Research archive for SBK

Standard Bank, the biggest bank on this continent with loads of potential, had two announcements yesterday. Firstly they were going to receive less, 75 million Dollars less than they indicated for the sale of 60 percent of the London Based global markets business to 20 percent (of Standard Bank) shareholder ICBC. 690 million Dollars for the stake, the lower price is due to a Chinese metals trader having pledged metal inventories many times over as collateral for loans. What? Exactly, this does little for credibility and does more to reinforce the notion of dodgy dealings in mainland China being more prevalent. I am sure, like most things in life, that a few rotten apples spoil the bunch. At the same time, including discontinued operations (this one), the company reported that they expected earnings for the full year to be between 5 percent lower or higher. In the middle of the range that is flat.

On the local front today we have the announcement that Jacko Maree is handing the reins over at Standard Bank to Sim Tshabalala and Ben Kruger. Two? Sim is 45 years old, in fact OLDER than when Jacko took over, whilst Ben is 53. Why? Is the business that complex that the two need to separate their duties? Is running a big and complex outfit like this deserving of the time of two quality guys like this? Surely if someone like Jamie Dimon can run a big and complex bank like JP Morgan, this could and should be easier? Perhaps the board were at loggerheads as to who to appoint? Maybe that is exactly it, and decided that this is the best solution in the short to medium term. Those two know each other well, Sim and Ben. Sim will run the African business and the groups wealth business, with Simon Ridley being his right hand man, whilst Ben will run Personal & business banking and Corporate & Investment Banking. And risk. Peter Wharton-Hood will report to Ben.

Yesterday we had full year results from Africa's biggest bank, Standard Bank. It's always tough analysing a banks financials because there are lots of moving parts and it can get very complicated. I'll try and simplify it as much as possible to get a better picture. Firstly let's look at the highlights.

Standard Bank released a trading update yesterday, this is for their full year to end December 2011. Copy paste time, because in life, as Einstein demonstrated about telephone numbers, he did not remember his own and once looked it up in a phone book when asked, it is easier to use someone else's information: "The group anticipates that normalised headline earnings for the year ended 31 December 2011 will be approximately 20% higher than the previous corresponding period. With respect to results on an International Financial Reporting Standards basis, shareholders are advised that Standard Bank Group's earnings per share, headline earnings per share ("HEPS") and diluted HEPS are expected to be between 18% and 22% higher than the comparative figures for the year ended 31 December 2010."

South Africa's biggest bank by assets, Standard Bank, came out with some impressive looking half year results yesterday morning. They managed to grow earnings by 11% to R6.6bn which equated to headline earnings per share of R4.18. The commentary was very interesting. They used phrases such as "the resilience of African economies" and "better governance, continued reform and financial deepening" to describe the African continent which is very encouraging. They operate in these regions so they would know.

Standard Bank released their results for the full year to December, and we are starting to see a flurry of results here at the beginning of the year. Again, another personal irritation of mine, I can sit here in the office and watch the presentation on Summit TV (channel 412 on the DSTV bouquet), why is there a need to go there. If I want to ask a question to management, I can submit a question on the web, send in an email, or on the conference call. There were a total of three or four questions asked. I don't eat sausage rolls and don't need to rub shoulders with anyone there. Are you feeling my new age style contrasting with the old style waste of time? I get that there needs to be some people there, but wouldn't shareholders of Standard Bank rather the fellows set up at HQ and deliver a webcast. Much cheaper and better usage of time, don't you think?

b>What did that Standard Bank trading statement say to send the bulls in the opposite direction? This is what they said: "Shareholders are advised that Standard Bank Group's earnings per share, headline earnings per share (HEPS) and diluted HEPS are expected to be between 3% and 12% lower than the same earnings figures for the year ended 31 December 2009....."

Standard Bank releasing their results for the half year to June. Man, if I have to say that bank earnings are complicated that is an understatement of epic proportions. There is so much "stuff" that goes on inside of a bank that even a sophisticated shareholder would struggle to understand. Here goes, here are the highlights, HEPS at 381.9 cps, dividend unchanged at 141 cps, Tier 1 capital adequacy ratio lower at 11.8 percent. The consumer might be set for a rebound, at least this is how I read it from this commentary part: "In a period characterised by continued low interest rates and increasing uncertainty about the global outlook, banking revenues were constrained. This was balanced by a steady improvement in customers' debt profiles, allowing impairment charges to almost halve."

And then Standard Bank with a trading update this morning, sometimes diversity is a good thing. Check it out: "Given the large turnaround in Liberty's earnings for the period, and the effect this has on the group's results, a voluntary trading statement for the group is provided below. Shareholders are advised that Standard Bank Group's earnings per share (EPS), headline earnings per share (HEPS) and diluted HEPS are expected to be between 6% and 12% higher than 1H09, calculated on a normalised basis. On an International Financial Reporting Standards basis, Standard Bank Group's EPS, HEPS and diluted HEPS are expected to be between 9% and 15% higher than 1H09."

What do you make of the Standard Bank outlook from their AGM yesterday? Puts a bit of a dampener on matters not so? Let us extract a few key lines from the Jacko Maree prepared statement: