REG - Standard Bank Group - Voluntary Trading Update - 1Q23

Industrial and Commercial Bank of ChinaAnnouncement

21/04/2023 18:30

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RNS Number : 1204X  Standard Bank Group Limited  21 April 2023

Standard Bank Group Limited

21 April 2023

 

Financial information provided to the Industrial and Commercial Bank of China
Limited ("ICBC") and update on the group's operational performance for the
three months ended 31 March 2023

 

Financial information provided to ICBC

 

On a quarterly basis the Standard Bank Group discloses to ICBC sufficient
information to enable ICBC to equity account the group's results. Accordingly,
the following consolidated financial information, prepared on an International
Financial Reporting Standards ("IFRS") basis, is being provided to ICBC for
the three months ended 31 March 2023 (1Q23).

 

Statement of changes in ordinary shareholders' equity for the three months
ended 31 March 2023

 

                                                          Balance as at 1 January 2023  Earnings attributable to ordinary shareholders  IFRS 17 transition(1) and other movements for the period  Balance as at 31 March 2023
                                                          Rm                            Rm                                              Rm                                                        Rm
 Ordinary share capital                                   168                                                                                                                                     168
 Ordinary share premium                                   27 341                                                                        9                                                         27 350
 Treasury shares(2)                                       (4 619)                                                                       2 312                                                     (2 307)
 Foreign currency translation and hedging reserves        (5 576)                                                                       2 172                                                     (3 404)
 Foreign currency translation reserve (FCTR)              (4 716)                                                                       2 115                                                     (2 601)
 Foreign currency net investment and total hedge reserve  (860)                                                                         57                                                        (803)
 Retained Earnings(3,4)                                   192 807                       10 171                                          (13 674)                                                  189 304
 Other                                                    9 143                                                                         168                                                       9 311
 Ordinary shareholders' equity                            219 264                       10 171                                          (9 013)                                                   220 422

 

(1) The preliminary IFRS 17 transition impact on the group's total ordinary
shareholders equity as at 1 January 2023 is a reduction of R1.1 billion. This
net reduction is made up of a reduction of R2.2 billion in retained earnings
offset by an increase of R1.2 billion in the treasury share reserve.

(2) The IFRS 17 transition adjustment as at 1 January 2023 for the treasury
share reserve comprises an increase of R1.2 billion (1 January 2022 - increase
of R0.8 billion) due to the removal of SBG shares held by Liberty Holdings
Limited (Liberty) policyholders as treasury shares.

(3) The IFRS 17 transition adjustment as at 1 January 2023 for retained
earnings comprises a reduction of R2.2 billion (1 January 2022 - reduction of
R0.8 billion). The largest component of the movement between 1 January 2022
and 1 January 2023 is as a result of the IFRS 17 transition impact on the
completion of the group's acquisition of shares held by non-controlling
shareholders in Liberty during 2022.

(4) Other movements for the period in retained earnings primarily comprises
the R11.6 billion ordinary dividends declared in March 2023.

 

Update on the group's operational performance for the three months ended 31
March 2023

 

In 1Q23, on an IFRS17 basis, the group delivered attributable earnings of
R10.2 billion. In 1Q22, on an IFRS4 basis, the group delivered attributable
earnings of R7.4 billion, which included a negative treasury share adjustment
of R517 million. If this adjustment (which is no longer required under IFRS17)
is excluded to create a more comparable base, attributable earnings grew by
28% for the period. A comprehensive IFRS17 transition report, with fully
restated and comparable prior year results and opening equity adjustments,
will be released during June 2023.

 

The group's performance was supported by higher average interest rates, good
balance sheet momentum from 2022, continued growth in transactional volumes, a
strong trading performance and an ongoing recovery in Liberty Holdings
Limited. A weaker rand exchange rate flattered earnings growth rates in ZAR in
the period.

 

Headline earnings adjustable items were not material in 1Q22 or 1Q23.

 

Standard Bank activities

Higher average interest rates and a larger balance sheet supported the group's
net interest margin and net interest income growth period on period. Continued
growth in transactional volumes, as well as the impact of annual price
increases across the continent, supported fee growth. Trading revenue
benefitted from higher client activity driven by continued global market
volatility and client demand for forex products. 1Q23 trading revenue was
ahead of the comparative period and ahead of expectations.

 

Inflationary pressure, combined with higher transactional activity, annual
staff cost increases and higher premises expenses linked to loadshedding in
South Africa, drove higher operating expenses period on period.

 

Credit impairment charges in 1Q23 were higher than in the comparative period,
given balance sheet growth, client strain on the back of higher than
anticipated interest rates and corporate and sovereign risk migration. The
group's credit loss ratio for 1Q23 was closer to the upper end of the group's
through-the-cycle target range of 70 to 100 basis points.

 

Liberty Holdings Limited

Liberty Holdings Limited (Liberty) recorded improved claims experience and
strong earnings growth in 1Q23. The group's 100% shareholding in Liberty is
reflected from February 2022.

 

ICBC Standard Bank Plc (ICBCS)

ICBCS recorded an operational profit in 1Q23, however its contribution to the
group declined period on period due to the non-recurrence of an insurance
recovery recognised by the group in January 2022.

 

Outlook

The group remains well capitalised and liquid. We continue to monitor the
impacts of potentially higher inflation for longer and hence higher interest
rates, electricity supply constraints in South Africa, global geopolitical
tensions, and banking sector vulnerabilities; all of which pose risks to our
outlook. Regardless of the scenario which unfolds, we stand ready and able to
serve the needs of our 18 million customers.  In line with previous guidance,
we remain committed to delivering positive jaws and an improving return on
equity in 2023.

 

 

 

For further information, please contact:

Ann Hunter

Standard Bank Group Limited

9th Floor

5 Simmonds Street, Johannesburg PO Box 2001

South Africa

Telephone number: +27 11 415 4194

 

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