit on new transactions during the year 346 268 614
Recognised in profit or loss during the year (159) (104) (263)
Exchange differences 47 47
Balance as at 31 December 2015 295 582 877
1 During the current reporting period, the group identified day one gains and losses on derivative instruments
which were not appropriately disclosed in the prior financial statements. The group has corrected this disclosure
by deducting R242 million of unamortised profit as at 31 December 2014. This correction to the disclosure had no
impact on the income statement or statement of financial position in the current or prior reporting period.
2 During the current reporting period, the group identified day one gains and losses on trading assets which were not
appropriately disclosed in the prior financial statements. The group has corrected this disclosure by including
R402 million of unamortised profit as at 31 December 2014. This correction to the disclosure had no impact on the
income statement or statement of financial position in the current or prior reporting period.
Offsetting and other similar arrangements
Financial instruments subject to offsetting, enforceable master netting arrangements or similar agreements
IFRS requires financial assets and financial liabilities 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.
The following table sets out the impact of offset, as well as 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.
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.
Financial
liabilities
Gross set off Net amount
amount of in the of financial
recognised statement assets
financial of financial subject Collateral Net
assets1 position2 to offset3 received4,5 amount
Rm Rm Rm Rm Rm
Assets
2015
Derivative assets 146 565 146 565 (134 668) 11 897
Trading assets 45 512 45 512 (37 273) 8 239
Loans and advances4 185 022 (34 862) 150 160 (74 256) 75 904
377 099 (34 862) 342 237 (246 197) 96 040
2014
Derivative assets 170 304 (40 676) 129 628 (109 362) 20 266
Trading assets 8 990 8 990 (7 566) 1 424
Loans and advances4 141 118 (39 082) 102 036 (24 266) 77 770
320 412 (79 758) 240 654 (141 194) 99 460
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 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. 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.
5 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.
Financial
Gross liabilities Net amount
amount of set off in the of financial
recognised statement liabilities
financial of financial subject Collateral Net
liabilities1 position2 to offset3 pledged4,5 amount
Rm Rm Rm Rm Rm
Liabilities
2015
Derivative liabilities 172 963 172 963 (134 726) 38 237
Trading liabilities 30 284 30 284 (27 950) 2 334
Deposits and debt
funding4 47 265 (34 862) 12 403 (8 552) 3 851
250 512 (34 862) 215 650 (171 228) 44 422
2014
Derivative liabilities 184 537 (40 676) 143 861 (116 334) 27 527
Trading liabilities 6 479 6 479 (6 477) 2
Deposits and debt
funding4 56 462 (39 082) 17 380 (6 644) 10 736
247 478 (79 758) 167 720 (129 455) 38 265
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 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. 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.
5 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.
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 International swaps The agreement allows for offset in the
and liabilities and derivatives event of default.
Trading assets and Global master repurchase The agreement allows for offset in the
trading liabilities agreements event of default.
Loans and advances Customer agreement In the event of liquidation or bankruptcy,
to banks and Banks Act offset shall be enforceable subject to
Banks Act requirements being met.
Deposits and debt Customer agreement In the event of liquidation or bankruptcy,
funding and Banks Act 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, as set out below.
Adoption of new and amended standards 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 amendment effective for the current period:
- IAS 19 Employee benefits: Amendment to employee contributions for defined benefit plans (IAS 19).
Early adoption of revised standards:
- Amendment to IAS 16 Property, Plant and Equipment (IAS 16) and IAS 41 Agriculture (IAS 41).
- Annual improvements 2012 - 2014: amendment to IFRS 7 Financial Instruments: Disclosures.
- Annual improvements 2010 - 2012 cycle and 2011 - 2013 cycle.
- Amendment to IAS 1 Presentation of Financial Statements (IAS 1)
- Changes to the ordering of line items in the financial statements, notably in the statement of financial position
to better reflect liquidity
- Consideration of regulatory disclosure and reporting requirements to identify information that was not required
and was better placed outside of the financial statements
- The application of materiality to items resulting in aggregation/deletion of immaterial items. The changes result
in a more streamlined and concise set of financial statements that are consistent with best practice.
- The development of a revised income statement, which included the following changes and related restatements:
Normalised Condensed consolidated
condensed group income statement
income statement (IFRS)
Income As As
statement As previously As previously
line item presented presented presented presented Reason for restatement
Non-interest Inclusion in total income
revenue 38 813 38 984 38 891 39 062 of revenue sharing agreements
with discontinued operation.
Revenue sharing
agreements
with group
companies - (171) - (171)
Other operating A new line item, namely
expenses 21 635 21 910 46 596 46 871 non-trading and capital related items'
Non-trading and has been included in the income statement.
capital related This line item replaces the previously
items (gain) 986 - 986 - disclosed income statement line items
Goodwill relating to goodwill impairment and
impairment - 4 - 4 gain on disposal and liquidation of
Gain on disposal subsidiaries; includes the impairment of
and liquidation intangible assets and the loss on disposal
of subsidiaries - 1 212 - 1 212 of property and equipment that were previously
Share of profit included in operating expenses; and further
from associates includes the reversal of impairments of associates
and joint and gains on disposals of associates previously
ventures 612 665 626 679 included in the share of profit from associates
and joint ventures.
Net income from In determining net income from investment
investment management and life insurance activities,
management benefits due to policyholders is now presented
and life together with income from investment
insurance management and life insurance activities.
activities - - 21 209 79 467
Benefits due to
policyholders - - - 58 258
The abovementioned amendments to the IFRS standards, adopted on 1 January 2015, did not have any effect on the group's previously
reported financial results or disclosures and had no material impact on the accounting policies.
Acronyms and abbreviations
BEE Black Economic Empowerment
bps Basis points
Basel III Basel Capital Accord
Brazil Banco Standard de Investimentos SA
CAGR Compound annual growth rate
CDS Credit default swaps
CIB Corporate & Investment Banking
CSDP Central Securities Depository Participant
FCTR Foreign currency translation reserve
GDP Gross domestic product
HEPS Headline earnings per share
HQLA High-quality liquid assets
IAS International Accounting Standards
ICBC The Industrial and Commercial Bank of China Limited
ICBCS The Industrial and Commercial Bank of China Standard Bank Plc
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
IMF International Monetary Fund
JSE JSE Limited
LCR Liquidity coverage ratio
Lexshell Liberty's black economic empowerment ownership initiative
Liberty Liberty Holdings Group
NII Net interest income
NIR Non-interest revenue
NSFR Net stable funding ratio
NSX Namibian Stock Exchange
GMOA Global markets outside Africa business
OCI Other comprehensive income
PBB Personal & Business Banking
PIM Principal investment management
ROE Return on equity
SAICA South African Institute of Chartered Accountants
SARB South African Reserve Bank
SB Plc Standard Bank Plc
SBG Standard Bank Group
SEC Securities and Exchange Commission
SENS Stock Exchange News Service
SIP Shareholder Investment Portfolio
the group Standard Bank Group
Tutuwa The group's black economic empowerment ownership initiative
US United States
USD United States dollar
Johannesburg, 3 March 2016
Administrative and contact details
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
Head: Investor relations
David Kinsey
Tel: +27 11 631 3931
Group financial director
Simon Ridley
Tel: +27 11 636 3756
Head office switchboard
Tel: +27 11 636 9111
Directors
TS Gcabashe (chairman)
Shu Gu**(deputy chairman), RMW Dunne#, BJ Kruger* (chief executive), Adv KD Moroka,
Dr ML Oduor-Otieno##, AC Parker, ANA Peterside CON###, SP Ridley*, MJD Ruck, PD Sullivan####,
BS Tshabalala, SK Tshabalala* (chief executive), Wenbin Wang**, EM Woods
*Executive Director ** Chinese
#British ##Kenyan ###Nigerian ####Australian
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
JSE independent sponsor
Deutsche Securities (SA) Proprietary Limited
Namibian sponsor
Simonis Storm Securities (Proprietary) Limited
JSE joint sponsor
The Standard Bank of South Africa Share and bond codes
JSE share code: SBK ISIN: ZAE000109815
NSX share code: SNB
NSX share code: SNB 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
Website: www.standardbank.com
Date: 03/03/2016 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
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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,
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