STANDARD BANK GROUP INVESTOR BRIEFING

February 2024

Contact details

Jan Brits

Head: Group Capital Management

Tel: +27 82 856 4669

Email: Jan.Brits2@standardbank.co.za

Sasha Cook

Head: Sustainable Finance

Tel: +27 21 401 2783

Email: Sasha.Cook@standardbank.co.za

Praveshni Sewmohan

Manager: Sustainable Finance

Tel: +27 11 721 6410

Email:

Praveshni.Sewmohan@standardbank.co.za

Paul Burgoyne

Head: Treasury and Money Markets

Tel: +27 11 415 6010

Email: Paul.Burgoyne@standardbank.co.za

Carl Wiesner

Head: Syndicate (SA) Debt Capital Markets

Tel: +27 82 757 5395

Email: Carl.Wiesner@standardbank.co.za

Vuwani Nthakheni

Senior Manager: Balance Sheet and Liquidity Management

Tel: +27 11 415 8209

Email: Vuwani.Nthakheni@standardbank.co.za

This is the size of body copy.

Marc Hearn

Head: Strategic Funding

Tel: +27 74 138 4085

Email: Marc.Hearn@standardbank.co.za

John de Beer

Head: NBFI

Tel: +27 11 415 7844

Email: John.deBeer@standardbank.co.za

Chuma Dick

Manager: Execution NBFI

Tel: +27 11 415 7833

Email: Chuma.Dick@standardbank.co.za

P2

Agenda

1. Market update

Page 4

2. Funding and liquidity

Page 8

3. Regulatory update

Page 11

4. Capital management

Page 17

5. Sustainable finance

Page 20

6. Term sheet

Page 26

P3

1.0

Market update

South African macroeconomic outlook

  • Gradual SA policy reform to be growth-supportive over time
  • CPI expected to average 5.0% in 2024, supported by a lack of demand- driven inflation and wage pressure and favourable base effects
  • Expectations for rate cutting cycle from Q2:24 with the repo rate at 7.25% by year end

% y/y

8

6

4

2

0 -2-4-6-8

SA GDP to improve to 1.2% in 2024

1.2

0.6

Inflation expected to moderate; rate cuts expected in 2024

10

8

6

% y/y

4

2

0

-2

-4

2018

2019

2020

2021

2022

2023

2024

CPI

Repo

Real repo

Scope for the rand to

Rand likely to strengthen by year-end

strengthen towards

24

R18.10/$ by year end

19

Adverse growth impact

R/$

14

from electricity shortfall

should ease notably in

9

2024 given expected

increase in Eskom supply

4

and ongoing expansion of

1Q00

1Q03

1Q06

1Q09

1Q12

1Q15

1Q18

1Q21

1Q24

private sector generation

Actual

Fair value

capacity

Sources: Eskom, Standard Bank Research, Stats SA, SARB, Bloomberg

Loadshedding to ease this year

20000

GWh

15000

10000

5000

0

2018

2019

2020

2021

2022

2023

Stage 1

Stage 2

Stage 3

Stage 4

Stage 5

Stage 6+

P5

Market update

NCD Issuances and Pricing Levels (NCD vs Treasury Bills)

200

180

160

140

123

138

145

174

176

186

199

182

120

100

80

91

86

91

94

60

Mar-21Jun-21

Sep-21Dec-21Mar-22Jun-22Sep-22Dec-22Mar-23Jun-23Sep-23Dec-23

Ave bal

12m ave spread above 3m J

Tbill asw pricing

180

5-year Bank Senior vs NCD Pricing Levels

160

140

120

100

80

5y NCD (ask)

5y Bank Senior

60

1.20%

1.00%

0.80%

0.60%

0.40%

0.20%

0.00%

  • Demand for bank credit risk by institutional investors was strong in 2023, driving spread compression in pricing on the shorter end of the curve
  • SBSA is the largest issuer of NCDs in the local market with a year-to-date market share of 33% (2023: 36%)
  • Increase in NCD pricing levels in Q4'23 is primarily due to seasonal illiquidity in wholesale funding markets
  • Treasury bill pricing remains high as National Treasury continues to rely on this market to fund its liquidity requirements
  • Robust demand for bank bonds with most public auctions clearing near the bottom of pricing guidance
  • Senior vs NCD spreads compressed in 2023. Low supply of issuances in the local debt primary markets is a key contributing factor

P6

Market update

SARB and NT updates

Gold and Foreign Exchange Contingency Reserve Account ("GFECRA")

  • SA's reserve account has grown over the recent years on the back of sharp currency weakness. Profits in the account arising from valuation gains on the SARB's foreign reserves have grown to approximately USD27bn (R500bn)
  • Given the fiscal shortfall noted by NT and growing demands on the fiscus to support SOEs, these gains could be considered to close the funding gap
  • Monetising the reserves does not need to result in selling of the FX reserves. It is expected that monetisation and drainage will be done using CPD and MPIF quotas
  • SARB has confirmed that they are engaging with National Treasury. It is broadly expected that the Minister of Finance will announce some form of access to GFECRA in the budget
  • It is unclear to what extent the account might be used in the short-term

Monetary Policy Implementation framework

  • In Jan'24, the market liquidity surplus peaked at R99.3bn compared to R85.7bn in Dec'23, marginally below the SARB surplus target of
    R100bn
  • This has had a stabilising effect on short-term basis markets, at levels marginally above Jibar

ZARbn

MPIF - Impact on market pricing

120

100

80

60

40

20

0

80

70

60

50

40

30

20

10

0

-10

bps

ZAR Market Liquidity

3m Basis (RHS)

Source : SARB; Standard Bank Group

P7

2.0

Funding and liquidity

Strong liquidity position

Exceeding Basel III regulatory requirements

Liquidity Coverage Ratio (LCR)

  • SARB directive proposing the removal of the ability to use foreign currency HQLA to cover ZAR net cash outflows from 1 Jan'24
  • Minimal impact to SBSA due to small holdings of FCY HQLA but will limit diversification away from ZAR government and credit bonds
  • The group maintained LCR compliance throughout 2023 well in excess of the 100% regulatory requirement

Basel III Liquidity Coverage Ratio (daily avg.1)

150.0%

138.4%

134.8%

144.3%

146.8%

136.4%

124.4%

129.1%

133.0%

112.6%

110.8%

100.0%

50.0%

0.0%

Dec-19

Dec-20

Dec-21

Dec-22

Sep-23

SBG

SBSA Regulatory min

Basel III Net Stable Funding Ratio (month end)

Net Stable Funding Ratio (NSFR)

  • SARB directive requiring the phase out of the 35% Available Stable Funding (ASF) factor applied to ZAR NBFI deposits with a residual maturity of less than 6 months
    From 1 Jan'24 the ASF factor reduced from 30% to 20%
  • The phase out impacts approximately R70bn of short-term wholesale funding on
    SBSA's balance sheet over the full phase out period, which will impact pricing of these funding sources
  • The group successfully maintained the NSFR ratio in excess of the 100% regulatory requirement

150.0%

119.5%

124.8%

122.0%

124.1%

122.6%

108.8%

111.9%

107.6%

110.6%

108.3%

100.0%

50.0%

0.0%

Dec-19

Dec-20

Dec-21

Dec-22

Sep-23

SBG SBSA Regulatory min

1 Simple average of 92 days of daily observations over the respective quarters for SBSA, SBSA Isle of Man branch, Stanbic Bank Ghana, Stanbic Bank Uganda, Stanbic IBTC Bank Nigeria, Standard Bank Namibia, Standard Bank Isle of Man Limited and Standard Bank Jersey Limited and the simple average of three month-end data points for the respective quarters for the other Africa Regions banking entities

P9

Liquidity management

Diversified sources of liquidity, prudent redemption profile

SBG and SBSA's funding sources3

2% 1%

SBG

3%

9%

4%

20%

30%

11%

2%

1%

5%

11%

SBSA

21%

23%

30%

27%

Corporate funding

Retail deposits

Institutional funding

Interbank funding

Government and parastatals

Senior debt

Term loan funding

Subordinated debt issued

Other liabilities to the public

SBG debt redemption profile (ZARbn)1

Thousands

70

60

60

50

41

40

39

35

30

21

20

10

0

2024

2025

2026

2027

2028

Structured Notes

Senior debt

Subordinated debt

Syndicated/Bi-lateral loans

DFI loans

Offshore T2

NCD (> 1 year original tenor)

  • Primary markets are open and receptive to bond and note issuances
  • USD400m offshore Tier 2 bond is approaching its optional redemption date in
    May'24
  • Funding diversification maintained across products, sectors, geographic regions and counterparties
  • Diversified use of platforms across various jurisdictions:
    • Local listed bonds
    • Foreign currency loans, bonds: Eurobond, MTN, niche markets
    • Local and offshore structured notes2
  • Debt strategy designed to manage maturity profile and reduce refinancing risk
  1. Redemption profile represents the contractual maturity or the first call date in the case of a callable instrument. SBSA is the main issuer of debt instruments other than subordinated debt which is issued by SBG Limited
  2. Luxembourg listed programme launched 2017

3 As at June'23

P10

Attachments

Disclaimer

Standard Bank Group Ltd. published this content on 29 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2024 07:09:07 UTC.