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: +27 11 415 4344 | Tel: +27 11 415 6010 | Tel: +27 11 415 8221 |
Email: | Email: | Email: |
Jan.Brits2@standardbank.co.za | Paul.Burgoyne@standardbank.co.za | Tshepo.Hlongwane@standardbank.co.za |
Vuwani Nthakheni | Sasha Cook | John de Beer |
Senior Manager: Balance Sheet and | Head: Sustainable Finance | Fixed Income Sales |
Liquidity Management | ||
Tel: +27 11 415 8209 | Tel: +27 21 401 2783 | Tel: +27 11 415 7844 |
Email: | Email: | Email: |
Vuwani.Nthakheni@standardbank.co.za | Sasha.Cook@standardbank.co.za | John.deBeer@standardbank.co.za |
Carl Wiesner | ||
Manager: Debt Capital Markets | ||
Tel: +27 82 757 5395 | ||
Email: | ||
Carl.Wiesner@standardbank.co.za |
2
Agenda
- Market Update
- Sustainability Strategy
- Funding and Liquidity
- Regulatory Update
- Capital Management
- Tier 2 Green Bond
- 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
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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 07:13:12 UTC.