Standard tweaks plans

Standard Bank Group said yesterday it will tweak its strategy as it announced headline earnings were down for its 2010 financial year.

"After extensive debate, we believe that a fundamental revision of the strategy is unwarranted, but that some refinement and tightening of strategic focus is required," group CEO Jacko Maree said in a statement.

Headline earnings for the year were R11.283-million, down 4%. Headline earnings per share were down 5% to 715.9c. The group recorded a return on equity (ROE) of 12.5%, down from 13.6% in 2009.

Credit impairment charges were down and the credit loss ratio improved to 1.04%, compared to 2009's 1.60%.

"Standard Bank Group, overall, is in good health," said Maree. "We are well capitalised, profitable and have a clear growth path, despite an uncomfortable cost-to-income ratio of 61.7% and an ROE of 12.5%.

"We have therefore, over and above the necessary action taken on costs, looked carefully at our business strategy and refined our strategy to align it to changes in the group's operating environments."

Standard Bank implemented measures to cut costs in 2010, including retrenching 953 employees. "As staff costs are its largest expense, Standard Bank halted recruitment in virtually all parts of the business and implemented a retrenchment process aimed at removing inefficiencies, mainly impacting head office managers and executives in Johannesburg and London."

This resulted in once-off pre tax costs of R610-million. "The reduction in heads . will only be evident in 2011 once notice periods have expired."

The company also downsized IT, cut consulting services, travel and conference costs, and would not renew some sponsorships.

"The restructuring process has proved effective in breaking the group's recent trend of relatively high cost growth. The banking group's total operating expenses for 2011 are expected to be flat on the 2010 cost base including restructuring costs."

The refined strategy includes continued focus on Africa.

"Our rapid pace of investment in those countries has not been vindicated by recent revenue trends. Nevertheless, we are confident that future revenue flows will justify these investments."

The group had reallocated responsibilities between its three deputy group chief executives, Ben Kruger, Sim Tshabalala and Peter Wharton-Hood. Kruger would be responsible for both major banking business lines, corporate and investment banking, and personal and business banking.

Tshabalala would continue as CEO of the Standard Bank of South Africa, the group's largest banking operation. Wharton-Hood would still be in charge of operations and IT across the banking group. He would also take on responsibility for the operation of all banks outside South Africa.

The group declared a full year dividend of 386c.