|  | Segmental report |  |
| |
| |
%
change |
|
2002
R million
Audited |
2001
R million
Audited |
|
|
| Headline earnings |
| |
| Domestic Banking |
33 |
|
3 960 |
2 971 |
|
- Retail Banking
- Wholesale Banking
|
25
36 |
|
1 796
2 102 |
1 441
1 542 |
|
|
36 |
|
1 301 |
955 |
|
|
38 |
|
635 |
461 |
|
|
32 |
|
166 |
126 |
|
|
|
|
|
62 |
(12) |
|
|
International Operations
|
(34)
|
|
429
|
648
|
|
|
Stanbic Africa
|
48
|
|
482
|
325
|
|
| STANLIB |
(24) |
|
62 |
82 |
|
| Central funding |
|
|
32
|
(41)
|
|
|
|
|
|
Standard Bank operations
|
25
|
|
4 965
|
3 985
|
|
|
Liberty Group operations
|
(31)
|
|
298
|
434
|
|
|
|
|
|
Standard Bank Group
|
19
|
|
5 263
|
4 419 |
|
|
Domestic Banking continued the good performance recorded in the first half, with year on year headline earnings growing by 33% to R3 960 million and ROE increasing to 31,2% (2001: 27,0%). The interest margin was up by 12 basis points from 2001.
Retail Banking increased headline earnings by 25% to R1 796 million. Market share increased in lending products, particularly in instalment finance and home loans, whilst customer retention improved across all products. Growth of 18% in non-interest revenue resulted mainly from point of representation fees and card-based commission, while bancassurance income continued to improve its contribution. A decrease in the provision for credit loss ratio from 1,27% to 1,24% was indicative of the improved book quality.
Wholesale Banking’s continued focus on optimising operations of core businesses and strong growth in client driven trading income in SCMB helped increase its contribution to group earnings from 35% to 40% in 2002. Headline earnings increased by 36% to R2 102 million. All the major business units performed well and balanced revenue growth was achieved across net interest income, fees and commission income and trading income. Provisions for credit losses increased by 9% over the previous year, mainly due to general provisions, but remained constant as a percentage of average advances.
International Operations (changes reflected in pound sterling terms) reflected a decline of 48% in headline earnings as a consequence of the difficult trading conditions. Net interest income was 14% higher, with margins decreasing due to the shift in focus away from growth towards limiting risk as market conditions deteriorated. The results were impacted by an increase in the provision for credit losses of 107% and although no significant defaults have occurred, provisions have been raised against appropriate credit risk criteria. Staff costs increased by 15% due to higher staff numbers to ensure that expansion is properly managed. Trading income increased by 5%.
Stanbic Africa’s contributions from acquisitions, coupled with strong performances across almost all established operations, assisted in growing revenue lines by an average of 55%. The acquisition of Uganda Commercial Bank in particular, contributed meaningfully to the growth in headline earnings. A focus on collection strategies resulted in a decrease of 33% in the provision for credit losses. The increase in the cost-to-income ratio from 58,3% to 60,8% resulted mainly from acquisitions and the expansion of risk and finance functions based in Johannesburg. The results for the Zimbabwean operations have been consolidated into the group’s accounts for both the current and previous years. The net asset value of this investment has been fully provided for.
STANLIB experienced a notably challenging year characterised by declining equity markets worldwide, but performed to expectations in generating headline earnings of R62 million, down 24% mainly as a result of non-recurring items relating to the merger.
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