Standard Bank Group Limited: Update on performance and capital adequacy

OREANDA-NEWS. Update on the group's performance for the four months to 30 April 2015 and capital adequacy, leverage ratio and liquidity coverage ratio disclosure at 31 March 2015

1.   Update on the group's performance for the four months to 30 April 2015

At the annual general meeting to be held later today, group chief executives Sim Tshabalala and Ben Kruger will refer to this update regarding the group's performance for the first four months of 2015 in comparison with the equivalent period for 2014.

Banking activities

Group income growth, boosted by good non-interest income, has been satisfactory in spite of the challenging economic conditions in several of the markets across the African continent in which the group operates, particularly in Nigeria. Expense growth remains within expectations but slightly higher than income growth. The credit environment in South Africa has largely been stable despite the low growth environment. Group credit impairments for the four months to April 2015 are slightly lower than in the comparative period. In summary, the results of the group's banking operations for the year to date are in line with the required growth to achieve the group's medium term target for return on equity of 15% to 18%.

Liberty Holdings Limited ("Liberty")

Shareholders are referred to the Liberty operational update on 21 May 2015 wherein, referring to the first quarter of 2015, the following comments were included:

"The performance of the group for the three months to 31 March 2015 continues to broadly reflect the trends demonstrated in the previous financial year of improved operating earnings, positive momentum in retail insurance single premium investment new business sales and stable customer behaviour. Returns on the shareholder investment portfolio for the period were in line with the benchmark for 2015 and remain ahead of the three years' cumulative benchmark."

2.   Basel III capital adequacy, leverage ratio and liquidity coverage ratio disclosure as at 31 March 2015

In terms of the requirements under Regulation 43(1)(e)(iii) of the regulations relating to banks and Directive 4/2014 issued in terms of section 6(6) of the Banks Act (Act No. 94 of 1990), minimum disclosure on the capital adequacy of the group and its leverage ratio is required on a quarterly basis. This disclosure is in accordance with Pillar 3 of the Basel III accord.

Standard Bank Group capital adequacy and leverage ratio

	March
	2015
	Rm
Ordinary share capital and premium	18 067
Ordinary shareholders' reserves1	119 042
Qualifying common equity tier I non-controlling interest	5 013
Regulatory deductions against common equity tier I capital	(34 809)
Common equity tier I capital	107 313
Unappropriated Profit	15 838
Common equity tier 1 capital excluding unappropriated profit	91 475
Perpetual preference shares	3 847
Qualifying tier I non-controlling interest	208
Tier I capital excluding unappropriated profit	95 530
Tier II subordinated debt	18 614
General allowance for credit impairments	1 508
Tier II capital	20 122
Total qualifying capital excluding unappropriated profit	115 652
Total minimum regulatory capital requirement2	85 968
Credit Risk	63 557
Counterparty credit risk	1 643
Equity Risk	1 476
Market Risk	4 450
Operational Risk	12 184
Threshold items	2 658
Capital Adequacy Ratio (excl unappropriated profit)
Total capital adequacy ratio (%)	13.5
Tier I capital adequacy ratio (%)	11.1
Common equity tier I capital adequacy ratio (%)	10.6
Capital Adequacy Ratio (incl unappropriated profit)
Total capital adequacy ratio (%)	15.3
Tier I capital adequacy ratio (%)	13.0
Common equity tier I capital adequacy ratio (%)	12.5
Leverage ratio
Tier I capital (excl unappropriated profit)	95 530
Tier I capital (incl unappropriated profit)	111 368
Total exposures	1 698 924
Leverage ratio (excl unappropriated profits) (%)	5.6
Leverage ratio (incl unappropriated profits) (%)	6.6
Note:
1 Including unappropriated profits.
2 The minimum capital requirement excludes any bank-specific capital requirement and is reported at 10%.

 

The Standard Bank of South Africa Limited and its subsidiaries ("SBSA") capital adequacy and leverage ratio

	March
	2015
	Rm
Tier I capital1	59 181
Tier II capital	16 257
Total qualifying capital	75 438
Unappropriated Profit	4 856
Total minimum regulatory capital requirement2	55 132
Credit Risk	41 961
Counterparty credit risk	1 439
Equity Risk	1 243
Market Risk	2 837
Operational Risk	7 541
Threshold items	110
Capital Adequacy Ratio (excl unappropriated profit)
Total capital adequacy ratio (%)	13.7
Tier I capital adequacy ratio (%)	10.7
Capital Adequacy Ratio (incl unappropriated profit)
Total capital adequacy ratio (%)	14.6
Tier I capital adequacy ratio (%)	11.6
Leverage ratio
Tier I capital (excl unappropriated profit)	59 181
Tier I capital (incl unappropriated profit)	64 037
Total exposures	1 210 017
Leverage ratio (excl unappropriated profits) (%)	4.9
Leverage ratio (incl unappropriated profits) (%)	5.3
Note:
1 Excluding unappropriated profits.
2 The minimum capital requirement excludes any bank-specific capital requirement and is reported at 10%.

Liquidity coverage ratio disclosure

In terms of the Basel III requirements in Directive 11/2014 issued in terms of section 6(6) of the Banks Act (Act No. 94 of 1990), minimum disclosure on the liquidity coverage ratio (LCR) of the group and the bank is required on a quarterly basis. This disclosure is in accordance with Pillar 3 of the Basel III liquidity accord.

The LCR is designed to promote short-term resilience of the 1 month liquidity profile, by ensuring that banks have sufficient high quality liquid assets (HQLA) to meet potential outflows in a stressed environment.  The LCR was phased in at 60% on 1 January 2015 and will increase by 10% each year to 100% on 1 January 2019.

	Standard Bank Group Consolidated 31 March 2015	Standard Bank of South Africa Solo 31 March 2015
	Rm	Rm
Total high quality liquid assets	152 888	107 942
Net cash outflows	173 351	135 551
LCR (%)	88.2	79.6
Minimum requirement (%)	60.0	60.0
Note:
1. Only banking and/or deposit taking entities are included and the group data represent an aggregation of the relevant individual net cash outflows and HQLA portfolios.
2. The above figures reflect the simple average of the month-end values at 31 January 2015, 28 February 2015 and 31 March 2015, based on the regulatory submissions to the SARB.