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13 March 2002
Results and dividend announcement for the year ended 31 December 2001
Stanbic headline earnings increase by 21%
- Headline earnings 21% up
- Headline earnings per share 19% higher
- Total dividends per share 20% higher
- Cost-to-income ratio improved to 57,3%
- Translation gain of R4 billion taken to reserves
- Total return on equity 39%
Standard Bank Investment Corporation (Stanbic) has again achieved good results for the year with headline earnings 21% up to R4 438 million and headline earnings per share increasing by 19% to 337 cents.
The cost-to-income ratio improved to 57,3%, from 58,8% for the previous year. The total return on equity, inclusive of translation gains of R4 billion, increased to 39%.
Says Jacko Maree, Stanbic Chief Executive: "The results for 2001 are a continuation of the group's performance over many years. The ten-year compound annual growth rate for headline earnings is 24%."
He says that the diversity and breadth of the group's earnings stream continue to be a particular strength of the Standard Bank group and have contributed to the overall results for the year.
Headline earnings from domestic banking operations for the year were 24% higher. Trading conditions in International and African operations deteriorated in the second half of the year, resulting in lower headline earnings growth by these operations of 14% and 5% respectively.
Total income, after provision for credit losses, of R15 415 million was 19% higher. Net interest income before provisions was 13% up. The interest margin reduced from 3,7% to 3,3% . Total advances at the year-end of R157, 8 billion were 24% higher. Growth in the domestic market, which accounts for 79% of total advances, was 11%.
Non-interest revenue of R8 879 million was 23% higher and now comprises 52% of total income compared with 50% in 2000.
Fees and commissions, which constitute 62% of non-interest revenue, were 16% higher with domestic banking 17% up.
Trading income was 35% up with International Operations sharply higher as a result of the expansion of activities and the exchange rate effect.
The balance of non-interest revenue was 45% higher with this strong growth due to wealth creation and investment income, and property and investment realisations.
The charge for credit losses of R1 603 million was 14% higher, with the specific provision 10% up, and the general provision 52% higher due partly to the introduction of minimum regulatory requirements.
The improvement in the overall quality of the loan book is illustrated by the decline in the overall level of arrears and by the reduction in non-performing loans as a percentage of average loans to 3,3% from 4,4% in the previous year. The group's exposure to the micro lending industry is not material.
Operating expenses for the year of R9 744 million were 15% higher, with staff and other operating costs 17% and 13% higher respectively. Costs domestically were restricted to an increase of 9%.
The Liberty group's earnings of R458 million have been included in Stanbic's headline earnings. On a like for like basis, adjusting for the effect of the capital reductions, Liberty earnings were 14% up.
Total assets of R395, 8 billion were 39% higher with banking assets of R306, 4 billion reflecting an increase of 47%.
Total capital and reserves of R26, 0 billion were 42% higher, due mainly to the level of profit retention and the R4, 0 billion translation gain from foreign business units.
The group remains adequately capitalised. At the year-end, total regulatory capital was 14,4% of risk-weighted assets compared with a blended requirement in the various jurisdictions of approximately 11%. Additional tier two capital of R2, 4 billion was raised during the year, bringing the total amount of subordinated bonds issued over the past two years to R5, 9 billion.
A final dividend of 74 cents a share (2000: 63 cents) brings the total dividend for the year to 102 cents a share (2000: 85 cents).
" The year ahead is expected to see the start of an economic recovery in the major western countries which will, with some delay, begin to confer benefits on the domestic economy and other emerging market economies. The group is well positioned in all of its operations to take advantage of anticipated higher levels of economic activity and, provided there are no unforeseen adverse developments, it is expected that the rate of real growth in earnings for the year ahead should be in line with the group's historic trend," says Maree.
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