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    Financial Outcome Icon

    Delivering sustainable returns to our shareholders depends on the extent to which our investments in satisfied clients, engaged employees and managing risk and conduct are effective and efficient. In turn, we need to ensure that we balance the capital we allocate to these strategic investments with competitive returns.

    What success looks like

    • We continue to demonstrate value creation for all our stakeholders by delivering headline earnings growth and driving ROE to the upper end of our 18% to 20% target range.
    • We maintain the resilience of our balance sheet to support the execution of our group strategy.

    How we measure progress

    By delivering positive results on our client focus, employee engagement and risk and conduct value drivers, we seek to improve our financial outcomes, thereby ensuring growth, resilience and returns. We measure our financial outcome through the following indicators.


    • Headline earnings (HE): show the profits we make, excluding profits or losses from non-recurring events1. We seek to improve our HE each year by continuing to grow our revenue while managing our costs and risks.
    • Africa Regions HE contribution: our Africa Regions contribute significantly to our banking headline earnings.
    • Cost-to-income ratio (CTI): measures our efficiency in generating revenues relative to the costs we have incurred. We aim to reduce our CTI, making sure that the growth in our costs does not exceed the rate at which we grow our revenues. Containing our costs is key to growing HE and improving ROE.
    • Credit loss ratio (CLR): measures our impairment charges as a percentage of average loans and advances. We aim to maintain our CLR at an acceptable level in line with our risk appetite.


    • Our resilience is measured by LCR, NSFR and CET 1. More detail can be found in our risk and conduct section here.


    • Return on equity (ROE): shows how much profit we generate with the money shareholders have invested in us. ROE is the result of all the growth and resilience measures and, therefore, the ultimate measure of our effectiveness in executing our group strategy.

    How we performed

    The group delivered solid results for the year ended 31 December 2018, with 6% growth in HE to R27.9 billion and an improved ROE of 18.0%, up from 17.1% in 2017. The group’s capital position remained robust, with CET 1 flat at 13.5%. A final dividend of 540 cents per share was declared, resulting in a total dividend of 970 cents per share for the year, an increase of 7%. Banking activities’ HE grew 7% to R25.8 billion and ROE improved to 18.8%, up from 18% in 2017.

    R27.9 billion
    2017: R26.3 billion
    Target: Sustainable growth
    R25.8 billion
    2017: R24.3 billion
    2017: 28%
    Target: >30%
    2017: 55.5% 2
    Target: Approaching 50%
    2017: 0.87% 3
    Target: 80 – 100 bps
    2017: 17.1%
    Target: 18% – 20%
    2017: 18.0%
    1. As prescribed by the SAICA (South African Institute of Chartered Accountants) circular.

    2. Restated. The group amended its accounting policy for UCount expenses to be recognised against net fee and commission revenue (within non‑interest revenue and total income) and not in operating expenses.

    3. Based on IAS 39.

    Arrow right
    • Strengthening efficiency and return on investment.
    • Responding to increased competition in challenging market conditions.
    • Improving performance, including that of Liberty and other banking interests.
    • Leveraging the ICBC partnership.

    Raised by:

    Shareholders and investors, investment analysts.

    People Network icon
    • Returns on IT investment.
    • Maintain resilience of our balance sheet.
    • Improve efficiencies and manage the cost base.
    • Sustainable revenue growth.
    2018 key priorities
    • Continue to deepen our progress in aligning processes to our value drivers to measure what matters most in delivering on our ROE target range of 18% to 20%.
    • Continue to respond effectively to macroeconomic challenges.
    • Maintain earnings growth by partnering with high-growth clients in high-growth markets.
    • Reduce our CTI by driving revenue growth faster than cost growth.
    • Seek to maintain our CLR within our guidance of an 80 bps to 100 bps range.
    • Maintain a resilient balance sheet, meeting Basel III capital and liquidity requirements across all the markets in which we operate.
    • Finalise the group’s adoption of IFRS 9, including the final reporting on the transition impact.

    To ensure that we can continue to attract the capital we need to fund the growth in our assets, we must provide an appropriate rate of return to our equity shareholders and debt funders, including depositors. This requires that we balance our ability to generate revenue with the costs incurred in doing so.

    Perfomance against Stratagy Icon

    Performance against strategy

    We allocate our resources and align our relationships to support the disciplined delivery of our strategy, while continuing to focus on growth, resilience and returns to deliver a compelling investment case.

    ACHIEVED IN 2018

    • Group HE growth reflects strong franchise growth, growing client numbers and growing deposits and loans, while being further enhanced by an 11% increase in Liberty HE.
    • Currency movements continued to impact the group’s reported results, but less than in prior years. On a constant currency (CCY)4 basis, group HE grew by 8%.
    • Banking revenue growth remained steady, credit impairment charges decreased significantly while costs were carefully managed in a challenging environment.
    • Africa Regions’ contribution to banking HE increased to 31% from 28% in 2017. The top five contributors were Angola, Ghana, Mozambique, Nigeria and Uganda.
    • PBB delivered satisfying results with a 10% increase in HE to R15.5 billion, contributing 56% to group HE. CIB HE decreased marginally to R11.2 billion, and contributed 40% to group HE in 2018.
    • Despite the challenging economic environment in South Africa, SBSA performed acceptably and maintained HE at R16 billion.
    • Liberty earnings attributable to the group was R1.6 billion, driven mainly by a 42% improvement in normalised operating earnings.
    • The group’s share of HE from ICBC Argentina increased by 19% (CCY: 95%), offset by a poor performance from ICBCS, where the group’s 40% share was a loss of R74 million, down from a profit of R152 million in 2017.

    To make a more informed assessment of our operational performance, we disclose a constant currency measure to remove the effects of currency volatility. This is done by adjusting the comparative financial results for the difference between the current and previous years’ exchanges rates. Click here for more details.


    • Our value drivers have been further embedded in our business, allowing us to appropriately measure our progress and improve our ROE to 18.0%, in line with the lower end of our target range.
    • Remained resilient despite the challenging macroeconomic conditions in most of our countries of operation supporting steady growth in our group HE and a sturdy balance sheet that complies with Basel III capital and liquidity requirements.
    • Despite continued effort, cost growth was slightly higher than revenue growth reflected in our CTI of 57.0% and negative 2.8% jaws. Efforts to reduce CTI and manage costs remain crucial across the group.
    • The group finalised the adoption of IFRS 9, the impact of which is summarised. and can be found below.
    • Increased shareholding in Nigeria to 65.4% from 53%, and Kenya from 60% to 69.1%.



    The group’s headline earnings is one of the components used in the determination of the group’s ROE and represents the major lever in lifting the group’s ROE to meet our medium-term target. Headline earnings growth is used as a key reference point in decision-making throughout the group.

    Banking activities’ balance sheet drivers

    Growth in deposits and funding, and loans and advances supported the group’s headline earnings growth between 2013 and 2018 by a compound annual growth rate (CAGR) of 10%.

    Net Loans Graph
    Deposits and debt funding Graph
    Trading and Assets Graph
    Average interest icon
    Average Deposits icon
    Net Interest icon


    NII decreased by 1% as margins compressed 16 bps to 4.58% and average interest-earning assets grew 2.5% year-on-year. IFRS 9-related accounting impact accounted for 13 bps of the decline, with the other 3 bps due to the impact of competitive pricing and demand for higher yielding deposit products in South Africa and negative endowment in Africa Regions, which was largely offset by strong growth in current and savings accounts and a mix benefit as unsecured lending grew faster than asset-backed lending.

    Net Interest Income Graph
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    NIR grew by 7% supported by broad-based growth across all three underlying categories, namely net fee and commission revenue up 6%, trading revenue up 4% and other revenue up 11%.

    Increasing digital adoption drove an 11% increase in electronic banking fees revenue and growth in digital volumes across offerings. Knowledgebased fees grew 3% following CIB’s participation in several landmark transactions and increased client activity. Strong equities performance supported growth in trading revenue, while fixed income and currencies struggled against a high 2017 base. Other revenues were boosted by better bancassurance earnings and CIB’s portion of ICBCS’ aluminium recovery of R151 million.

    non Interest Income Graph
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    Credit impairment charges were R6.5 billion, 31% lower than 2017, and the group CLR improved to 0.56%, down from 0.87% in 2017. Adjusting for the IFRS 9-related accounting impact, the group CLR would have been 0.71%. PBB’s credit loss ratio decreased, largely driven by higher post write-off recoveries, operational enhancements in client credit ratings and improved collection strategies. CIB’s impairment charges declined 35% on the prior year, driven by a recovery of a prior year impairment in Nigeria and improved credit risk management, offset by a challenging macro environment in South Africa.

    Credit Impairments Graph
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    Operating expenses growth of 5% is considered relative to inflation in the underlying markets in which we operate and the investment required to support our businesses’ growth. It was well controlled as we closed our core banking programme and delivered a variety of digital enhancements and regulatory, risk and compliance improvements. Staff costs were up 7% driven by a combination of annual salary increases, separation costs relating to the IT restructure and key hires. Ongoing prudent discretionary spend and tight control of IT expenses, despite an increase of 23% in professional fees relating to customer experience and regulatory projects, contained other operating expenses increase to 5%.

    Operating Expenses Graph
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    Banking HE grew by 7% to R25.8 billion, up from R24.3 million in 2017, supported by increased NIR, lower credit impairment charges and the growth in Africa Regions’ HE of 19%. Africa Regions contributed 31% of the banking HE, improving from 28% in the prior year.

    Banking Activities Graph

    The group’s share of Liberty’s HE increased by 11% to R1.6 billion, Liberty’s normalised operating earnings were up 42%, driven by a strong performance in Individual Arrangements and STANLIB. Given the negative trend in asset prices in the year, Liberty’s shareholder investment portfolio performed poorly with earnings down 81% on 2017.

    Liberty Headline Graph
    Other Banking Graph

    Other banking interests’ HE are down 26% to R418 million from R567 million, driven by ICBCS losses offsetting a pleasing performance from ICBC Argentina. ICBC Argentina delivered a strong performance despite the dislocation experienced in its domestic market resulting in the continuing devaluation of the peso. The ICBCS loss was driven by the impact of declining global emerging market risk appetite and reduced investment flows.

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    Group headline earnings grew by 6% to R27.9 billion, up from R26.3 billion in 2017, supporting a 7% growth in dividends per share to maintain a dividend payout ratio of 55.5%.

    Group Headlines Graph


    Our ROE is the most relevant measure of our financial performance over time as it combines all of our critical drivers, including earnings growth and capital utilisation, into a single metric. Internally we measure our return on risk-weighted assets (RoRWA) as a more direct measure of earnings relative to regulatory capital utilisation.


    The income statement below reflects the revenue generated and costs incurred by our banking activities, with material income statement line items explained. A detailed analysis of the group’s financial performance, and the principal headline earnings drivers for growth in our ROE, is in the graphs above.


    The balance sheet or statement of financial position shows the position of the group’s assets, liabilities and equity at 31 December 2018, and reflects what the group owns, owes and the equity attributable to shareholders. Material line items have been discussed in the PDF below.


    Loans and advances

    Gross loans and advances to customers grew by 10% year-onyear, of which PBB’s advances to customers grew by 7% and CIB’s, 13%. In line with underlying macros and strategy, Africa Regions recorded strong year-on-year portfolio growth of 31%. In South Africa, PBB disbursements grew across most products with particularly strong growth recorded by VAF and personal unsecured lending.

    Within PBB, the mortgage lending portfolio grew by 4%, driven by consistent quarter-on-quarter increases in disbursements, an increase in home loan registration values and a marginal slowdown in prepayments. The VAF lending portfolio grew by 10%, driven by growth in South Africa, as the turnaround strategy started to gain traction.

    Personal unsecured lending and business lending both grew 14%. PBB Africa Regions loans to customers grew by 22%.

    Within CIB, Investment Banking (IB) grew 8%. IB originated over R167 billion of loans in the year across the Oil & Gas, Industrials, Consumer, Mining and Power & Infrastructure sectors, up from approximately R130 billion in the prior year. This is reflective of CIB’s broad client franchise and ongoing commitment to partnering with their clients as they invest and expand on the continent. The Africa Regions IB portfolio grew by 28%, while South Africa IB grew a respectable 7% in a very slow environment. South African rand weakness in December 2018 inflated year end balances. Corporate overdrafts and trade finance facilities, reflected under TPS, grew 52% year-on-year but 15% on average. CIB funding provided to corporates through commercial paper issuances, qualifying as high quality liquid assets (HQLA), is reflected as financial investments on the balance sheet. Underlying growth in CIB gross loans and advances to customers, including HQLA, was 15%. Loans to banks declined as liquidity raised at the end of 2017 was repaid.

    Composition of gross loans to customers

    Funding and liquidity

    The group’s liquidity position remained strong and within approved risk appetite and tolerance limits. The group’s fourth quarter average Basel III LCR was 116.7%, exceeding the minimum phased-in regulatory requirement of 90%. The group maintained its NSFR above the 100% regulatory requirement. Both were above the group’s medium target of over 100%.

    During 2018, the group raised R28.3 billion of longer-term funding through a combination of negotiable certificates of deposit, senior debt and syndicated loans and R5 billion Basel III compliant tier II capita. The group will continue to monitor opportunities to issue senior unsecured and/or tier II subordinated debt in the market to optimise the group’s capital and funding position.

    Deposits from customers grew by R88.6 billion year-on-year, supported by 10% growth in PBB retail-priced deposits. Africa Regions recorded current and savings account inflows in Nigeria, Uganda, Zambia and Zimbabwe. Growth in customers drove increased deposits held in our offshore operations in the Isle of Man and Jersey.

    CIB’s deposits and current accounts from customers grew by 5% on the back of strong growth in call and current accounts, growing 19% and 20% respectively. The increase in deposits was driven by new clients in South Africa and across Africa Regions, as well as increases in deposits from existing clients.

    Composition of gross deposits to customers Graph

    Capital management

    The group maintained strong capital adequacy ratios, with CET 1 flat at 13.5% and total regulatory capital of 16.0% (2017: 16.0%). The group manages its capital levels to support business growth, maintain depositor and creditor confidence and create value for shareholders while ensuring regulatory compliance.

    IFRS 9 became effective on 1 January 2018. The fully‑loaded day one impact of implementing IFRS 9 was a 70 bps reduction in the group’s CET 1 ratio. After adjusting for the SARB’s three-year phase-in provision, the impact was reduced from 70 bps to 18 bps.

    Capital Adequancy Graph


    IFRS 9 Financial Instruments – impact on our 2018 results

    The group has adopted IFRS 9 Financial Instruments (IFRS 9), which replaced IAS 39 Financial Instruments: Recognition and Measurement (IAS 39) from 1 January 2018. IFRS 9 introduced changes to the classification and measurement of financial assets and liabilities, as well as new impairment requirements, particularly how to account for expected credit losses resulting in the earlier recognition of credit impairments.

    The group elected not to restate its comparative financial statements when adopting IFRS 9 on 1 January 2018, and the accounting adjustment relating to the transition from IAS 39 to IFRS 9 (the transition impact) was accounted for in the group’s opening 1 January 2018 reserves.

    Transition impact of IFRS 9 on 1 January 2018
    CET 1 5
    -70 / bps
    12.8% (IAS 39: 13.5%)
    -R6.6 billion
    +R8.6 billion

    This represents the full IFRS 9 transition impact on the group’s CET 1, before taking into consideration the SARB’s three-year phase-in provision for IFRS 9 impairment deductions at the date of initial application (1 January 2018).

    IFRS 9-related adjustments

    In addition to the transition impact shown above, the following two IFRS 9-related accounting changes had a significant impact on the classification between line items in our income statement for the year. While these changes have had no impact on headline earnings, they do have an impact on certain ratios, making comparisons difficult due to the accounting treatment being different in the two reporting periods.

    IFRS 9 requires that interest be suspended earlier than under IAS 39.

    When a financial asset is classified into stage 3, interest must be suspended in terms of IFRS 9. As this may occur earlier than under IAS 39, it has therefore resulted in a R553 million decrease in net interest income and credit impairments. The lower credit impairment charge is as a result of the interest income being suspended and therefore not included in the impairment calculation.

    Interest in suspense is recognised against credit impairment charges.

    Following a clarification from the IFRS Interpretations Committee in December 2018, interest in suspense (IIS) on cured financial assets is required to be recognised as a reduction in credit impairment charges. Previously, IIS on cured financial assets was recognised in interest income. The IIS on cured financial assets has reduced credit impairment charges by R1.2 billion for 2018.


    IIS is the contractual interest that accrues on financial assets which are non-performing and therefore classified as stage 3, in accordance with IFRS 9. The interest on these financial assets is suspended and will only be recognised in the income statement when the financial asset cures, being when it moves back into the performing category as certain conditions are met.

    Group Ratio's Table


    The local currency results (attributable to group) and economic conditions of the countries that are most material to the group’s results are provided below. These cover the key economic conditions impacting on the results of each of the operations, and therefore on the group’s results.

    South Africa

    africa Map

    Operations results:

    SBSA delivered headline earnings of R16 billion, flat on 2017, driven by the weak performance of the South African economy and increasingly intense competition. Improved product offerings and service delivery supported SBSA maintaining high market shares.

    Currency impact: The rand depreciated by 16.8% against the US dollar.

    GDP result: GDP growth estimated to be 0.7% (2017: 1.3%).


    Mozambique Map

    Operations results:

    Tighter monetary policy strengthened the banking system and revived a challenging economic environment. Although inflation and interest rates reduced from the prior year, consumer demand remained subdued. This allowed for a 1.1% (CCY*) growth in headline earnings.

    Currency impact: The metical depreciated by 5.2% against the US dollar.

    GDP result: GDP growth estimated to be 3.3% (2017: 3.7%).


    Namibia Map

    Operations results:

    Despite continued economic challenges, concerted management effort to improve revenue while managing costs resulted in a 6.6% (CCY*) increase in headline earnings.

    Currency impact: The Namibian dollar depreciated by 16.8% against the US dollar.

    GDP result: GDP growth estimated to be 0.7% (2017: -0.9%).


    Kenya Map

    Operations results:

    During 2018, the effective group shareholding of our Kenya operation was increased, contributing to the 55.6% (CCY*) increase in headline earnings. Despite interest rate caps, good growth in customer assets, together with cost containment and significant impairment recoveries on key clients contributed to this growth.

    Currency impact: The Kenyan shilling appreciated by 1.4% against the US dollar.

    GDP result: GDP growth estimated to be 5.7% (2017: 4.9%).


    Uganda Map

    Operations results:

    Headline earnings growth of 7.4% (CCY*) was driven largely by reduced credit impairments. Lower revenues due to a low interest rate environment were offset by growth in customer loans and deposits and supported by well-diversified revenue streams. Cost containment remained a focus area but the subdued revenue growth resulted in a higher CTI.

    Currency impact: The Ugandan shilling depreciated by 1.9% against the US dollar.

    GDP result: GDP growth estimated to be 6.1% (2017: 3.9%).


    Ghana Map

    Operations results:

    Headline earning increased by 3.9% (CCY*) in a lower interest rate environment which enabled positive loan growth, higher interest income and lower interest expense. Improved trade activities and transactional volumes increased fee and commission revenue, while the continued improvement of the loan book quality and successful recoveries reduced impairment charges.

    Currency impact: The cedi weakened by 8% against the US dollar.

    GDP result: GDP growth estimated to be 6.5 % (2017: 8.5%).


    Nigeria Map

    Operations results:

    Headline earnings improved by 55.3% (CCY*), including the effect of the increase in shareholding. This was driven by significant credit impairment recoveries, partly offset by higher IT and operating costs. The macroeconomic conditions remain challenging, with moderate growth and rising inflation being tempered by a relatively stable exchange rate.

    Currency impact: The naira remained steady at the official rate of NGN359.7 against the US dollar.

    GDP result: GDP growth estimated to be 1.9% (2017: 0.8%).


    Angola Map

    Operations results:

    Headline earnings improved significantly by 92.6% (CCY*), driven by improved loan book quality, endowment funding benefits, increased foreign currency allocations by the Central Bank and rising interest rates. High inflation required continuing tight cost management.

    Currency impact: The kwanza depreciated by 85.6% against the US dollar.

    GDP result: GDP contraction estimated to be 1.8% (2017: -0.1%).


    Global growth is expected to weaken slightly in 2019 to 3.5% as the slowdown in momentum seen in the second half of 2018 continues into 2019. With risks to the downside, economic conditions will remain challenging and volatile in 2019. Subdued demand will impact global trade, industrial production and could drive commodity and oil prices lower.

    While not immune from global risks, prospects for sub-Saharan Africa are good with growth expected to accelerate from 2.9% in 2018 to 3.5% in 2019. Over a third of the countries in the region are expected to grow above 5%.

    With elections set for May 2019, South Africa is expected to be a tale of two halves. Subdued growth is anticipated in the first half of 2019 as political and policy uncertainty continues to undermine confidence and delay investment and growth. An acceleration in the second half of 2019 and into 2020, driven by corporate investment, while expected, will be dependent on the rate of policy progress, structural reform, broader economic stimulus and job creation. A return of stable electricity supply is critical. Assuming some progress and no further downgrades by rating agencies, we expect inflation to remain within the target range and interest rates to remain at current levels in 2019. This should support GDP growth to 1.3% for the year.

    There is no doubt that in the years ahead the financial services industry, the competitive and regulatory environment and our customers’ and employees’ expectations will continue to change. Across the group, we are making the changes necessary to best position the group to deliver to all our stakeholders. We are focused on transforming our customer and employee experience and improving our productivity to deliver a ‘future-ready’ group. In 2019, we will build on the momentum from 2018, continue to simplify, rationalise and digitise and seek ways to accelerate our delivery.

    Key focus areas will be to:

    • Continue to reduce cost growth and increase efficiency by permanently reshaping the group’s cost structure.
    • Accelerate digitisation to meet client needs and enhance competitiveness and efficiency.
    • Pursue growth opportunities and support Liberty’s recovery.
    • Work with ICBC to find lasting solutions to ICBCS and ICBC Argentina legacy issues.
    • Monitor opportunities to issue senior unsecured and/or tier II subordinated debt in the market to optimise the group’s capital and funding position.

    We remain committed to our medium-term targets of delivering sustainable earnings growth and an ROE in our 18% to 20% target range. Finally, in delivering on our purpose of driving Africa’s growth, we will continue to support faster, more inclusive and more sustainable growth and human development in South Africa and across the continent we are proud to call home.

    Our financial outcomes in 2019 will be guided by the group’s medium-term priorities:

    Medium Term Targets