• China lends Nigeria Dollars 2bn in exchange for oil talks. • Ft com site : China oils Nigeria talks with loan

Telecom Solutions, Ericsson, ERTU, Etisalat, Huawei Technologies, KT, Telecom Egypt, ZTE along with a host of others. Regional pavilions are also popular with China, Egypt, Korea and Nigeria highlighting national strengths and competitive advantages.
ICT in Africa - A Continent on the Move
With a theme that speaks for itself, AFRICA 2008 draws top speakers offering both regional and global insights on Africa's position, its unique market drivers, and the host of factors critical in sustaining its most effective enabling environment. Sessions cover topics such as public-private partnerships, entrepreneurial success stories, capacity building and cybersecurity.
The four thematic days are:
- Africa Today: The State of the Art
- Dynamic Africa: Demand Drivers and Innovation
- Dynamic Africa: Partnering for the Future
- Africa in the Vanguard
"The investment climate in Africa is particularly inviting right now," said Dr Hamadoun I. Toure, ITU Secretary-General. "Liberalized markets forge forward and demand continues at a remarkable speed." Referring to the successful Connect Africa Summit, Dr Toure added, "We're certain to see further momentum on the investment commitments generated in the last six months."
ITU convened the Connect Africa Summit in Kigali, Rwanda, in October 2007. A total of USD 55 billion was pledged to expand broadband ICT networks. Infrastructure developments since late 2007 have been remarkable and ITU TELECOM AFRICA 2008 promises to be the most important and efficient networking platform for the subsequent developments in the region.
Media accreditation
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About ITU
ITU is the leading United Nations agency for information and communication technology issues, and the global focal point for governments and the private sector in developing networks and services. For more than 140 years, ITU has coordinated the shared global use of the radio spectrum, promoted international cooperation in assigning satellite orbits, worked to improve telecommunication infrastructure in the developing world, and established the worldwide standards that foster seamless interconnection of a vast range of communications systems.
ITU also organizes worldwide and regional exhibitions and forums bringing together the most influential representatives of government and the telecommunications industry to exchange ideas, knowledge and technology for the benefit of the global community, and in particular the developing world.
From broadband internet to latest-generation wireless technologies, from aeronautical and maritime navigation to radio astronomy and satellite-based meteorology, from phone and fax services to TV broadcasting and next-generation networks, ITU continues to play a central role in helping the world communicate.
Visit our Web site at http://www.itu.int/newsroom
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Document MTPW000020080310e43a004k3
ICBC interested in cooperation with Nigerian Oceanic Bank
189 words

6 March 2008

China Knowledge Press

CHIKNO

English

Copyright 2008 China Knowledge Online Pte Ltd. All rights Reserved.
Mar. 6, 2007 (China Knowledge) - Industrial and Commercial Bank of China (ICBC), the largest commercial bank in China, has indicated the interest to partner with Nigerian Oceanic Bank International Plc in export and trade financing in a bid to further boost the economic ties between the two countries, sources reported. In a business meeting between the management of ICBC and Oceanic Bank last week, Wang Zhenglong, deputy head of Bank Department of ICBC expressed that the partnership would create a good opportunity for both banks to finance trade flows between Nigeria and China as well as other parts of Asia as ICBC shares complementary features with Oceanic Bank.
Executives from Oceanic Bank also urged the Chinese lender to further its operations in the African country, therefore to key into the exponential growth in the Nigerian economy in areas of trade finance, project management, industrial machines, infrastructural development, renewable power and telecommunications. ICBC has been actively expanding overseas in recent years. It has just completed its acquisition of a 20% stake in South Africa's Standard Bank for US$5.5 billion.
Document CHIKNO0020080306e43600032

Chinese Bank Partners Oceanic On Export, Trade Financing
895 words

6 March 2008

04:42 AM

All Africa

AFNWS

English

(c) 2008 AllAfrica, All Rights Reserved
Lagos, Mar 06, 2008 (This Day/All Africa Global Media via COMTEX) -- Industrial and Commercial Bank of China (ICBC), China 's largest bank, has expressed interest to partner with Oceanic Bank in export and trade finance, given the growing strong economic and trade relations between China and Nigeria .
"We are targeting countries with good market potential and strong trade ties with China , and ICBC shares complementary features with Oceanic Bank," says Wang Zhenglong (Deputy Head, Bank Department) in a business session with the management of Oceanic Bank team led by Dr Cecilia Ibru in China last week.
"We need more friends like Oceanic Bank and I can recall that ICBC and Oceanic Bank won the Best Bank of the Year 2007 in their respective countries awarded by The Banker, a subsidiary of the Financial Times of London".
"We are eager to sign an MOU with you as ICBC and Oceanic are growing rapidly" says Wang.
Responding, Dr Cecilia Ibru urged ICBC "to key into the exponential growth in the Nigerianeconomy in areas of trade finance, project management, industrial machines, infrastructural development, renewable power and telecommuhnications".
The partnership Wang said will create a good opportunity for both banks to finance trade flows between Nigeria and China as well as other parts of Asia given ICBC branch network of over 17,000 in China and Operations in more then 30 countries in the world.
Oceanic Bank's rising branch network targeted as 600 before end of the year is an attractive synergy of immerse benefit to both Nigerian and Chinese investment."
This partnership will bring about expanded platform for growth for both ICBC and Oceanic Bank and good news for its customers" added George Liu ICBC Head, Project and Finance).
ICBC is one of the world's largest banks in terms of market capitalization and has the country's (China) most advanced retail strategy. it has the largest client base in the China with more than 175 Million personal Banking customers.
Last year, ICBC acquired 20 per cent ($ 5.5bn acquisition) of South Africa 's Standard Bank Group.
It would be recalled that Oceanic Bank was recently singled out for praise by both the United Nations and the African Union (AU) at the just concluded 2008 African Private Sector Forum, organized by the duo and held at Addis Ababa, Ethiopia.
The bank's Chief Executive, Dr. (Mrs.) CeciliaIbru, who was represented at the conference by Mr. Kola Ayeye, Executive Director in charge of Lagos and West assured the international community that Oceanic Bank would continue in its strive to effectively alleviate poverty in Nigeria through the funding of the real sector and its corporate social responsibility initiatives.
Georg Kell, United Nations Global Compact Executive Director lauded Oceanic bank for its many social responsibility initiatives and its many efforts at reducing the poverty level of the populace. The bank chief said Oceanic Bank over the years has evolved as a socially responsible entity that places emphasis on giving back to the society what it gets from it. The policy, according to her, was borne outof the need to provide for the needy as well as help contribute to the social sector like education, healthcare, security among many others.
On education, she said the bank recently donated a Centre for Business Entrepreneurship Development to Obafemi Awolowo University , Ile-Ife. The center, according to her will serve as incubation center where young people would be adequately developed and properly equipped with all the skills required for them to become successful entrepreneurs. Oceanic Bank also recently provided Government Girls College , Dala, in Kano with basic infrastructure required for studies. The students hitherto had no chairs and desks in their class rooms - they were sitting on bare floor. The commitment cost the bank over N10 million. The initiative is to be repeated in the different school every year.
According to her: "The Bank also built a set of classrooms for the students of Nassarawa State University , worth N250 million as a way of improving the process of teaching and learning in the institution. The move was aimed at reducing theburden of providing the facility from the state government, which had called for support from the private sector.
Also at Delta State University , Abraka, the bank also donated an IT centre, worth millions of Naira to the school authority for the purpose of the students."
The bank also donated relief materials worth millions of Naira to victims of the recent floods in Adamawa and BornoStates . The materials were handed over to those affected through their respective state governors. The gesture was borne in a bid to ease the pains that the affected families went through after the floods which destroyed properties worth millions.
Worried by the high state of insecurity in the state, the bank donated 30 Toyota Hilux buses worth N150million to Lagos state security fund to improve security in the state.
As a way of promoting industrialization the country, Oceanic Bank is currently financing theset up of industrial parks in key states among which are: Abuja , Osun, Delta, Bayelsa. At the industrial parks, infrastructure would be provided for interested industrialists who wish to set up their facilities there. This is aimed at building a cluster of industries in selected sites so that they can jointly use existing infrastructure to enjoy economics of scale.
Document AFNWS00020080306e436000df
Preliminary 2007 Standard Bank Group Limited Earnings Conference Call - Final
13,869 words

5 March 2008

Voxant FD (FAIR DISCLOSURE) WIRE

FNDW

English

© Voxant Inc. All rights reserved.
MIKE BROWN, INVESTMENT ANALYSTS SOCIETY OF SOUTHERN AFRICA, STANDARD BANK GROUP LIMITED: Ladies and gentlemen good morning, can we commence with proceedings? I think most people have made it here. A few are just coming in at the back, so let's get moving. My name is Mike Brown I'm from the Investment Analysts Society which is being hosted this morning by the Standard Bank Group. There are also other people attending here from the media and from various other interested parties. This presentation will also be available on Summits, webcast and teleconferencing, so it's a broad audience.
I might just add that the results were published this morning just before 8 o'clock on [sens] and within two hours we had a English presentation to a wide group of interested parties, to the shareholders, and everybody has access to that. I'd like to congratulation Standard Bank Group on their corporate governance and in doing in this manner; we think it's the correct way for this to happen.
This is a presentation on financial results, audited financial results for the year ended December 31, 2007. Let me now turn over to Simon Ridley, as I think it's traditional with Standard Bank; they start with the numbers first and then lead us back through the other elements of the presentation. So over to Simon Ridley.
SIMON RIDLEY, CFO, STANDARD BANK GROUP LIMITED: Thanks Mike, on behalf of our Chairman, Derek Cooper, CEO Jacko and my colleagues we'd really like to welcome you. In addition I'm welcoming the Summit viewers, those people on the webcast and the conference call participants. So welcome to all of you.
Just going through the highlights. 21% growth is the feature for our earnings per share measures and that was quite handsomely beating our financial objective of inflation plus 10% which arrives at 16.5%. Our dividend for the year up 21%. Quite an important feature is our net asset value per share growth, and that's after paying a dividend still up 20%. There's an acquisition that happened in the year and with a fair amount of goodwill. If we take that out our net asset value per share was up 13%. So despite that substantial goodwill amount in Nigeria, still a very strong growth in NAV.
ROE 24.8% beating our target of 24%. Our credit loss ratio of 0.78% did not meet our target of being below 0.75% and that's because at the time of setting that target we were assuming a much lower interest rate environment. And then finally the cost income ratio, being quite a lot below our target of 53.5%.
I suppose, as with most banks around the world, 2007 was almost startling in terms of the contrast between the two halves of the year. A fairly benign first half, even though interest rates have started to move up and we reported 27% growth in rand earnings. And then in the second half we had this massive turmoil globally, which Ben will go into some detail on. And then domestically, inflation kicking up resulting in consecutive rate hikes in the second half with a further 150 basis points which had the natural effect then of slowing down our domestic Personal & Business banking operation and resulting in high bad debt. So we had a low second half growth of 17%.
Just looking at the year in total then, it's really a picture of very strong revenue growth, a combination of net interest income and non-interest income up 32% and that's on the high base of 25% growth in the prior year. The 32% has been boosted by acquisitions; it would be 27% without the acquisitions, but still very strong. That allowed us to absorb the high increase in bad debts of 68%, which we'll go into some detail later, and the operating cost growth of 29%, which was also affected by acquisition. That would be 23% growth in costs if we stripped out the acquisition effect. The banking activities as a whole went up 22%, the Liberty contribution up 15% and still 22% for the Group as a whole.
Over the longer term compound average growth was 19% in earnings, and if you run this picture back 20 years you will see the similar picture of 19%, so still consistent growth. Dividends compound growth up high at 25%, and that's because we changed the cover at the end of 2004.
Looking at the business unit components of our growth, Personal & Business Banking, which Pete will go into some detail on, up 18% off a high base. It's over the past few years a very strong growth, but now reflecting some softening in our South African operations. And then Corporate & Investment Banking up 34%, and that's really with fantastic revenue growth, which Ben will go into some detail, and still good ROEs in both of those operations.
Central funding it's not a big figure, but I'm sure to [save] a question later, turned from a small profit last year into a small negative this year of [ZAR240 million] (sic - see presentation) and that's really negative. All our acquisition costs go in there, our hedging programs against currency risk and interest rate risk are in there. We have a leadership center which we've established last year in full swing, but that cost was taken. And then finally taken some central model risk credit provisions, but overall still getting to 22% earnings growth.
We don't normally analyze our results by geography, but I think it's instructive because of the shift this year. So in South African operations, including Liberty, we were up 15%, and that's a good growth on a high base established over prior years. On a compound basis over seven years that's about a 21% growth today. Our operations outside of South Africa showing a 75% growth in earnings which has uplifted that Group growth up to 22%, even though it's on a still a fairly small amount. So a very welcome boost from our non-South African operations.
To be fair, there is some acquisition impact in there, but most of it is towards the last quarter as we moved capital from the center into our businesses. The biggest being in our Nigerian acquisition, where we removed $500 million of capital out of the center into the rest of Africa. So it's still very credible organic growth starting to come through, and particularly from our international operations headquarters in London.
So if we look at our mix, still very much 50/50 between wholesale and retail. If we regard Liberty as largely a retail based organization and you add that to our Personal & Business Banking it's 50% and our Corporate & Investment Banking 51%. So this balance in our earnings still continues.
Just looking at the balance sheet, loans and advances, the highlight here is still very good momentum throughout the year and only starting to soften in the last couple of months of 2007. So we have a Retail Bank book up 29%, and another highlight is loans to Corporate customers up 40% across the Group. So as you can see, the Corporate element starting to exceed now in growth the Retail element of our Group. Mortgage loans is still our biggest portfolio at a third of the Group at ZAR219 billion, a third of advances is mortgages. And our second biggest portfolio then being loans to Corporate customers.
Looking at the funding side, we have now a better balance with retail priced funding up 26%, a fair amount of that coming from our Argentina acquisition. If we strip that out, the growth in retail funding was up 16%. So in Argentina we have a big retail funding book. A lot of it's still under-lent as an operation and that bodes well for the future. Funding that's wholesale priced to retail customers, from retail customers we've obtained ZAR29 billion in money market instruments which is up 71%, which is more expensive than normal retail funding, but very welcome in terms of our overall funding mix.
And then securitization, up 36% year-on-year, but all of that happened in the first half. As we'll touch on later securitization around the world has really come to a grinding halt in the second half of 2007.
Just a couple of bullets on liquidity, because it's such an important feature these days with banks. We do still play a lot of emphasis in holding liquidity from longer term sources, so our long term funding ratio improved to 18% of our total deposits. With a large proportion of our assets being term assets, essentially that mortgage book, we did have to pay constant attention to the structural liquidity mismatch we have. And that we respond to by having a longer element of term funding and then a large surplus liquidity buffer, which you can see was ZAR60 billion at the end of last year.
What we have noticed is in the domestic market, the local banks including us, we have to rely more on domestic funding with the dislocation that's occurred around the world. And there's less appetite for South African risk, so the five year credit default swap spread is now 200 basis points; a year ago was about 50 basis points. So there's more reliance on local funding, but we're still doing fine in a local sense. As I've mentioned, securitization we hope will improve at some stage, but right now it's really dead as a option for funding.
The other thing we manage closely is concentration risk and that's really -- we avoid over-reliance on classes of depositors or single depositors. Just a question that we've had from international investors from time to time is conduits. They're not really material in our balance sheets or in relation to our balance sheet. Conduits we manage on behalf of our investors, we have potential liquidity exposure to those conduits of ZAR13 billion. They are still finding appetite for local investors, but at a higher spread. And I think the important thing for our conduit and most of the South African ones is that the asset quality is still good, as they're all at AA minus or better and there's been no sudden downgrade in assets that you've seen in international conduits.
Just going into some detail on the income statement, the area that you see has the most impact from macroeconomic developments is net interest income, and we need to just look at this. Our margin has improved from 3.63% up to 3.94%.
Looking at what's happened in the year, we've picked up an additional ZAR4.4 billion of net interest income because of the higher balance sheet volume that we've had. We've had some unwind back to net interest income of credit provisioning adjustments we make. And just to explain it for a minute, under the new accounting rules if funding is tagged as non-performing one has to discount the security by the expected amount of time you expect to recover that security. And as you recover that security you get an unwind back in the net interest income. So we had an additional ZAR200 million bringing to ZAR400 million the total unwinds that we had in 2007.
The big feature is the positive endowment effect. We picked up an extra ZAR1.6 billion in net interest income through the high interest rates. And that relates -- I suppose you should compare it to the higher bad debt charges of about ZAR1.8 billion, which we'll touch on later.
Running the surplus liquidity is important for risk management and does come with a cost. So that compressed our margins by 9 basis points, because typically it's at a slight negative carry. And then additional NII from acquisitions is ZAR1 billion that's come in.
On the non-interest revenue side some really pleasing highlights here, fees and commission of 23% and that's despite softer growth in our branch related fee and commission income. A highlight for us has been that anything that has an advisory component, we call it knowledge based fee income. So anything in our Group where there's some value-add or knowledge imparted is included in that category, and that was up 75%. A lot of that coming out of the wholesale side of our Group.
Trading revenue, which Ben will cover, up 49% and the pleasing element there it's across all areas of trading. So no one disappointment in any desk across our Group.
Other revenues is more volatile, up 21%, banking and other up 24% and most of that improvement driven by fair value gains in our corporate investment banking portfolios and which fair values we try and be conservative on. Our MasterCard disposal profit of ZAR460 million; as you see in our announcement that's excluded from headline earnings, but including this measure.
Property coming down a bit off a very high base from last year, really less gains on the property investment portfolio. And finally anything to do with bancassurance, our insurance related revenue, still showing great momentum, up 25% on last year's amount.
Turning to the credit losses that we put through our income statement, ZAR4.6 billion versus ZAR2.7 billion. The Corporate side we actually had a reduction in credit losses, so really the high interest rates not impacting at this stage any of our large Corporates portfolio. So the entire bad debt increase coming from Personal & Business Banking and it's really an NPL charge from ZAR1.9 billion up to ZAR3.7 billion. And most of that is coming from Mortgages and Card, which Pete will go into some detail on.
On a longer term trend basis you can see on last year's amount which it was, in a rand sense, was double the prior year, we've increased further then by the 68%. We are still adding what we used to call in the old days, general provisions i.e., provisions on performing book; that's the orange segment of that bar. And if you look at the trend as a credit loss ratio last year, a still fast growing book, our credit loss ratio is 0.78% and it's sort of approaching the ratio that we had in 2003. And as you can see, there's a very close correlation with interest rates; we've just mapped in here the South African average prime rate. And with the accounting rules requiring more dynamics in your provisioning there's now closer tracking to interest rate moves.
An the operating expenses front, it's really reflective of a strong growing Group, up 29%, taking out acquisition element 23%. Our headcount up 17% of which 9% came from acquisitions; the rest is still strong organic growth, particularly in our non-South African operations.
IT continues to be a feature; we have to invest in it. Anything to do with regulatory developments was a big feature of our IT costs in 2007 together with building up our retail core banking systems. But despite that quite high cost growth, cost income ratio still coming down and showing a respectable gap between income growth and cost growth which, as you will know, is commonly referred to as the jaws gap.
On the capital front, firstly our returns on capital, we've had a very good NAV growth, as I mentioned earlier, you can see 2006/2007 how our net asset value stepped up. And that has had the natural consequence of slightly diluting our ROE. And then, as would be expected of higher interest rates, our estimated cost of equity has increased, but we're still showing a very strong spread over that cost of equity in our Group.
On the capital adequacy we've taken the view that the most important thing that you would want to know is, what happens with Basel II? Basel I is interesting, but that's now behind us, so into Basel II, we've reflected the pro forma figures as of December 2007. And it's interesting to point out that in terms of credit risk quantification moving from B1 to B2, there's been almost no change across the Group on a total level. Within that we see a quite big savings in risk-weighted assets in our Personal & Business Banking operation and then more capital required in our Corporate & Investment Banking. And that's really because we have a large corporate book and most of our book is outside developed markets, including South Africa. So that has a natural consequence of increasing the risk-weighted assets.
Trading risk or market risk came down slightly. So overall banking activities we are now showing additional risk-weighted assets of ZAR51 billion. And almost all of that can be explained by what's happened with operational risk, up ZAR56 billion, and that wasn't measured as a risk under Basel I.
The other dynamic in capital adequacy then is the available capital. And you can see on a like-for-like basis our available capital of ZAR76 billion at the end of December is now accounted as ZAR65 billion under Basel II. And it's something we touched on in our ICBC deal related presentations that right at the end of last year the regulations were finalized on this. And there's several reserves which no longer qualify as Tier 1 capital. There's future credit losses which we are not allowed to book in an accounting sense, but Basel II requires you to impair your capital with them. And finally there were some general debt provisions under Basel I which no longer count as Tier 2 under Basel II.
So the consequence of all of this then is our adequacy ratios, just looking at Group, Basel I 14.4%, a very strong ratio, coming down to 11.3% which still reflects a still healthy buffer over the 9.7% minimum requirement. That's pre the ICBC deal. If we do this on a pro forma basis and include the capital we received the day before yesterday, our total capital ratio goes to 14% and our Tier 1 ratio goes from 8.5% to 11.2%.
And going forward we're not just going to rely on this for organic growth. We have a fair amount of debt capital headroom. And with more Tier 1 it gives the ability to raise more Tier 2and hybrid Tier 1 type debt. And we can raise a further ZAR15 billion of debt capital instruments, assuming markets return to some normality over the next half, which we're sure they will. And these forms of debt capital will then be available to us for future organic growth.
That concludes my slides. I'm now going to hand over to Pete, thank you.
PETE WHARTON-HOOD, CEO PERSONAL & BUSINESS BANKING, STANDARD BANK GROUP LIMITED: Thank you, Simon and good morning, ladies and gentlemen. Personal & Business Banking 2007 had a rewarding and a challenging year all rolled into one. Our customer acquisition strategies over the last three years we see as appropriate under the circumstances and, of course, the context within which these results are reviewed must take that into consideration.
In addition to that, our geographic diversification benefits are starting to show in the mix of results that we present. But we all understand that the local market pressures have started to dampen some of the retail momentum. But I must add, this didn't come as a surprise in the results because, as part of our planning and stress testing, the inevitability of the downturn that was anticipated was contemplated in the numbers that we'd planned, albeit sooner than expected.
As Simon has explained, our interest income was boosted by the endowment effect. We've made significant progress in our bancassurance initiatives together with Liberty Life. And we've made good progress across our vast operations in addressing the regulatory challenges and the implementation of Basel II.
The current market conditions that the South African consumer faces are well known to all of us and the debt to disposable income of the local households and debt repayment ratio to disposable income is certainly indicative of a consumer base that is starting to show signs of stress. But on a positive side, the market value of the assets that they have geared up are comfortably ahead of the gearing levels that they've taken on.
From a financial perspective, the headline earnings of PBB up 18% to ZAR5.7 billion, our credit loss ratio at 1.34% and ROE up just over 28%. Our cost-to-income ratio of 52.1% is an all time low in the aggregate of the business, and our domestic operation for the first time in history reached the 50% threshold. Our external net advances rose 28% to just over ZAR340 billion.
The income statement tells two stories. You can see very strong revenue growth in the net interest and non-interest revenue lines. And you can see that our operating expenses have still carried on as we continue to bolster the infrastructure, both domestically and abroad, as we grow our business. Our credit impairment charges up 82% require further analysis to see both the cause and the outlook for those particular numbers.
On the product reporting front, if you have a look at the revenue that's been generated by the big product shops, total income is up by 29% and strong revenue growth is evidenced across all the product shops. However, this did not all translate into an equivalent improvement in headline earnings. And I guess the eye-catching numbers are the 15% decrease in headline earnings in the Home Loans business; this contrasted to a 20% growth in revenue. And the small decline in earnings in the Vehicle & Asset Finance business of a 40% growth in income. And as we go through the individual product analyses it will become evident as to what the drivers of that was.
On the credit impairment front, you'll see that the ratios moved from 1% in 2006 to 1.34% which is marginally ahead of the result reported at the half year. But the numbers that obviously require further explanation are in the Home Loans business as it is our biggest single asset class. The 720 basis points in the Card division, you will recall is still in line with the projection of 700 basis points to 900 basis points as contemplated two years ago.
In the Home Loans business, the sheer quantum of the increase in NPLs is driven by the stress that our customers are now starting to face. In addition to that, property price inflation has obviously driven the average ticket price up. And in addition to that, the higher interest rates have caused the quantum on the evaluation to increase. What you can see from the net security line is that the basis on which our collateral has been valued has stayed consistent over the last three reporting periods, and at just under 80% is largely consistent with management's view of the underlying value of collateral under stress conditions.
But that's also been exaggerated by the high interest rates which impact on the calculation of the time value of money discount that is applied to the future value of the collateral. So the net exposure at just over ZAR1 billion is fully provided for and the arithmetic that goes into the calculation on the basis of collateral values, emergence periods and the basis on which those have been factored into our calculation and the time value of money adjustment have all stayed consistent in their basis of preparation. The early arrears position of our business is consistent with underlying circumstances that the consumers face. And you can see from the Home Loans business that the increase in early arrears reported at the half year attracted a lot of operational attention. And the decrease is in part attributable to increasing operational effectiveness in addition to the fact that some of the math there is skewed by the early arrears moving into the non-performing loan category.
The Card business has also attracted the right level of early collections activity and has presented a result consistent with the activities of management. The Vehicle & Asset Finance business however is cause for concern and is being addressed.
In the non-performing loans category, one can see the consistency with which these results have been reported is indicative of two events unfolding. A worsening of conditions for the customer and an ever increasing effort from management in a collections environment to stem the roll rates and stem the losses to be incurred.
The retail market share in South Africa has been the subject of considerable public debate, with varying explanations provided by a number of participants in the market as to moves in the market share statistic. As has been consistent in the past, we publish our share of the DI900. And the explanation that is brought to bear with this as being the stock evaluation of market share conditions belies the activity that has happened in the latter half of the year.
And what we can see is in our share of new business statistic, particularly in the mortgage business, a deliberate effort by management to stem our share of the new business has started to take effect in the statistics produced for new business. But that our continuing interaction with the existing customers, the extent to which access bond facilities are drawn down and the extent to which existing and known customers of the Standard Bank are further banked within their existing facilities has seen our market share statistic as reported here, not entirely consistent with the management actions in the latter half of the year. I guess one would say that in a context such as this the statistics will eventually catch up with the management actions as they flow through onto the balance sheet.
But the management team is entirely satisfied with the condition that the business is in and the market share positioning that has been attained as it is consistent with the development of the franchise that we built over a number of years and is consistent with the demands of the customers in each and every segment that we have chosen to bank.
On the Home Loans front the global increase in the book was 29%. You can see that the value of new registrations only moved up by 9%, indicative of the fact that part of that book growth is attributable to the in-house activity with existing customers already known to us. The margin compression continues and the contribution from the rest of Africa, albeit small, is the fledgling kick off point for a business that we would like to grow over the next three to five years.
On the credit front the average loan to value and installment to income ratios, as identified at the time of credit granting, have remained at 81% and 25% respectively. And the 67% balance to original value on the portfolio is comforting in the knowledge of how our collateralized lending business is run and our portfolio is well provided.
In the Vehicle & Asset Finance front the global increase in the book moved by 31%, 8 percentage points of that 31% attributable to the acquisition of our Argentinean business where we have a leading position in the Argentinean market with just over 12% market share.
Our reentry in the South African market into the dealership channel, albeit well thought out at the time was unfortunate in its timing in that we started to grow this asset class just before the market conditions started to deteriorate. It was the correct competitive strategy at the time, but could have been better timed, if that is the right way to put it. The strong volume growth has been boosted by our corporate and commercial market activity despite the known decline in vehicle sales in South Africa. Our Argentinean business performed well, and this is an asset class which will have significant opportunities in our African businesses as we choose to roll out this franchise in due course.
On the credit front our entry into the dealer franchise introduced a higher proportion of non-Standard Bank customers into the mix and with it a higher level of doubtful debt provisioning that came with it and the decline in the recovery values in the used car market has obviously triggered increased impairments. We have mitigated some of these losses by improving our asset disposal processes which we introduced into the Group.
In the Card business it certainly was a year of consolidation with only a 2% increase in the number of revolving credit card customers. Cardholder spend was only up 6% with a slowdown clearly evident in the fourth quarter, and the book increased by 31% as the customers started to utilize previously unutilized balances made available to them. Our acquiring revenue grew by 9% and the card portfolios are positioned for appropriate and sensible growth in Botswana, Namibia, Lesotho and Swaziland in due course.
The impairment levels do reflect the tightening economic environment and are consistent with the stress testing conducted in the portfolio. And the ultimate credit loss ratio at 720 basis points well within the management target identified of 700 basis points to 900 basis points.
Our other lending book has grown in credit utilization, specifically in the demand portfolios. The book increased by 24% and the number of accounts, which was a focus of management effort during the course of the year, grew by 12% in line with our budgets. Our SMMEs are showing inevitable signs of stress, but the SMEs are proving to be more resilient and in line with the corporate sector at this time in the cycle. Again the credit provisions are in line with expectations.
Our transaction and investment product engine benefited from the endowment effect, and the continued focus on sales yielded the volume increases on which this big machine depends. The number of transactional accounts was up 9% and fees and commissions up 13%. Average current account balances grew by 22%, investment balances up by a healthy 32% and the widening deposit margins gave us a positive endowment effect. We also showed strong product sales in the lower end of our market, and our Mzansi account base is now in excess of 620,000.
On the distribution front the percentage increase, this is the actual number of transactions through the systems, our ATM transactions grew by 5%, our branch based transactions by 5%, the number of ATMs by 3% and our Internet user base by 23%. The zero move in the growth in the number of branches belies the fact that there was some reshuffling of the branch portfolio in South Africa where we closed 24 branches, or integrated 24 branches and opened another 21.
In the rest of Africa there has been a significant increase in volumes from our customers as we choose to grow the franchise with a healthy growth in ATMs, branches, the number of ATMs deployed and the Internet usage. And it really is the catalyst that comes in the PBB franchise as you would be reminded of five years ago, that before you can build the lending book you do need to get to grips with your customers in the context of taking their deposits, processing their transactions and understanding the market environment in which you operate. So this is a very healthy sign and sets a very healthy platform for the development of our African franchise.
On the bancassurance front, I omitted to say that the headline earnings contribution increased by 43% during the course of the year, and significant progress has been made in aligning our sales processes with the expertise within Liberty Life. Our cooperation levels outside of South Africa are now starting to gain traction. Liberty had their own set of challenges domestically from an operational point of view, but now that those tasks are complete they're in a position to partner us in identifying specific opportunities outside of South Africa. And the interaction has been both positive and stimulating from a staff point of view.
We are in the process of re-looking at the wealth model and it is in a fairly advanced design stage with Liberty Life where we can start to see how we can bring back our distribution capabilities with their known sales and product capabilities to forge a more robust model that we feel that we can then export.
SBFC, our in-house financial consultancy, was responsible for a 28% increase in risk premiums and investment capital which was channeled into the broader Standard Bank Group. And the number exceeded ZAR24 billion which is a record for us. Embedded product volumes increased by a further 21% which again reemphasizes the basis on which we've chosen to take our distribution capabilities and match that with Liberty's product expertise.
The outlook for Personal & Business Banking in South Africa, it would be naive not to suggest that the interest outlook will dampen demand and will have its impact on our credit loss ratios; we can see our growth rates start to moderate. We will continue to focus on risk management and collections, and we identified 18 months ago that this would be the next battleground for competition to show the expertise and the systems that are required to manage through these tricky times.
Not withstanding the difficult times ahead, sensible cost management goes without saying, but we will not compromise the process of investing in the business which we have built up over a number of years. And we believe that we are well positioned to serve the transactional customers of all the customer segments that we've embraced in our Bank.
The ongoing focus on regulatory compliance with its operational challenges remains uppermost in management's minds and we'll make sure that we deliver that cost effectively and at the desired level of performance.
In the Africa front we've now got an opportunity to start to focus on those countries that clearly have higher revenue potential pools. And with that, it goes without saying that we will leverage the acquisition in Nigeria provided we make sure that we understand the local market conditions and local customer requirements with the infrastructure and systems to back the rollout of that particular market.
We will choose, where appropriate, to replicate our service led strategies which proved to be successful over the last three years in South Africa with the obvious adjustment for local and cultural differences as appropriate. There's still room to go in improving customer service, and there's still room to go in fine-tuning the product offerings because, in some instances, we are in actual fact first-to-market providers in those countries without any reference points by which to judge ourselves.
We will leverage the newly launched products as we start to grow them responsibly and deepen the penetration into the customer segments of choice. And we will continue to expand our channel offerings, both our physical branch infrastructure and making our electronic transactional infrastructure more pervasive through the countries. The investment in the physical network comes with its challenges, but it certainly has a basket of opportunities on which we can capitalize.
In Argentina, the nine months produced attributable earnings in line with expectations of ZAR129 million. We have successfully integrated the people, the processes, and the systems into our Group culture psyche and risk management systems. We conducted a significant overnight rebranding exercise, which was completed on budget and on time, and it has achieved substantial awareness in the local market.
Anecdotally I received an e-mail from our New York office where one of the customers in Argentina actually asked the question in the branch to say, who owned Standard Bank Argentina before Standard Bank owned it? And I think to have overcome and established our brand presence there that quickly, it says that there was an enormous integrated effort that took place to settle the business down and actually get traction really quickly.
The service led sales strategies have been implemented in the Personal & Business Banking business in Argentina, and we have chosen to broaden our segment focus away from purely the high and middle class end of the customer spectrum.
The Corporate Banking team did a fantastic job in limiting any of the client run-off, and to the extent that they were possible to retain they did, with the inevitable benefit from the funding side of the balance sheet that we were able to limit -- in actual fact we grew deposits post the name change.
The newly established Investment Banking team, which was deployed into Argentina in the latter half of 2007, is starting to find traction. And with the substantial coverage that was already established in Argentina, where we bank 400 of the top 500 corporates, the opportunity to leverage the skills in London into Argentina are both clearly evident and extremely exciting.
On the contribution front, in line with our plan of two years ago -- sorry, 18 months ago, we expect Argentina to contribute $40 million in headline earnings during 2008, of which three quarters will accrue to Standard Bank.
With that, over to Ben.
BEN KRUGER, CORPORATE & INVESTMENT BANKING, STANDARD BANK GROUP LIMITED: Good morning. 2007 clearly was a significantly eventful year for corporate investment banks globally, and I don't think any bank is an exception to that. It's pleasing, therefore, to announce further progress on our strategy that we adopted a number of years ago. And at a very high level we are trying to balance our growth opportunities in the medium to long-term while, at the same time, trying to ensure that we derive the maximum return for shareholders in all of our businesses.
When we talk about some of our more established businesses, we have had a particularly good performance in our South African business under the good leadership of David Munro. And what's made that more remarkable is that we have had a particularly strong second half in 2007, given quite strong turmoil in the market here domestically. The domestic business, as you can see from your booklet, grew headline earnings by 22%.
Our business in Africa, under the leadership of Craig Bond and Chris Newson has made further great strides in developing capital markets and corporate investment banking activities on the continent, and we have managed to increase our headline earnings by more than 50% in that business.
The area that has attracted a lot of attention in the last three years, both from management, shareholders, and analysts alike is our operations outside of the African continent. And Rob Leith and David Duffy have made great progress in that business over a number of years. And we are pleased to announce a 96% increase in headline earnings in that business.
Apart from the earnings in these businesses, more importantly for us is the milestones achieved in growing out these businesses. We felt shareholders will be able to judge our progress made in terms of the revenue that we produced as a first milestone in all of these businesses. Secondly, the rate at which we scale our operations in the various countries of operation would be a further milestone. And thirdly, our rate of growth with some of key customers, focusing on fewer customers, and doing more with fewer customers has achieved great traction.
All of our regions have grown their revenues, all of the regions have grown their production penetration. And when you look at our cross-sell and leverage ability between our customers, we now have well in excess of 100 customers in our international businesses that have each contributed more than $1 million of profit in the last year of operation.
We've also started to expand our operations in country like Turkey, Nigeria, Argentina, and further scaling ventures like Russia and so forth. And we've made very good progress on integrating these activities into the mainstream activities of the Bank.
In a year like this, it's a relief that we've had no direct subprime exposure, but we are fundamentally intertwined in the financial markets globally and we've had some secondary effects with some hedge funds, which I'll elaborate on somewhat later.
It's been a year of intense focus on risk and capital management. Simon has highlighted our changed capital position with the implementation of Basel II, and, for us, that is a key focus in all of our businesses right now. We've made great progress in implementing Basel II and, for us, it wasn't just a question of trying to get across the regulatory hurdle of implementing that. We've worked very hard through all of our business activities to truly embed the concepts of the economic capital, and all the new concepts that we require in this business that's the Standard way of doing business going forward, so that we don't have to go back and retrain staff or change any of our progresses. I think that has had quite a few positive spin-offs for the business as a whole.
Our headline earnings increased by 34% to ZAR6.7 billion, our credit loss ratio remains fairly benign. And whilst we're investing significantly in the future growth of our business, we have managed to retain a return on equity of 27%, with a fairly tight cost-to-income ratio of 52%.
When you look at our abridged income statement you see really good revenue growth in all of our major activities. Our net interest income grew by 33%, and that's on the back of robust growth, particularly in the Corporate sector. Our net fee and commission revenue increased by 40%, and you'll see later we've made great strides in increasing our Investment Banking and Advisory franchise. Our trading performance has been a star division for us in the year that's been, and our other revenue, as I'll elaborate later on, somewhat flat as a result of very high property-related earnings in the prior year.
At a total income level, we grew income by 37% or, in rand terms, an amount of ZAR5.3 billion which, when you compare that to some of our peer group, it is a significant amount of growth in revenue to get to a total of almost ZAR20 billion of revenue in this business now. Our operating expenses has grown significantly at 37%, and requires some further elaboration.
Our staff costs increased by 42% year-on-year. When you look at our headcount growth, our headcount increased by 23%. Some of that is affected as a result of the acquisitions we've made in Nigeria, Argentina, and Turkey, but stripping out the acquisitions, our headcount growth is still up 11%, which reflects a further investment in our organic growth initiatives right across the globe in the businesses as well as in our risk and infrastructure disciplines supporting the businesses.
We have also realigned all of our incentive structures, and have made them more in line with what international peer groups would do. And our incentive structures have become a far greater component of remuneration in the business, which we think is a very important concept for us to [get a bit down].
When you look at some of the things happening in the market, there is no justification for not investing significant amounts in IT and making sure that you have the best possible IT and trading infrastructure and risk management infrastructure in place. And our other expenses reflect a healthy investment that we've made in both IT risk and support infrastructure in the Group in the last year.
The implementation in the move to Basel II has clearly affected our cost base as well, and we have to spend a huge amount of money in trying to get to the level where we would like to be in due course.
When you look at the distribution of our income, you'll see that we've maintained a fairly static pattern over the years. Profit from funds which really reflect the corporate component in our business are 34% of our earnings. Our trading income this year, clearly a far greater contribution at 38%, and then our fee and commission income 28%. But over a seven year timeframe, clearly a static position.
We run the Bank on three broad groupings. Banking and Trade Finance growing revenue by 27%, and headline earnings by 31%; a very strong performance there. Investment Banking growing revenues by 26%, and headline earnings by 6%, which I'll elaborate on a little bit later. And then an incredibly strong growth in our Global Markets business, growing revenue by 54% to ZAR8.5 billion, and headline earnings to ZAR2.5 billion for the year.
Our Banking & Trade Finance business has seen a particularly good growth in lending, both in term lending and commercial property finance. And with the advent of interest rate increases, we've had a positive impact as a result of the endowment effect on those balances as well.
Our cash management and overnight deposits as a result of electronic banking and transactional banking services has been a strong contributor to our profit this year, particularly given the increase in interest rates. And as I said earlier, a very clean credit portfolio. We also, for the first time, include revenues from our new businesses in Argentina and Nigeria, and I think in future years this will become a key component for us going forward.
On the domestic electronic banking arena, we found ourselves in a particularly tight price spot from our competitors. And all of our growth in this area is really a reflection of the volume growth that we've seen in the year that's passed, with very little by way of price increases.