Standard Bank : Investor briefing

Standard Bank Group

STANDARD BANK GROUP INVESTOR BRIEFING

February 2023

Contact details

Jan Brits	Paul Burgoyne	Tshepo Hlongwane
Head: Group Capital Management	Head: Treasury and Money Markets	Head: Trading, Money Markets
Tel: [phone]	Tel: [phone]	Tel: [phone]
Email:	Email:	Email:
[e-mail]	[e-mail]	[e-mail]

Vuwani Nthakheni	Sasha Cook	John de Beer
Senior Manager: Balance Sheet and	Head: Sustainable Finance	Fixed Income Sales
Liquidity Management
Tel: [phone]	Tel: [phone]	Tel: [phone]
Email:	Email:	Email:
[e-mail]	[e-mail]	[e-mail]
Carl Wiesner
Manager: Debt Capital Markets
Tel: [phone]
Email:
[e-mail]

2

Agenda

1. Market Update
2. Sustainability Strategy
3. Funding and Liquidity
4. Regulatory Update
5. Capital Management
6. Tier 2 Green Bond
7. Annexure

3

04

07

12

16

22

26

33

01

Market Update

Local Issuance Landscape

Economic Indicators

Indicator	2022	2023	2024
GDP	2.30	1.30	1.80
Household	2.80	1.30	1.70
Consumption
ZAR/USD (avg)	16.60	16.30	16.50
CPI (avg)	6.90	5.70	4.70
Repo Rate (YE)	7.00	7.25	7.00
10-year bond yield (YE)	10.86	10.35	10.25

Debt capital market issuances (Rbn)

R'bn	2019	2020	2021	2022	2022 vs.	2022 vs.
2021	2019
Corporate	44.3	25.3	31.9	41.4	30%	-7%
Financial	73.6	40.2	56.7	61.2	8%	-17%
Municipality	-	1.7	-	1.0	-	-
Securitisation	20.1	7.4	17.7	16.2	-8%	-19%
SOE	35.8	17.8	8.4	17.2	105%	-52%
Total (bonds)	173.8	92.4	114.7	136.9	19%	-21%
CP	68.2	25.7	12.0	17.0	42%	-75%
Grand total	242.0	118.1	126.7	153.9	21%	-36%

• Bond issuances totalled ~R137bn in 2022, up 19% from 2021. Likely to continue gradual recovery to pre-pandemic levels
• The bond market grew by ~R10bn in 2022 after contracting by ~R3bn in 2021 and ~R28bn in 2020
• Senior spreads increased c.5 - 10 bps over the year
• 28% y/y increase in green, social and sustainability linked issuances in 2022
• • Sustainability type instruments comprise only c.4.6% of bonds outstanding in the local DCM
• AT1 auctions were very well supported
• Improving but slow return of SOE issuers to the market

SA Government Curve

Average on-screen NCD Curve

At-Issue Spreads

14
12
10
8							bps
6
4
2
0	1	3	5	7	9	11 13 15 17 19 21 23 25 27 29
		04-Feb-23		07-Jan-23	05-Feb-22
5

160									800
140									700
120									600
100									500
								bps 400
80
60									300
40									200
20									100
0									0	Oct-17	Jul-18	Apr-19		Oct-20	Jul-21	Apr-22
Jan-17	Oct-17	Jul-18	Apr-19	Jan-20	Oct-20	Jul-21	Apr-22	Jan-23	Jan-17	Jan-20	Jan-23
		12M		36M			60M		5-year senior	10NC5 tier 2		AT1 (c.5-year call)

Sources: JSE data, Bloomberg, Standard Bank Research

Bank Issuance Landscape and Outlook

2023 Outlook

Annual Change in Net Outstanding per Instrument Type (Big Five Banks)

• Scheduled bond redemptions in 2023 totaling ~R133bn, 5% higher than in 2022. Financials account for ~R47bn of the total
• Expected net positive senior issuances from Banks and Corporates in 2023 as gross fixed capital formation growth continues
• Strong open to local bond market issuances in 2023

R'bn

30

25

20

15

10

5

0 -5-10-15

Senior

Subordinated (T2)

Subordinated (AT1)

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

2022 Net Issuance per Instrument Type (Big 5 Banks)

Standard Bank Redemptions

6

4

R'bn	2
0
	-2

-4-6

6

R'bn

Absa

FirstRand

Investec

Nedbank

Standard Bank

Senior Tier 2 Additional Tier 1

7

6

5

4

3

2

1

0

Jan

Feb

Dec

Jan

Feb

Mar

Apr

May

Jun

Aug

Sep

Nov

2023

2024

Senior

Tier 2

Additional Tier 1

Sources: JSE data, Bloomberg, Standard Bank Research

02

Sustainability Strategy

Sustainability, SEE* and ESG

Africa is our home, we drive her growth

Given our purpose of driving Africa's growth, and that our business includes sectors rated as high ESG risk, best practice ESG risk management is the foundation for delivering positive social, economic and environmental (SEE) impact

Significant commercial opportunity

Competitive and strategic differentiator

Optimising positive impact

A COMMERCIAL STRATEGY to grow earnings and market share by providing products and services that meet the development needs of Africa and Africa's people

Aligned with the UN Principles for Responsible Banking, Paris Agreement, UN SDGs, South Africa NDP1, African Union Agenda 2063, Nationally Determined Contributions

	Minimising and mitigating negative impacts
	A RISK MANAGEMENT STRATEGY to minimise
SEE ESG	the direct and indirect harm to the environment,
society, and good governance, arising from our
operations, who we do business with and what we
	finance
	Informed by regulatory requirements, subject to
	various voluntary frameworks such as Equator
	Principles
• Central to our values and ethics	ESG performance subject to independent
• Important to our stakeholders	assessment by rating agencies based on public
• Good for our clients and customers	reporting, including annual ESG Report

SEE is what we aim to achieve, ESG is how we will achieve it

8

*Social, economic and environmental impact, 1 - South Africa-National Development Plan

Standard Bank's SEE impact areas

Standard Bank Group impact areas

Financial inclusion

We enable more people to access financial products and services, supporting economic development and reducing inequality.

Job creation		Africa
and enterprise	Infrastructure	trade and
growth		investment
We work with our clients to	We support the	We facilitate the
understand their challenges	development of	deepening of trade and
and priorities, provide them	infrastructure to enable	investment flows
with appropriate financial	inclusive and sustainable	between African
solutions to support their	industrialisation by	countries, and with key
growth and expansion and	financing large-scale	global markets
deliver digital solutions to	infrastructure projects and	including China,
meet their unique needs.	partnering with our clients	through the provision of
This includes targeted	to ensure environmental	innovative trade finance
support to enable SMEs to	and social risks are	solutions and cross-
develop and grow their	appropriately managed	border payments and
businesses.	and minimised.	investment solutions.

Climate
change and	Education	Health
sustainable
finance
We work with our clients to	We support access to	We support better health
develop appropriate	inclusive, quality	outcomes for Africa's people
solutions for mitigating and	education and the	by financing healthcare
adapting to the effects of	promotion of lifelong	providers, and health
climate change and develop	learning	infrastructure and equipment,
innovative financial products	opportunities, and	providing business
and services that support	help Africa harness	development support to
the green economy, reduce	the opportunities of	healthcare practitioners,
carbon emissions, increase	the fourth industrial	investing in our people's
climate resilience, and	revolution.	health, safety and wellbeing
enhance socioeconomic		and investing in health-focused
development.		corporate social investment
		(CSI) programmes.

We are aligned to the United Nations SDGs1:

1 United Nations Sustainable Development Goals

9

How we measure our ESG performance

10

Latest S&P CSA

Score: 66

Latest Sustainalytics

Score: 24.7