Standard Bank's Geographic Reach

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UBS SA Financial Services Conference Testing times Ben Kruger

Image: Eskom’s Klipheuwel wind energy research facility, and experimental wind energy farm on the West Coast near Cape Town

Standard Bank’s geographic reach • Standard Bank Group (“SBG”) is one of Africa’s largest banking groups with - 1 227 branches - 48 730 employees - 8 517 ATMs - ZAR1.7 trillion total assets (1H13) - ZAR15.8 billion headline earnings (12 months to June 2013) - Presence in 18 African countries, with 2 new representative offices in the process of being opened in Ethiopia and the Ivory Coast • The group’s African focus and extensive footprint of operations is a differentiator • This network has been built largely over the past 21 years, with the network in key SBG’s African network In the process of opening rep office markets built over the last 4-5 years Countries in the West African currency union which can be accessed from rep office in Cote d’Ivoire 1

1 Our vision is to be a leading Africa-focused bank

Investment and development flows, emerging multinationals, and consumers of Trade flows natural resources including China

Risk or ig inati on in The developed world pools of country and where capital, multi nationals and appropriate into distribution of risk where SBSA appropriate in line with group risk appetite and expected returns

Defining testing times

• Subdued economic environment

- Outlook for GDP growth is weak

- SA’s real short-term interest rates low by EM standards

- Aggregate investment by government, businesses and households is low

• Consumers remain under pressure

• Unprecedented scale, pace and volume of change in the regulatory framework, although stabilising

• Reduction in leverage from the phased in increases in Tier 1 capital adequacy ratios from new regulatory regime

• Customers want to use technology and need innovation to help them reduce their cost of banking

• Competition is fierce

2 Testing times require a plan, focus and execution

• 2016 is the focal point of our medium-term plan

- Compliance with fully phased-in B3 capital rules

- Clear line of sight for liquidity rules

- Completed core banking replacement

• High water mark of capital deduction

• First year of full amortisation

- Acceptable sustainable ROE

• 2016 plan based on three pillars

- Performance in the changed environment

- Business model transition

- Culture and execution plans

Performance in the changed environment

3 ROE reconciliation Standard Bank group ROE, FY07 to 12 months ended June 2013

R9.1bn average additional 25 capitalised software 2.4  0.6 R3.3bn post-tax reduction in endowment income 20 3.2 1.9

15 Cumulative Basel I to Basel III 3.6 change impact of (6%) on ROE 2.2  2.9 (R29bn of capital) 10

24.8 13.8 0 % 2007 ROE B2 day 1 B3 day 1 Higher Core Lower Change in Other Year to June change change CET1 rate banking interest SB Plc 2013 ROE replacement rates profitability

Source: Standard Bank

SBG positioning

16% SBG capital ratios B3 • Successfully transitioned to Basel 3 with 14% 2.3% 3.1% 2.9% 2.3% 3.1% appropriate capital ratios 0.9% 0.5% 12% 1.8% 0.7% 1.0% 0.5% 3.6% 10% 0.9% • CIB risk-weighted asset growth 8% 1.0% constrained 6% 12.0% 11.8% 10.8% 11.3% 10.7% 9.8% 4% 7.7% • Appropriate market shares in SA in most 2% product segments 0% FY07 FY08 FY09 FY10 FY11 FY12 1H13 • Superior asset, revenue and earnings Core / Common (CET) ratio Other Tier I Tier II growth in African subsidiaries

40 SA market shares 34 34 • African footprint sufficient for sustained 35 30 26 27 growth with strong CIB franchises 25 20 17 18 20 15 • Negggative earnings run-rate in PBB ROA 15 13 10 reducing 5 0 • Standard Bank Plc costs reduced as % planned

7 Sources: Standard Bank, UBS

4 Core banking replacement NBV of software at FY12 of R11bn • 15 – 30 year old legacy systems need to be retired and replaced • New digital channels and products to 2.9 support the demands of our customers and SA core banking (SAP) clients 5.6 Africa Core Banking (Finacle and New Business Online) • Cheaper origination and servicing costs Other 2.5 • Improved customer acquisition and cross- sell • Enablement of effective and efficient processes • SBG has structural charges from the - Extract scale benefits on the standardised replacement of our core banking systems applications - SA core banking intangible asset net of - Improve seamless cross -border processing of amortisat ion expecte d to pea k at R10bn in 2016 transactions - Amortisation of intangible asset will impact • Anticipated to be delivered through 8 profit releases completing in 2016 - ~ 2 – 3% impact on ROE of our core banking • 7m access account customers migrated replacement across South Africa and Africa onto this platform

SBG revenue

Net interest income 20 0.4 0.5 18 0.9 0.7 0.1 0.0 16 0.5 5.4 • PBB delivering sustainable revenue 0.7 0.5 5.3 0.2 14 6.1 0.0 5.8 4.8 4.7 growth since 2H10 12 4.4 4.9 4.9 3.4 4.1 10 - Net interest income driven balance sheet 8 6 12.7 13.1 growth, asset mix change and asset re- 10.6 10.7 11.1 9.4 10.2 9.5 9.2 9.2 4 9.1 pricing 2 0 - Non-interest revenue impacted by 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 Rbn competitive positioning Personal & Business Banking Corporate & Investment Banking Other • CIB operating in substantially changed 20 Non-interest revenue 18 1.6 1.2 regulatory environment 16 0.7 0.4 1.4 0.8 2.2 0.9 2.5 2.0 1.1 1.2 2.4 3.5 1.3 14 2.3 2.8 0.7 - Capital utilisation even more important 2.3 2.4 0.8 12 2.6 1.5 2.9 1.9 0.8 0.9 101.0 303.0 111.1 0.8 141.4 1.1 3.8 consideration of revenue generation 10 2.9 3.8 3.5 2.2 3.3 8 3.1 3.5 4.3 2.6 4.3 6 4

2 5.9 6.3 6.4 6.6 6.7 7.5 7.3 8.2 8.0 8.6 9.0 0 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 Rbn

PBB fees and commissions CIB FIC trading CIB other trading CIB fees and commissions Other 9

Source: Standard Bank

5 NII margin before and after impairments, make up of credit losses

Margin on interest-earning assets 5.00 4.00 • Gross margin has recovered from 4.00 3.50 material negative endowment impact 3.00 3.00 experienced in 2009 and 2010 2.00 2.50

1.00 2.00 • Margin after credit costs stable in spite of 0.00 1.50 higher impairments in 2H12 and 1H13 -1.00 1.00 • PBB credit losses shifting from low- -2.00 0.50

-3.00 0.00 growth secured portfolio to higher growth 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 % % unsecured lending Gross margin Impairments After impairment margin (RHS) • CIB credit losses impacted by legacy Credit losses and credit loss ratio 9 000 2.00 investment banking book 8 000 1.80 7 000 1.60 1.40 • Current credit loss ratio higher than 6 000 1.20 5 000 thhhlhrough the cycle expectati on 1.00 4 000 0.80 3 000 0.60 2 000 0.40 1 000 0.20 0 0.00 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 Rm %

PBB secured PBB unsecured CIB Central Credit loss ratio (RHS)

Source: Standard Bank

Relative operational performance

2 year CAGR to June 2013 25 23 • SBG achieving operational leverage 20 through cost control... 15 15 13 • ...partly offset by higher impairment 11 10 charges 5 • Overall earnings growth has been 0 reasonable over the last two years % Total revenue Operating expenses Credit Impairment Headline earnings charges • Standard Bank’s ROE static but SBG ROE and NAV growth 16.0 reasonable NAV per share growth

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0 FY10 FY11 FY12 1H13* % NAV per share growth Return on equity

Sources: Standard Bank, bank financial statements

6 Work to be done in improving returns

Destination of revenue earned* • Income statement growth has been 100 26 25 19 18 18 20 20 satisfactory over the last few years but 80 9 7 6 6 6 12 10 12 utilisation of resources to achieve 15 12 14 60 8 13 22 revenue is too high 40 • Progress has been made in 2012 and 20 2013 to reduce costs required to earn 53 50 50 57 62 60 58 0 revenue... % 2007 2008 2009 2010 2011 2012 2013 Operating expenses Credit impairments Taxation and other • ...but credit impairment costs have been Minorities Shareholders Return on assets* disappointing over the last year 8 • Return on assets below 2007 levels but 6 higher than post-crisis levels 4 1.61 1.52 1.29 1.22 1.22 2 1.12 1.09

0 2007 2008 2009 2010 2011 2012 2013 -2

-4

-6

% Total income/Average assets Opex/Average assets Impairments/Average assets Return on average assets 12 * 12 months to 30 June Source: Standard Bank

Business model transition

7 PBB business model transition

PBB return on RWA 300 3.0 • It is all about the customer • The future is mobile/digital 250 2.5 • The cus tomer is a segment of one

200 2.0 • Full value chain transition – front to back • Balance the ‘here and now’ with the

150 1.5 ‘hybrid’ future • Proliferation of non-bank competitors

100 1.0 • Appropriate technology is a sustainable differentiator

50 0.5 • Market share of the right customers • Leverage strong business/commercial 0 0.0 banking platform Rbn FY09 FY10 FY11 FY12 1H13 % RWA Return on average RWA (RHS) 14

CIB business model transition

CIB return on RWA 600 3.0 • Optimise capital deployment and increase ROE 500 2.5 - Less long-dated complex derivatives - Less private equity

400 2.0 - Focus on transactional banking • Digitalisation of trading and transactional banking 300 1.5 • Improved risk distribution

200 1.0 • Africa-specific sector expertise in power and infrastructure, oil and gas, metals and mining, telecoms and primary capital 100 0.5 markets • Increased flow in FIC business and risk 0 0.0 mitigation Rbn FY09 FY10 FY11 FY12 1H13 % • Focused client engagement model RWA Return on average RWA (RHS) 15

8 From emerging market to Africa-focused

SBG total income SBG capital utilisation 80 120

70 100

60 80 50

60 40

30 40

20 20

0 0 Rbn FY09 FY10 FY11 FY12 1H13 Rbn FY09 FY10 FY11 FY12 1H13

Africa including SA OA Africa including SA OA 16

SBG’s network already covers countries that comprise over 80% of Sub-Saharan African GDP

The nominal GDP of the African countries where SBG has banks, accounts for 50.6% of the entire continent’s official nominal USD GDP. In Sub-Saharan Africa, countries in which SBG has banking presence account for 80.1% of the nominal USD GDP South Africa Nigeria Angola The top 10 economies Ghana Kenya (including North Africa Sudan & South Sudan Ethiopia not shown) account for Tanzania 78.3% of continental Côte d'Ivoire Cameroon GDP DRC Uganda The next 10 economies Zambia Equatorial Guinea account for 12.0% of Botswana Gabon continental GDP Mozambique Senegal Congo Namibia Madagascar Mauritius Chad Mali Burkina Faso Benin Rwanda Niger Guinea Eritrea The remaining 34 African economies account for 9.7% Malawi of continental GDP Sierra Leone Swaziland Togo Zimbabwe Lesotho Central African Republic Cape Verde Countries where Standard Bank has full-scale banks Liberia Burundi West African Economic and Monetary Union (“WAEMU”) countries Djibouti Gambia Where Standard Bank is in the process of being present Seychelles Guinea-Bissau Other countries Comoros Somalia US$ billions at PPP Sao Tome 0 50 100 150 200 250 300 350 400 17

Source: Economist Intelligence Unit

9 Per capita growth has been strong in key countries, yielding higher standards of living and income

There has been a sustained upward trend in GDP per capita in the African countries where SBG has presence, which we would expect to translate into higher standards of living and greater consumption Middle class % Youth (<24yrs) % of Key growth markets for Standard Bank Group of population (2010) population (2010) 18 Angola 13.2% 63.8% Nigeria 9.9% 63.1% 16 Ghana 19.8% 57.5% Kenya 16.8% 61.2% 14 Mozambique South Africa 8.1% 70.1% Uganda 12 19.8% 48.9% Namibia 2.6% 66.6% Sudan (South) 10 Zambia 9.1% 55.7%

Botswana N/A N/A 8 Lesotho 5.6% 66.2% Malawi

r capita (US$at PPP in thousands) 29.3% 55.0% e 6 Mauritius Swaziland 11.1% 53.3% GDP p GDP Tanzania 4.5% 65.3% 4 Zimbabwe N/A N/A

2 9.4% 59.3%

2.9% 64.2%

0 N/A N/A 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 18 *PPP = Purchasing power parity Source: Economist Intelligence Unit, African Development Bank

Asset growth of Standard Bank’s Rest of Africa operations

The size of the bubble Standard Bank’s African subsidiaries have represents total assets of our achieved asset growth rates that have exceeded 90% bank in US$ GDP in the majority of presence countries* Angola 80% Bubble scale (US$bn) 70%

60% Nigeria 2.0 Mauritius Ghana 50%

40% 1.0 Kenya DRC

30% Botswana 0.2 Malawi Zambia

yr Asset CAGR (2005 - (2005 CAGR Asset yr 2012) 20% Lesotho Tanzania 7 7

Swaziland Mozambique 10% Uganda Namibia 0% 0% 5% 10% 15% 20% 25% 30% 7yr Nominal GDP CAGR (2005 - 2012)

Zimbabwe is excluded due to unreliable data available as a result of hyperinflation; South Sudan a new operation.

19 Angola only opened its first branch in 2010, therefore the data used is only for one year (2011-2012)

Source: Economist Intelligence Unit, Africa Finance

10 African subsidiaries performance over three years – revenue and earnings

45 Year-on-year growth in Africa subsidiaries 40 35 30 25 • Strong growth from African subsidiaries 20 over the last few years... 15 10 5 0 FY11 FY12 1H13 • ...providing a significant boost to overall % Africa revenue growth Africa headline earnings growth group growth over the last three years

Contribution to banking activities growth over three years*

Revenue Earnings • Opportunity remains to generate superior growth particularly from west African subsidiaries (Nigeria, Angola) in retail and 36%

45% business banking Africa

20 * To June 2013 Source: Standard Bank

Growing contribution from Rest of Africa subsidiaries

Revenue FY10 1H13

17% 25% • Rest o f Af r ica now provides 17% o f group capital, 25% of group revenue, and 22% of group earnings

Headline earnings • Proportion from Rest of Africa expected to FY10 1H13 grow over time

14% 22%

Source: Standard Bank

11 Culture and execution plans

A culture of confidence and excellence

• Trust, confidence and integrity remain the foundation

• Improved accountability for cost management and profitability

• MkMake and rema in focuse d on thbithe big ca llills in a fas t c hang ing env ironmen t

• Agility, rapid and frequent deployment at the fringes

• End-to-end business models for CIB and PBB within one bank

• Commerciality in all we do

- We are the custodians of shareholder funds

12 Conclusion • Our Outside Africa restructuring is largely complete with mainly a London business model, a deleveraged balance sheet and surplus capital • We are an Africa-focused group with the growth engine of our group benefitting from the Rest of Africa - We ha v e w ell-established on-the-grou nd banks in the high grow th markets Angola, Nigeria, Ghana, Kenya and Mozambique - We have appropriate access to other important markets through our rep offices in South Sudan, Ethiopia and Cote d’Ivoire - We have good and ever improving links to China • We need to improve our productivity - Efficiency of revenue generation needs to improve, and we are working hard to lower operating and credit costs • We are preparing for the digital revolution through our core banking replacement • Our core franchises are mostly well positioned and we have good focus on customers • We have simplified our management structures and teams • Our staff are engaged and motivated • We are focused on improving our ROE