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Standard Bank Group Limited
Registration number 1969/017128/06
Incorporated in the Republic of South Africa
Website: www.standardbank.com/reporting
Share codes
JSE and A2X share code: SBK
ISIN: ZAE000109815
NSX share code: SNB
SBKP ZAE000038881 (First preference shares)
SBPP ZAE000056339 (Second preference shares)
JSE bond code: SBKI
('Standard Bank Group' or 'the group')
Voluntary trading update for the five months to 31 May 2022 and trading statement for the six-
month period ending 30 June 2022
Since reporting in March 2022, the global macro-economic outlook has deteriorated. Growth has
slowed, inflation has risen, and uncertainty has increased. Key drivers include the ongoing conflict in
Ukraine, the strict lockdowns in China, and persistent global supply chain disruptions. In sub-Saharan
Africa, higher food, fertilizer, and fuel prices have started to filter through, driving inflation upwards.
Higher inflation has prompted monetary tightening.
In South Africa, inflation reached 5.9% in April 2022. By 31 May 2022, the Monetary Policy Committee
had raised the repo rate by 100 basis points to 4.75% and indicated that there were likely to be further
increases in the second half of the year. In March 2022, SB Research expected interest rates in South
Africa to increase by 100 basis points for the full year. This has been revised up to 175 basis points.
Standard Bank activities:
In the five months to 31 May 2022 (5M22 or the current period), the group recorded low double digit
revenue growth. A larger average balance sheet and higher interest rates drove low-teen net interest
income growth. A growing client franchise and higher client activity (fewer Covid-related restrictions in
5M22 than in 5M21) drove higher transactional turnover and supported mid-single digit growth in
banking fees. Higher insurance premiums and lower pandemic-related claims were partially offset by
higher short-term insurance claims. The latter was driven by inclement weather and floods in KwaZulu
Natal, South Africa. Trading revenue grew mid-teens supported by continued client activity; this is off a
high base in the five months to 31 May 2021 (5M21 or the prior period) and ahead of expectations.
Costs grew high single digits driven by a combination of higher staff costs, normalisation of certain post-
pandemic spend and inflation more generally. In 5M22, weighted average inflation across our countries
of operation was close to 10%. Revenue growth exceeded cost growth, delivering positive jaws.
Credit impairment charges in 5M22 were marginally lower than in 5M21. A decline in the Consumer and
HNW and the Business and Commercial client segments credit impairment charges period on period
was partially offset by the normalisation of Corporate and Investment Banking charges from a net
recovery in the prior period to a net charge in the current period. The credit loss ratio for the current
period was at the lower end of the group's through-the-cycle target range of 70 ' 100 basis points. It is
important to note that as we enter a rising interest rate cycle, the group's balance sheet provision levels
remain well above historic levels.
Liberty Holdings Limited
Liberty Holdings Limited's (Liberty) operational earnings improved period on period driven mainly by
lower funeral and death claims in SA Retail and Liberty Corporate, and improved persistency in SA
Retail. Sales on both SA Retail and Liberty Corporate have increased relative to the prior period. While
the pandemic impact was broadly in line with expectations, and significantly lower than in the prior
period, risk claims remain elevated. The future pandemic-related experience remains uncertain. The
pandemic reserve was used to absorb adverse experience variances as intended and will be re-
assessed as part of the 1H22 reporting process. STANLIB and the shareholder investment portfolio
were negatively impacted by market movements. Liberty remains well capitalised with a solvency
capital ratio within our target range of 1.5x to 2.0x cover.
Liberty's earnings were 100% consolidated from 1 February 2022. The adjustment for Standard Bank
shares held for the benefit of Liberty policyholders (Treasury Share Adjustment) was negative due to
the increase in the group share price from 31 December 2021 to 31 May 2022. Post the Treasury Share
Adjustment, Liberty's contribution to the group was marginally negative for 5M22.
The Liberty integration plan is on track. The focus is on unlocking value and delivering the synergies
identified as part of the transaction.
ICBC Standard Bank plc
Despite difficult market conditions, ICBC Standard Bank plc recorded an operational profit in 5M22 (i.e.
excluding the insurance recovery reported on 11 March 2022). The group's 40% share of the insurance
recovery equated to R1.2 billion post tax.
Capital and returns
The group's capital and liquidity levels remain strong. The group's common equity tier 1 ratio was 13.5%
as at 31 March 2022.
Group return on equity (ROE) for the period was close to group cost of equity (FY21 cost of equity was
14.7%).
Outlook
Group guidance for the twelve months to 31 December 2022 remains largely unchanged. A higher
average balance sheet and positive endowment from higher interest rates should drive strong net
interest income growth. A larger client base and higher client activity is expected to continue to support
fee growth. Trading revenues are subject to market volatility and related client activity. While the group's
credit loss ratio is expected to remain at the lower end of the group's through-the-cycle target range,
balance sheet provisioning and associated credit charges are subject to macro-economic
developments, including the frequency and quantum of further interest rate increases across our
countries of operation throughout the rest of the year. We remain committed to delivering cost growth
below inflation, positive jaws and an ROE above cost of equity in 2022.
While the economic outlook has deteriorated and uncertainty increased, opportunities exist to help our
clients and in turn, grow our business. We remain convinced that the strategy we laid out in August
2021 remains valid and that the 2025 targets we set are achievable.
Trading statement
In terms of the Listings Requirements of the JSE Limited, a listed company must publish a trading
statement once it is satisfied that a reasonable degree of certainty exists that the financial results for
the period to be reported will differ by at least 20% from reported financial results for the previous
corresponding period.
Shareholders are advised that Standard Bank Group's headline earnings per share (HEPS) and
earnings per share (EPS) for the six-month period ending 30 June 2022 are expected to be more than
20% higher than the reported HEPS and EPS for the comparable period (1H21 HEPS: 721.4 cents,
1H21 EPS: 717.4 cents).
We will provide a more specific guidance range once there is reasonable certainty regarding the extent
of the increase in earnings.
Standard Bank Group will report financial results for the six months to 30 June 2022 on 19 August 2022.
The event details will be made available on the group's Investor Relations website in due course.
Investor call
Standard Bank will host an investor call at 17h00 (South Africa time) on 14 June 2022. To register for
the call please use the link below:
Chorus call Registration
Alternatively, the call registration details are available on the Standard Bank Group Investor Relations
website - https://reporting.standardbank.com/
A replay will be available on the Investor Relations website shortly after the end of the call.
Shareholders are advised that the information contained in this voluntary trading update and trading
statement has not been reviewed or reported on by the group's external auditors.
Queries:
Investor Relations
Sarah Rivett-Carnac
Email: sarah.rivett-carnac@standardbank.co.za
Johannesburg
14 June 2022
Lead sponsor
The Standard Bank of South Africa Limited
Independent Sponsor
J.P. Morgan Equities South Africa Proprietary Limited
Namibian sponsor
Simonis Storm Securities (Proprietary) Limited
Date: 14-06-2022 08:00:00
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