Standard Bank has played a valuable
and integral part in the development of the South
African economy for more than 140 years. During
this time, the bank has expanded its geographic
presence to 38 countries worldwide including South
Africa. By focusing on sustainable economic wealth,
we not only economically empower our employees,
shareholders and business partners, but we also
contribute to the sustainability of state and
regional treasuries and a diverse spectrum of
important social development and upliftment projects.
Extending contribution to general economic
development
During our financial year to 31 December 2004,
we created wealth of R20,2 billion, an increase
of
14% on the wealth we created during our 2003 financial
year. While much of our wealth generation benefits
our employees, shareholders, customers, suppliers
and government treasuries, we remain focused on
contributing to the socioeconomic development of
our host communities.
The bank recognises and accepts the responsibility
to contribute to broader socioeconomic goals of
poverty relief, improved health (including the
prevention of HIV/Aids transmission), better education
and general social development upliftment, especially
in underresourced communities. In South Africa,
such bank-led initiatives encourage economic development,
strengthen civil society and promote the development
and building of our young democracy.
In the African context, Standard Bank continues
to grow its economic contribution. The benefits
of this involvement include transferring technology,
expanding financial services and providing capital
in the countries in which we operate. These benefits
support growth and development. The further unfolding
of the New Partnership for Africa’s Development
(Nepad) will bring major challenges and opportunities
to both the bank and Africa.
The primary challenge for organisations in the
21st century is to operate successfully in an
increasingly globalised environment. At the same
time, business is required to go beyond narrow
financial considerations and is expected to balance
the social, environmental and economic demands
of its stakeholders. Standard Bank’s contribution
to the economies in which it operates should be
seen in this context.
Benefiting employees, customers and communities
Standard Bank employs 39 080 people, including
Liberty Life. Of this complement, 31 905 people
(about 80%
of our employees) are employed in South Africa
and 7 175 outside South Africa (mostly in Africa).
We
paid our employees R8,5 billion during 2004. The
amount paid in 2003 was R7,6 billion. A conservative
economic estimate indicates that more than 150
000 people directly depend on Standard Bank for
their
livelihood in our wider host communities.
Standard Bank furthermore contributes to the
economy by:
- providing affordable, effective banking and
financial services to diverse individuals and
organisations;
- contributing over R2 billion to the South
African fiscus in the form of taxes in 2004;
and
- promoting economic stability and convenience
in local communities and regions through our
extensive branch
network.
Overview of financial results
Standard Bank Group once again met its primary financial
objectives of strong real earnings growth and returns
on shareholder equity. Headline earnings increased
by 21,8% to R7 648 million and a return on equity
of 26,4% was achieved. The accounting treatment
of the group’s Black Ownership Initiative implemented
in 2004 impacts favourably on these financial measures.
Excluding this effect, headline EPS increased by
20% and return on equity was 24,5%.
These results were achieved in a positive economic
environment in most markets in which we operate.
The global economy grew at its quickest pace in
almost two decades in 2004. Emerging markets flourished
and Africa’s economy expanded at twice the
annual average rate of the last 20 years. In 2004,
the South African economy, which represents the
group’s most important market, continued
to benefit from 10 years of sound economic and
political policy: Inflation (measured by CPIX)
reduced to an average of 4,3% (2003: 6,8%), interest
rates reduced by a further 50 basis points and
the rand continued to strengthen against the currencies
of our main trading partners. The consumer sector
benefited from lower interest rates and buoyant
spending patterns persisted throughout 2004. The
rand’s appreciation has had a mixed effect
across the different sectors of the South African
economy. Importers and the general public are
benefiting from reduced prices on imported goods
while many exporters continue to find it difficult
to maintain earnings levels.
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