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5 March 2003
The Standard Bank Group completed another successful year with headline earnings up by 19% to R5 263 million and headline earnings per share increasing by 18% to 396 cents.
Says Jacko Maree, Standard Bank Group Chief Executive: "The diversity of the group's sources of income again provided a foundation for solid results, with the strongest performance in 2002 coming from our banking businesses on the African continent."
The South African banking operations performed well on both corporate and retail fronts, while strong growth occurred elsewhere in Africa assisted by good performance from recent acquisitions. Global credit markets deteriorated significantly in the second half of 2002 and as indicated in an announcement in November, the group's international operations were impacted by reduced business opportunities and the need to substantially increase credit provisions.
The group's domestic banking advances book ended the year 13% up, with strong growth and increased market share in high yielding assets such as home loans, instalment finance and card balances. Banking assets reflected a slight reduction due to a 15% decrease in international loans and advances coupled with the effects of a stronger rand at year-end. Group net interest income grew by 29% underpinned by good domestic performance in both advances growth and margin improvements.
Key to the good performance of Domestic Banking was the improvement in credit risk management across all divisions evidenced by lower non-performing loans and improved provision coverage. Despite substantially increased provisions in International Operations, the charge for credit losses was contained to 1,18% of loans and advances, slightly higher than the 1,11% reported in 2001.
Non-interest income grew by 25% and continues to contribute more than half of the revenues of the group. Fees and commission income rose by 24%, while increased client volumes across all trading desks supported trading income growth of 42%. Operating expenses increased by 27%, reflecting the impact of a weaker average exchange rate, acquisitions by Stanbic Africa and the expansion of International Operations. Operating expenses were 18% higher in the group's domestic banking operations, driven mostly by staff costs, including a provision for the resumption of retirement funding contributions and increases in frontline staff to improve service levels.
The capital adequacy ratio of the group's banking operations was 13,8%, up from 13,5% in 2001. Ordinary shareholders' funds increased to R26,1 billion after taking into account a R3,3 billion reversal of the currency translation reserve. Translation gains and reversals have consistently been taken directly to this reserve in terms of the group's accounting policy.
Key performance ratios, return on equity (ROE) increased from 20,1% to 20,3% and the cost-to-income ratio improved slightly from 57,4% to 57,3%. The group's domestic cost-to-income ratio reflected a marked improvement and now stands at 53,4%.
Dividends for the year grew by 22% to 124 cents per share, following a slight reduction in dividend cover to 3,2. It is planned that dividend cover will gradually be reduced to 3,0 times which should see dividend growth being higher than earnings growth over the medium term.
"Sound economic fundamentals are in place in South Africa and the country is well positioned for sustained growth. It is expected that the group will continue to benefit from efficiencies extracted from our strong domestic base and from our extensive African banking operations. The global political and economic conditions are uncertain but international credit markets are showing signs of improvement. Given the breadth and the ongoing integration of the group's activities, we are well placed to take advantage of any improvements in market conditions," said Maree.
Full details of our results for 2002.
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