Standard bank group annual integrated report 2020
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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
* 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
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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.
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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
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STANDARD BANK GROUP Annual integrated report 2020
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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.
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STANDARD BANK GROUP Annual integrated report 2020
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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
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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
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.
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STANDARD BANK GROUP Annual integrated report 2020
9
LEADERSHIP INSIGHT
10
Chairman's statement
14
Group chief executive officer's review
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