13879_SBG AR 2014_A_p1-21(sl)

200 Pages·2015·5.93 MB·English

Annual integrated report 2014
Standard Bank Group
About Standard Bank Contents
Africa is our home, and
we are focused on driving
her growth. 1 Our reports 98 Transparency and
2 About this report accountability
With a heritage of over
3 • Integrated thinking 100 Chairman’s overview
150 years, we are a leading
integrated financial services 102 Corporate governance report
group on the African continent. 4 Our business 104 • Board of directors
We have an on-the-ground
6 How we create value 124 • Executive committee
presence in 20 countries in
sub-Saharan Africa, fit-for- 8 Our group strategic construct 133 Remuneration report
purpose representation 10 Our operating context
outside Africa and a strategic 12 Realising the Africa opportunity 162 Shareholder information
partnership with ICBC. This
14 Measuring our strategic progress 164 Chairman’s letter to shareholders
unique footprint supports our
strategy to connect African 16 Responding to our stakeholders 165 Notice to members
markets to each other and to 18 Our socioeconomic impact 173 Proxy forms
pools of capital globally.
20 Our indirect environmental impact 173 • Ordinary shareholders
175 • Preference shareholders
We continue to position the
group for the future, putting 22 Our performance 177 Shareholder analysis
our customers and clients at the 179 Share statistics
24 Chairman’s report to stakeholders
centre of everything we do. In
180 Shareholders' diary
line with the realities of risk, 27 Group chief executives’ report
regulation, technology and 32 Business unit reviews 181 Instrument codes
competition that are shaping 32 • Personal & Business Banking
the African landscape, we are Additional information
38 • Corporate & Investment Banking 182
investing significantly in our
diversified operations, our 43 • Liberty and Wealth 184 Directorate of key subsidiaries
people and culture, our systems 46 Human capital report 185 Credit ratings
and infrastructure, and our 52 IT report 186 Financial and other definitions
brand. We understand that our
commercial success over the 54 Financial review 189 Acronyms and abbreviations
long term depends on our 73 Key accounting concepts 192 International representation
social relevance and outcomes 76 Summarised annual financial 195 Pro forma information
as a financial services
statements 196 Contact details
organisation that serves the
84 Summarised risk and capital
real economies of this continent
we call home. management report
2014 2013
Headline earnings – continuing operations Rm 21 068 17 613
Headline earnings Rm 17 323 17 194
Group return on equity (ROE) % 12.9 14.1
ROE – rest of Africa % 21.5 19.7
Dividend per share cents 598 533
Tier I capital adequacy ratio % 12.9 13.2
Net asset value per share cents 8 625 8 089
IT costs as a % of operating expenditure % 25.3 24.7
Staff costs as a % of operating expenditure % 53.3 54.9
The financial results and related commentary is presented on a normalised basis, unless indicated as being
on an IFRS basis. For further details regarding the dividend, refer to page 69.
Our reports
We produce a full suite of reporting publications to cater for the diverse needs of our broad stakeholder base. The following reports,
which support our annual integrated report, are tailored to meet our readers' specific information requirements.
Frameworks applied Assurance Cross-referencing
I nternational <IR> Framework While the annual integrated
Annual integrated report AIR
S outh African Companies Act report is not audited, it
(this report) 71 of 2008 (Companies Act) contains information extracted
JSE Listings Requirements from the audited consolidated
As our primary report, our annual integrated
K ing Report on Corporate annual financial statements.
report provides an integrated assessment of
Governance (King Code) Certain externally assured
the group’s ability to create value over time.
S outh African Banks Act 94 of information has been
www.standardbank.com/reporting 1990 (Banks Act) extracted from the
sustainability report.
Risk and capital management V arious regulations relating to Selected information in the RCM
financial services, including risk and capital management AFS
report Basel III report forms part of the
International Financial audited annual financial
Provides a detailed discussion of the
Reporting Standards (IFRS) statements.
management of strategic risks related to the
King Code
group’s banking and insurance operations,
including capital and liquidity management
and regulatory developments.
www.standardbank.com/reporting
IFRS KPMG Inc. and
Annual financial statements
Companies Act PricewaterhouseCoopers Inc.
J SE Listings Requirements have audited the annual
Sets out the full audited annual financial
King Code financial statements and
statements for Standard Bank Group (the
expressed an unmodified
group or SBG), including the report of the
opinion for the year ended
group audit committee (GAC).
31 December 2014.
www.standardbank.com/reporting
Global Reporting KPMG Services Proprietary
Sustainability report SR
Initiative G4 Limited have provided
Standard Bank Group assurance over selected
Presents a balanced and comprehensive
sustainability information in
analysis of the group’s sustainability
the 2014 sustainability report
performance in relation to issues material to
and expressed an unmodified
Sustainability Report 2014 the group and its stakeholders.
opinion.
www.standardbank.com/sustainability
195405 Sustainability 2014.indd 1 2015/03/24 11:48 AM
Financial results presentation and booklet
Provides management’s analysis of financial results for the period and the performance of the group’s divisions.
The above icons
www.standardbank.com/reporting.
refer readers to
information
The Standard Bank of South Africa Limited annual report elsewhere in this
report, or in
The Standard Bank of South Africa (SBSA) is the group’s largest subsidiary. The group’s other subsidiaries also other reports
produce their own annual reports, some of which are available at www.standardbank.com/reporting. that form part of
the group’s suite
As a separate listed entity, Liberty Holdings Limited (Liberty) prepares its own integrated report which is available of reporting
at www.libertyholdings.co.za. publications.
For the latest financial information, refer to our investor Indicates that additional information is
relations page at www.standardbank.com/reporting available online.
or scan the QR code to be taken there directly.
Denotes text in the risk and capital
management report that forms part of the
group’s audited financial statements.
1
About this report
In determining the content to be included in this report, we consider
the pertinent developments and initiatives, and the related
performance indicators and future expectations that relate to our
material issues. We consider an issue to be material if it is likely to
impact our ability to achieve our strategy, and to remain commercially
sustainable and socially relevant. In particular, material issues are
As a financial services group
those that have a strong bearing on our stakeholders’ assessments of
focused on Africa, we play a the extent to which we fulfil their needs over the long term. We also
fundamental role in the take into account the factors that affect the economic growth and
social stability of the countries and regions in which we do business.
socioeconomic development
In 2013 we undertook an extensive consultative process to determine
of the continent we serve.
the material issues that affect our longer-term sustainability. These
The success of our customers and issues are outlined in relation to our operating context on page 10,
and form the lens for the narrative in this report. The specific
clients, and the trust and support
short- to medium-term matters that relate to how we deliver on our
of all our stakeholders, underpin strategy and manage each of these sustainability issues, are discussed
with leadership every year in producing the annual integrated report.
our commercial sustainability.
This year, we broadened this process with the aim of connecting risk
disclosure more specifically to the strategic narrative.
Based on our leadership engagement, governance processes and our
formal and informal stakeholder engagement initiatives, particularly
with investors, we are confident that all material matters have been
This interdependence requires that we conduct our business
identified and disclosed in this report. The group audit committee
ethically and responsibly to create value in the long-term interest
recommends the integrated report for approval to the board. The
of society. Although our annual integrated report is aimed principally
board and various subcommittees review the report to ensure all
at providers of capital, it is also considered to be of interest to a
material matters have been disclosed and appropriately discussed.
diverse range of other stakeholders.
Scope and boundary
Statement of the board of directors of Standard
The 2014 annual integrated report covers the period 1 January 2014
Bank Group Limited
to 31 December 2014. All material matters up to group board of
directors (board) approval on 4 March 2015 are included. The
annual integrated report discusses our operations in South Africa, The board acknowledges its responsibility to ensure the
the rest of Africa and outside Africa; the terms we use to describe integrity of the annual integrated report. In the board’s
the geographic regions in which we operate. The acronyms and opinion, the report addresses all material issues and matters,
abbreviations used in this report are explained on page 189. Unless and fairly presents the group’s integrated performance.
indicated otherwise, all data pertains to the group, which includes
On behalf of the board:
our banking operations, subsidiaries and Liberty. Any restatements of
comparable information are noted as such. While group financial
information is prepared according to IFRS, non-financial information
deemed material is also included. Information relating only to SBSA,
the group’s largest subsidiary and contributor to headline earnings, Fred Phaswana Sim Tshabalala Ben Kruger
has been clearly marked.
Chairman Group chief Group chief
executive executive
Materiality determination
Our annual integrated report aims to present a balanced and succinct 4 March 2015
analysis of our strategy, performance, governance and prospects.
We welcome the views of our stakeholders on the annual integrated report. Please contact us at
[email protected] with your feedback.
A limited number of printed risk and capital management report and annual financial statements books are available
Feedback on request. Please contact our investor relations department, using the details at the back of this report, and we will
gladly make arrangements to provide a copy to you.
Standard Bank Group
2
Annual integrated report 2014
Integrated thinking
Our commercial sustainability depends on our effectiveness in interest of maintaining stable and thriving African economies
assisting Africa’s people, businesses and institutions to fulfil their and societies.
economic potential by facilitating payments, managing risk and
We believe that a community-minded worldview is integral to
creating and preserving wealth. We intermediate between
our legitimacy and represents a consistent and considered level
providers of capital and employers of capital, providing the
of integrated thinking, which we continue to deepen within our
former with competitive returns on their investments, and the
organisation through our group strategic construct set out on
latter with access to the liquidity and capital they need to realise
page 8. In effect it corresponds to the capitals model of value
their objectives.
creation, adopted by the International Integrated Reporting
Council (IIRC) in the International <IR> Framework. While we
These functions of our core business can in no way be separated
have not formally adopted the six capitals categorisation, based
from our developing social and environmental context – whether
on our understanding of the IIRC’s guidance, our report explains
at local, national, regional or global level. Strong institutions are
our dependence and impact on the forms of capital that are
essential to ensure market outcomes that are socially beneficial
fundamental to our ability to create value over the long term.
in both the short and long term. These institutions include both We have not structured this report using the capitals but have
formal regulatory institutions and informal social institutions embedded them within each section to enable us to plot the
such as civil society structures. Well-functioning businesses and interrelationships and trade-offs between them in relation to
markets require appropriate regulation to continue as constructive our group and business unit strategies. The capitals are
organs of society, to restore trust and to participate in the shared introduced below.
is the money we obtain from providers refers to our people and how we select,
Financial of capital that we use to support our Human manage and develop them. This enables
capital business activities and invest in our capital them to utilise their skills, capabilities,
strategy. Financial capital, which includes knowledge and experience to improve
reserves generated through share capital, and develop products and services that
other equity-related funding and retained meet the needs of our customers and
profits generated from our operations, is clients across the diverse regions in
used to fund our business activities. which we operate.
relates to the natural resources on which is the cooperative relationships with
Natural we depend to create value and returns for Social and our customers, clients, capital providers,
capital our stakeholders. As a financial services relationship regulators and other stakeholders that
group we must deploy our financial capital capital we create, develop and maintain to
in such a way that promotes the remain socially relevant and operate
preservation or at least minimises the as a responsible corporate citizen.
destruction of natural capital.
is our tangible and intangible which includes the knowledge of our
Manufactured infrastructure that we use to conduct Intellectual people and our intellectual property,
capital our business activities, including our capital brand and reputation, is closely related to
IT assets. financial, human and manufactured capital
given the nature of our business.
3
Our
business
6 How we create value
8 Our group strategic construct
10 Our operating context
12 Realising the Africa opportunity
14 Measuring our strategic progress
16 Responding to our stakeholders
18 Our socioeconomic impact
20 Our indirect environmental impact
Standard Bank Group
4
Annual integrated report 2014
5
Leveraging information technology
SnapScan allows users to charge purchases to their
credit or cheque card by scanning a unique vendor
code at point of sale using their smartphone. Vendors
do not need a bank account as payments can be
redeemed as Instant Money vouchers at any Spar
store or Standard Bank ATM, making SnapScan
especially useful to smaller traders. Developed in
partnership with FireID, SnapScan stands as an
example of the innovations that our efforts
to build a digital bank in Africa are enabling.
5
Our business
How we create value
Income Principal risks arising
Business activity statement impact from this activity
For more detail 32 63 84
refer to page:
Lending enables our individual customers to create wealth by acquiring assets which either grow in value over time or which support their ability to
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other funders to enable lending. This creates liabilities, which Interest expense I continued functioning of the broader financial system. Our capital and liquidity management framework ensures that we are able to meet our funding
generate future interest expenses. requirements and payment obligations under both normal and stressed conditions, protect our depositors’ funds and reduce systemic risk in the
domestic banking system.
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t i or s companies and donor agencies operating on the continent.
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We are a significant employer in many of the countries in which we operate. We aim to hire locally whenever possible as we believe that employees
We invest in developing and retaining our people in who reflect the diversity of communities within which we operate enables us to better meet the needs of our customers and clients. Through our training and
order to execute our strategy and deliver to our customers Staff costs development programmes we enhance the level of financial services and related skills in Africa. The employment multiplier effect means that for each
and clients. job that we create we sustain, directly and indirectly, a number of other jobs in the local economy. As active consumers and taxpayers, our employees make
s a significant contribution to their local economies.
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xp Our ongoing investment in our business ensures that we remain competitive and sustainable, and thus able to continue to make a positive
E We invest in our operations, which includes IT systems contribution to our host countries. Our substantial investments in transforming our core banking platforms position us to serve our customers and
Other operating clients more effectively and to innovate, strengthening our competitive position. We are a significant procurer of goods and services in the markets
and infrastructure, to improve efficiency and deliver relevant
costs in which we operate, given the scale of our operations. In South Africa, we focus on increasing our procurement spend with black suppliers and in the rest
products and services to our customers and clients. of Africa we aim to procure locally wherever possible. Our suppliers in turn create and sustain employment and form part of the corporate tax base in the
countries in which they operate.
Dividends to our shareholders
Net profit Retained equity which is reinvested to sustain and grow our business
Taxes to governments
Standard Bank Group
6
Annual integrated report 2014
Linking our profitability to socially beneficial outcomes
Lending enables our individual customers to create wealth by acquiring assets which either grow in value over time or which support their ability to
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We source funding from deposits placed by customers and nter Liq Caguastionmste tr hdee peorsoistsio ena ronf i nctaeprietsatl adtu rea tteos indfelpateionnd.in Wg eo np atrhteic itpyaptee oinf seaqvuinitgys a onrd i ndveebstt mcaepnitta pl rmodarukcett as ntdo t shoeu srizcee ofuf nthdein dge,p owshitic phl accoendt rwibhiucthe ms titoi gtahtee s
other funders to enable lending. This creates liabilities, which Interest expense I continued functioning of the broader financial system. Our capital and liquidity management framework ensures that we are able to meet our funding
generate future interest expenses. requirements and payment obligations under both normal and stressed conditions, protect our depositors’ funds and reduce systemic risk in the
domestic banking system.
We facilitate the movement of money, enabling customers and clients to access their funds in a manner most convenient to them, by enabling
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or s companies and donor agencies operating on the continent.
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Wpshreao rdoeufhfcoetlrds ilnaognn dign -a Ldaibvniedsr otsyrh.yo sret-rtveicrems itnhsrouuragnh coeu, ri n5v4e.3st%m ent Iimlninfvaceeon ismantgsmeue emrfarnoentmnc et and Insuranc ational risk, incl TLpalihrsboroeot rauetngcy thaa ctlssthhoiveo eomrt f-pfs eaearrnlstvd iecm islpoe aandnngict-da ti lne ta rhtmidhe ,ei irn l ipfsderuei vrapaasnetsecnu edre,aa qninnucvtietsey as,a tnpgmdraoe ripnneetts irtprte yrlomo adsenusndc to t osfpt rahionnedcdru o sacmtdtrsave tiw sedohguriiycceh sit neaovrs veisilsciltsnemtse eiswnnsed to imhvr ieadalrtpuk earoetlsust. ritr oec umrseetmnotam.i neAr sps a rbonu daiusldsce taitv naedn mdp rpeomotrebtfceotrl isot h omefa irsn o awcgieeerat,y lwt hae.n a d r e
activities er
p
O
We are a significant employer in many of the countries in which we operate. We aim to hire locally whenever possible as we believe that employees
We invest in developing and retaining our people in who reflect the diversity of communities within which we operate enables us to better meet the needs of our customers and clients. Through our training and
order to execute our strategy and deliver to our customers Staff costs development programmes we enhance the level of financial services and related skills in Africa. The employment multiplier effect means that for each
and clients. job that we create we sustain, directly and indirectly, a number of other jobs in the local economy. As active consumers and taxpayers, our employees make
a significant contribution to their local economies.
Our ongoing investment in our business ensures that we remain competitive and sustainable, and thus able to continue to make a positive
We invest in our operations, which includes IT systems contribution to our host countries. Our substantial investments in transforming our core banking platforms position us to serve our customers and
Other operating clients more effectively and to innovate, strengthening our competitive position. We are a significant procurer of goods and services in the markets
and infrastructure, to improve efficiency and deliver relevant
costs in which we operate, given the scale of our operations. In South Africa, we focus on increasing our procurement spend with black suppliers and in the rest
products and services to our customers and clients. of Africa we aim to procure locally wherever possible. Our suppliers in turn create and sustain employment and form part of the corporate tax base in the
countries in which they operate.
For specific examples of how our business activities contribute to broader value creation, see Realising the Africa opportunity on
page 12, and for more information on our socioeconomic impact, see page 18.
7
Our business
Our group strategic construct
The ultimate test of our strategy is to deliver sustainable and superior financial performance over the long
term, measured by earnings and ROE. The group’s strategy has evolved organically in line with the development
of our franchises. The fundamentals of our strategy and its alignment to our code of ethics have therefore not
changed. In our pursuit of leadership as an African financial services organisation, we continue to pursue
growth – mainly organic growth – in Africa. Our businesses outside Africa exist primarily to link African
enterprises to global pools of capital.
Our purpose is the reason we exist, and the basis on which we
plan our future:
Our long-term profitability depends on the stability and wellbeing of our continent.
Our pursuit of profit in a competitive market will lead to socially beneficial outcomes.
We use the fundamental power of financial services to make life better for our
fellow Africans.
Purpose Africa is our home, we drive her growth
Legitimacy
To be the leading
financial services
Vision
organisation in, for
and across Africa,
delivering exceptional
Our values support our legitimacy,
Values and are the basis for earning the customer and client
experiences and
trust of our stakeholders.
superior value
Serving our customers Working in teams
Growing our people Respecting each other
D elivering to our shareholders L iving the highest levels of integrity
Being proactive Constantly raising the bar
Guiding principles
Business units Enabling functions
Integrated pillars
Pers o nBalu s i& n eBsas nking (PBBC)orp o Irantve e s t& Bmaennkit ng (CIB)Liber ty Waeanldt h Risk Finance IT OperationsHuman capitalMarketingCommunicationsComplianceLegal
Our integrated pillars Clear strategies for each of our business units and enabling
encompass our business units functions ensure that we deliver on our purpose. Business unit
and enabling functions, which is strategies are discussed further in the business unit reviews.
where our strategy is executed: These strategies are supported by changes made to our
business architecture, which ensure that the strategies can be
implemented effectively.
Standard Bank Group
8
Annual integrated report 2014