Standard bank group annual integrated report 2020

Pdf File 9,730.53 KByte, 74 Pages



ANNUAL INTEGRATED REPORT 2020

Standard Bank Group

Standard Bank Group

ANNUAL INTEGRATED REPORT 2020

INTRODUCTION

LEADERSHIP INSIGHT

OUR VALUE STORY

DELIVERING OUR STRATEGY

BEING ACCOUNTABLE

ADDITIONAL INFORMATION

Our reporting suite

Our integrated report

Our primary report to stakeholders, providing a holistic view of our ability to create sustainable shared value in the short, medium and long term.

We produce a full suite of reports to cater for the diverse needs of our stakeholders. Our integrated report contextualises and connects to information in the following reports, which provide additional disclosure and satisfy compliance reporting requirements:

Governance and remuneration report

Discusses the group's governance approach and priorities, as well as the remuneration policy and implementation report.

Risk and capital management report

Sets out the group's approach to risk management.

Annual financial statements

Sets out the group's full audited annual financial statements, including the report of the group audit committee.

Intended readers Our shareholders, debt providers and regulators

Environmental, social and governance (ESG) report

An overview of the group's processes and governance structures, including task force on climate-related financial disclosures (TCFD).

Report to society (RTS)

Assesses the group's social, economic and environmental (SEE) impacts.

Intended readers Our clients, employees and broader society

Subsidiary annual reports

Our subsidiaries provide an account to their stakeholders through their own annual reports, available on their respective websites.

? The Standard Bank of South Africa (SBSA)

? Liberty

? Other subsidiary reports, including legal entities in Africa Regions.

We urge our stakeholders to make use of our reporting site at . All our reports and latest financial results presentations, booklets and SENS announcements are available here, along with a glossary of financial and other definitions, acronyms and abbreviations used in our reports.

The invitation to the annual general meeting (AGM) and notice of resolutions to be tabled is sent separately to shareholders and is also available online.

Key frameworks applied

AIR GOV/REM RCM

AFS

ESG

RTS

The International Integrated Reporting Framework Companies Act, 71 of 2008, as amended (Companies Act) Johannesburg Stock Exchange (JSE) Listings Requirements King IV Report on Corporate Governance for South Africa 2016TM* International Financial Reporting Standards (IFRS) South African Banks Act, 94 of 1990 (Banks Act) Basel Committee on Banking Supervision's public disclosure framework CDP (previously Carbon Disclosure Project) The Financial Stability Board's TCFD United Nations (UN) Sustainable Development Goals (SDGs)

* Also known as the King Code and King IV. Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved.

Contents

MENU

PRE

NEXT

STANDARD BANK GROUP Annual integrated report 2020

1

Introduction

2 Who we are 4 Our approach to integrated thinking 6 About our report

Introduces the group, our competitive advantages, and our approach to integrated thinking, which frames our value story.

Leadership insight

10 Chairman's statement 14 Group chief executive officer's review

Our leaders discuss the dynamics in our markets and how these are influencing our strategic priorities and our progress in achieving them.

Our value story

22 Our operating context 30 Our material issues 32 Our strategy 34 Our delivery model 38 Our strategic outcomes 40 Allocating our resources

Delivering our strategy

44 Client focus 66 Employee engagement 74 Risk and conduct 86 Financial outcome 100 SEE impact

Connects the emerging trends affecting our business and our continent, and the issues that matter most to our stakeholders, to how we are accelerating our strategy and organising the group to deliver sustainable shared value.

Our progress for the year and prospects for the year ahead in relation to our strategic value drivers.

Being accountable

112 Governing value creation 128 Rewarding value creation

Describes our approach to good governance and how we reward our leaders.

Additional information

142 Pro forma financial information 142 Standard Bank Group Limited credit ratings 143 Bibliography IBC Contact and other details

How to navigate our report This interactive PDF provides active links to sections within the report and to external websites. Access to the internet is required to navigate to website content and use the download function.

The navigation tool for this interactive electronic report is at the top of each page. Selecting these will take you to the relevant section within this report. Additional navigation tools within this report are as follows:

Refers readers to information within this report.

Refers readers online, to information across our suite of reports.

Back to contents page

Print

Previous

Next

For information on forward-looking statements, refer to the inside back cover.

INTRODUCTION INTRODUCTION

LEADERSHIP INSIGHT

OUR VALUE STORY

DELIVERING OUR STRATEGY

BEING ACCOUNTABLE

ADDITIONAL INFORMATION

2

Who we are

Our approach to integrated thinking

About our report

GROUP HEADLINE EARNINGS (%)

Who we are

We are an African-focused, clientcentric, digitally enabled,

2019

2020

South Africa Africa Regions Wealth International Liberty Other

integrated financial services group with compelling competitive advantages.

GROUP NET ASSET VALUE (%)

2020

Our on-the-ground presence and relationships across Africa, with networks in international finance hubs position us well to solve client problems and satisfy their needs in a fast-changing environment.

2019

BANKING REVENUE (%)

2020

South Africa Africa Regions Wealth International Liberty Other

2020 56 26 5 6 7

2019 59 24 4 7 6

We provide integrated banking, insurance, investment and advisory solutions that drive the financial wellbeing of our clients and our continent.

2019

South Africa Africa Regions International and other

2020 61 36 3

2019 65 32 3

Africa Regions contributed 58%

of banking activities' headline earnings

2020 2019

34 59

58 30

4

4

(4) 7

8

0

East Africa

7 South Sudan

8 Ethiopia

(representative office)

9 Uganda

West Africa 1 C?te d'Ivoire 2 Ghana 3 Nigeria 4 Democratic Republic of Congo (DRC)

10 Kenya 11 Tanzania

South & Central Africa 12 Namibia 13 Botswana 14 Zambia 15 Zimbabwe 16 Malawi 17 Mozambique

1

2

3

West Africa

8 7

9 10

4

East Africa

11

5 16

14

South &

17 15

18

Central Africa 12

13

South Africa 6

20 19

5 Angola

18 Mauritius

6 South Africa

19 Lesotho 20 eSwatini

Presence in international markets:

International financial services:

On-the-ground presence in 20 countries in sub-Saharan Africa

? Beijing ? Dubai ? London ? New York ? S?o Paulo

? Isle of Man ? Jersey ? Mauritius

MENU

PRE

NEXT

STANDARD BANK GROUP Annual integrated report 2020

3

Compelling competitive advantages

The key attributes that differentiate us from our peers and protect us from competitors are outlined below.

Purpose-driven organisation We are committed to driving sustainable, inclusive growth across Africa.

Unrivalled, African-focused capabilities Our on-the-ground capabilities across 20 countries in subSaharan Africa, links to international capital and funding pools and a unique partnership with the Industrial and Commercial Bank of China (ICBC).

Established, fit-for-purpose franchise with modern digital core Our franchise strength is underpinned by our strong brand, excellent people, fit-for-purpose physical distribution network and digital platforms.

Diversified client base, service offering and revenue streams Our businesses and revenue streams are well-diversified across client, sector, product and geography, which provides protection in times of volatility.

Robust capital and liquidity position Our strong and liquid balance sheet provides flexibility to manage uncertainty, change, innovation and growth.

Strong growth prospects Our prospects for future growth are driven by regional economic fundamentals and increasing financial inclusion and penetration providing opportunities to increase our market share, particularly in some of the large markets in which we operate where we have relatively small market shares.

Appetite to invest, deliver and partner We have the resources and appetite to expand on our own and through partnerships and alliances.

Significant proven reach

Valued people

50 115

GROUP PERMANENT EMPLOYEES

2019: 50 691

Valued clients

14.8 m

ACTIVE CLIENTS

2019: 14.6 million

Strategic partnership with ICBC

Modernised banking platforms SUPPORT ACCELERATING DIGITISATION

Branches

1 124

2019: 1 114

ATMs*

6 774

2019: 8 976

*ATMs ? automated teller machines.

Well capitalised

13.3%

COMMON EQUITY TIER 1 (CET 1) RATIO

2019: 14.0%

Market capitalisation

US14 bn

Recognised brand

Standard Bank Stanbic Bank

As an established African-focused group we have:

Trusted brand

Client community

Digital assets and data

Established partners

Africa knowledge

Deep sector expertise

INTRODUCTION INTRODUCTION

LEADERSHIP INSIGHT

OUR VALUE STORY

DELIVERING OUR STRATEGY

BEING ACCOUNTABLE

ADDITIONAL INFORMATION

4

Who we are

Our approach to integrated thinking

About our report

Our approach to integrated thinking

Our approach to integrated thinking is dynamic and evolves as we respond to the challenges of the present while preparing the group for the future.

INFORMING OUR THINKING

Our operating context

The Covid-19 crisis is compounding the forces impacting financial services and changing stakeholder expectations of value, challenging us to deepen our resilience and re-imagine our relevance to our clients and our continent in the short, medium and long term.

Read more on page 22.

Our material issues

Shaped by the expectations of our stakeholders and prevailing economic, social and environmental trends, our material issues are those that have the potential to substantially impact on our commercial viability, our social relevance and the quality of our relationships with our stakeholders.

Read more on page 30.

EXECUTING OUR STRATEGY

Our strategy

We are accelerating our strategy to become a truly human and truly digital financial services organisation.

Our purpose

Africa is our home, we drive her growth.

Our vision

to be the leading financial services organisation in, for and across Africa, delivering exceptional client experiences and superior value.

Our strategic priorities

We have updated our strategic priorities to clarify what we need to do to deliver our purpose.

Transforming for the future

SHORT TERM Responding to and recovering from the Covid-19 crisis.

Read more on page 32.

MEDIUM TERM A truly human, truly digital group, providing a comprehensive range of services.

LONG TERM Africa's leading digital financial services business.

MANAGING OUR RISKS AND OPPORTUNITIES

Our risk management model

We align our risk appetite to changes in our operating environment, instil a risk-aware culture throughout the group and proactively enhance our risk management capabilities.

Read more on page 74.

DIRECTING OUR CONDUCT

Our values

are the behaviours that define us.

Our culture

is underpinned by the principle of doing the right business, the right way.

Our code of ethics

guides our behaviour commitments and standards of professional conduct.

Our leadership identity

describes the attributes we require to achieve our strategy and shift our culture.

Read more on pages 66 and 74.

MENU

PRE

NEXT

STANDARD BANK GROUP Annual integrated report 2020

5

ORGANISING OUR BUSINESS Our delivery model

We secure the inputs required to transform, grow, innovate and compete effectively and through our business activities we deliver the outcomes for the benefit of all our stakeholders.

Read more on page 34.

MEASURING OUR STRATEGIC PROGRESS Our value drivers

We track the progress we make in executing our strategy through our strategic value drivers.

Read more from page 38.

We are aligned to the UN SDGs.

ALLOCATING OUR RESOURCES Our resource allocation framework

We have updated the formal decision-making framework we use to allocate resources, to better deal with the volatility, uncertainty, complexity and ambiguity of the environment we operate in. We use scenario planning in our resource allocation and adapt these as appropriate.

Read more on page 40.

OUR ACCOUNTABILITY TO STAKEHOLDERS

Our approach to good governance promotes strategic decision-making that reconciles the interests of the group and society in our pursuit of sustainable shared value in the short, medium and long term. Our governance framework supports ethical and effective leadership, corporate citizenship and sustainable organisational and societal outcomes.

Read more on page 112.

OUR VALUE CREATION

We aim to deliver inclusive and sustainable growth, and create value for all our stakeholders.

CLIENT FOCUS

EMPLOYEE ENGAGEMENT

RISK AND CONDUCT

FINANCIAL OUTCOME

VALUE FOR OUR CLIENTS

Delivering relevant and complete digital

solutions to our clients.

VALUE FOR OUR EMPLOYEES

Shaping a workforce that is ready to meet our

clients' needs, now and in the future.

VALUE FOR ALL OUR STAKEHOLDERS

Doing the right business, the right way.

VALUE FOR OUR SHAREHOLDERS

Striving to generate sustainable returns.

SEE IMPACT

VALUE FOR SOCIETY

Driving positive SEE impact.

INTRODUCTION INTRODUCTION

LEADERSHIP INSIGHT

OUR VALUE STORY

DELIVERING OUR STRATEGY

BEING ACCOUNTABLE

ADDITIONAL INFORMATION

6

Who we are

Our approach to integrated thinking

About our report

About our report

We report on the progress we have made in the period 1 January 2020 to 31 December 2020 to achieve our strategic objectives. We evaluate our financial and non-financial performance against our strategic value drivers. This report includes material information up to the date of board approval on 10 March 2021.

The scope of information presented is largely medium term. It assesses the opportunities, risks and impacts influencing our ability to create sustainable shared value as we begin to realise our medium-term vision, while delivering on our purpose.

Our reporting boundary

The data in this report ? both financial and non-financial ? pertains to the Standard Bank Group (the group or SBG) as the reporting entity, although certain metrics relate to specific categories of activity only and are indicated as such. The integrated reporting boundary includes all entities over which we have control or significant influence.

Our banking and wealth management activities are consolidated and defined as `banking activities' in our annual financial statements. For the 2020 financial year, this comprises the financial results of Personal & Business Banking (PBB), Corporate & Investment

Banking (CIB) and Wealth. Our Wealth financial results are largely included in those of PBB for the current and prior years. Our banking activities also include central and other group activities, which include group hedging activities, capital instruments, surplus capital and strategic acquisitions. Where specified, banking activities' data also distinguishes between our South Africa and Africa Regions operations.

Liberty Holdings Limited (Liberty), our life insurance and investment management subsidiary (54% interest) and our associate ICBC Standard Bank Plc (ICBCS) (40% interest), are not included in the data relating specifically to our banking activities and are shown separately in our financial results.

Our strategic relationship with our 20.1% shareholder, ICBC, the world's largest bank by assets, allows us to facilitate investment flows and commercial relationships between Africa and China. The financial outcome of this relationship is included as part of our business activities.

The reporting boundary includes the strategic narrative in this report and pertains mainly to our banking activities across the continent and internationally, and it also includes our subsidiary and associates (including Liberty and our other banking interests) where they are relevant to the group's business model and strategy, performance

REPORTING BOUNDARY FOR THE INTEGRATED REPORT (risks, opportunities and outcomes)

FINANCIAL REPORTING BOUNDARY

BANKING ACTIVITIES

BANKING AND WEALTH MANAGEMENT

STANDARD BANK GROUP LIMITED (control and significant influence)

OUTSIDE THE BANKING ACTIVITIES' BOUNDARY

Other banking interests ICBCS

Investment management and life business

LIBERTY

CLIENT FOCUS

EMPLOYEE ENGAGEMENT

RISK AND CONDUCT

FINANCIAL OUTCOME

SEE IMPACT

VALUE FOR OUR CLIENTS

VALUE FOR OUR EMPLOYEES

VALUE FOR ALL OUR STAKEHOLDERS

VALUE FOR OUR SHAREHOLDERS

VALUE FOR SOCIETY

The six capitals defined in the International Framework are incorporated in our value drivers, which focus and measure our strategic delivery and the value we aspire to create for all our stakeholders. Although the capitals are not referenced in how we account for value, they are implicit in the inputs and outcomes of our business model, and in how we are reshaping the group for the future.

MENU

PRE

NEXT

STANDARD BANK GROUP Annual integrated report 2020

7

and prospects. Where appropriate, the reporting boundary also assesses the risks, opportunities and outcomes that affect our ability to create value, arising from entities and stakeholders, but which are not related to the financial reporting entity by virtue of control or significant influence, but rather by the nature and materiality of the risks, opportunities and outcomes.

Financial information has been prepared on an IFRS basis, unless otherwise specified, and therefore includes the consolidation of all entities in the group. Any restatements of comparable information are noted.

Details of our restatements can be found in our annual financial statements available online.

Process disclosures

We apply a combined assurance model to assess and assure aspects of the group's operations, including the internal controls associated with elements of external reporting. Our approach to the assurance of our annual reports incorporates and optimises all assurance services and risk functions, to enable an effective control environment that supports the integrity of information used in decision-making and reporting.

While this report is not audited, it contains certain information that has been extracted from the group's

audited consolidated annual financial statements, on which an unmodified audit opinion has been expressed by the group's external auditors, KPMG Inc. and PricewaterhouseCoopers (PwC). Similarly, it includes information extracted from the RTS and ESG reports on which assurance on selected information has been provided by PwC.

We have continued to deepen how we measure our strategic progress by refining our metrics. Our strategic value drivers form the basis for how we report our progress and priorities to the board, through our board and management subcommittees, on an ongoing basis. Our material issues are reviewed annually to take into account the changes in our operating environment and evolving stakeholder expectations.

The process for 2020 is disclosed in more detail on page 30.

The members of the group leadership council (GLC), previously the group executive committee, are accountable to the board for preparing the integrated report. Interviews with senior leadership and the board through its chairman, together with internal sources of information and relevant external research papers, have been used to prepare this report.

Statement of the board of Standard Bank Group Limited

The board acknowledges its responsibility to ensure the integrity of the integrated report. The group audit committee reviewed and recommended this report to the board of directors for approval. The board considers the preparation and presentation of this report as being materially in accordance with the International Framework. The board is therefore of the opinion that the report addresses material information on the group's ability to create value over the short, medium and long term.

The board reviewed and discussed this report on 10 March 2021 and approved the content provided. It delegated the final review and approval of the report for publication to the group chief executive officer.

On behalf of the board,

Thulani Gcabashe Chairman

Sim Tshabalala Group chief executive officer

INTRODUCTION

LEADERSHIP INSIGHT

OUR VALUE STORY

DELIVERING OUR STRATEGY

BEING ACCOUNTABLE

ADDITIONAL INFORMATION

8

Chairman's statement

Group chief executive officer's review

Our leaders discuss the dynamics in our markets and how these are influencing our strategic priorities and our progress in achieving them.

MENU

PRE

NEXT

STANDARD BANK GROUP Annual integrated report 2020

9

LEADERSHIP INSIGHT

10

Chairman's statement

14

Group chief executive officer's review

Download Pdf File