Good morning, everyone. On behalf of the Standard Bank Group Leadership team, I welcome you all, both physically and digitally. A special welcome to our Chairman, Nku. I see next to her is our former Chairman, the inimitable Mr. Thulani Gcabashe. Welcome, sir. I thank you all for being with us. It's great to see you all. 2022 was a remarkable year for the global banking industry. Following a decade of sluggish profitability, increased market volatility, and higher interest rates, all of these resulted in stronger profits for the banks. Indeed, global banking profits saw a 14-year high in 2022. However, despite increased profitability, improvements in return on equity have been relatively muted. Only about half of global banks delivered returns above the cost of equity in 2022. In 2022, our headline earnings increased by 37% to ZAR 34 billion.
This outcome was underpinned by continued balance sheet and franchise growth, another strong trading performance, and well-managed costs and risk. We also made good strategic progress in key areas, with excellent performance in all our businesses and in all our geographies. Our return on equity improved substantially from 13.5- 16.4%, well above our cost of equity. Taking into account our robust capital levels, we declared a final dividend of ZAR 6.91. This equates to a 60% payout ratio for the second half of the year, which is at the top end of our guidance range. Our strong performance is especially noteworthy given the volatile and complex operating environment. Our organization has proven to be remarkably resilient, and not merely resilient, able to thrive in challenging circumstances. The global operating environment saw five major shocks which happened simultaneously.
First, macroeconomic and geopolitical shocks, with soaring inflation as a consequence. Second, an asset value shock, with steep declines in valuation of growth companies and also many property markets around the world, including China. Third, an energy and food shock, mostly related to the war in the Ukraine. Fourth, a supply chain shock, which started during the first pandemic lockdowns and has continued as a result of geopolitical tension. Fifth and last, a talent shock, often labeled as the Great Attrition, as the nature of work tries to find a new equilibrium. In sub-Saharan Africa too, inflationary pressures mounted and interest rates increased. Most countries experienced currency weaknesses relative to the U.S. dollar. Discussions with the IMF around sovereign debt support programs continued in various countries. In November 2022, Ghana announced its intention to restructure its debt.
Sub-Saharan Africa GDP is expected to have grown at around 3.8% in 2022, ahead of global growth of 3.4%. While high commodity prices and strong terms of trade provided some protection in the six months to 30 June 2022, this faded quickly in the second half of the year. The South African economy and South Africa's people were battered by severe flooding in KwaZulu-Natal by a drastic escalation in the frequency and severity of load shedding in the fourth quarter, and the cumulative effects of decades of underinvestment in South Africa's road, rail, and port infrastructure. After a sharp dip in the fourth quarter, the South African economy grew by 2%. I wish it had been 12. By 2% in 2022.
Rapid inflation was an additional source of stress, and the repo rate increases necessary to combat it were an additional source of stress for most people and businesses. The repo rate rose 325 basis points in 2022, both faster and higher than expected. Consumer balance sheets remain relatively robust, but by year-end, signs of stress had started to emerge. Having said all this, we are also encouraged by the structural reforms made over the past year, reforms that have been bolder and more sweeping than is sometimes noticed. One case in point is Transnet's decision to concession the Johannesburg to Durban freight line. Another is the Treasury's requirement that Eskom concessions many of its power stations. We hope that reform will continue to accelerate, particularly in the electricity and transport industries, and to strengthen the stability and capacity of local authorities.
We also trust that government will continue to make economically rational policy choices in both domestic matters and international relations, especially considering that we are in competition for capital with other nations. As has been widely reported, South Africa was grey-listed by the Financial Action Task Force in February 2023. This is obviously regrettable and is negative for investor perceptions. It seems as if the grey listing has already been substantially priced into South African assets. FATF has emphasized that South Africa's major banks have excellent controls. Standard Bank, and indeed our peers, have worked very closely with the National Treasury and the South African Reserve Bank to ensure that key stakeholders, including correspondent banks, remain comfortable in continuing to engage and transact with us. Our international partners continue to have a high level of trust in the effectiveness of our money laundering and terrorist financing control frameworks.
While South Africa did not avert the listing, a lot of progress has been made in recent months, including the coming into effect of the General Laws Amendment Act, the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Act. This should augur well for a relatively short grey listing period. FATF has asked South Africa to focus on 8 priority actions over the next three years. In essence, these require the South African authorities to demonstrate that they are more frequently and systematically reporting, investigating, and prosecuting financial crimes. The amount of time that South Africa will spend on the grey list depends to a very large extent on how well coordinated and energetic these efforts are.
One recent positive development in this regard is the signing of an MoU between the Hawks and the South African Revenue Service to share information more systematically and to work much more closely together. The National Treasury points out that FATF generally expects deficiencies to have been addressed within three years, and indeed, Botswana and Zimbabwe were removed from the gray list after 3 years. Faster progress is possible. For example, Mauritius was removed from the list within 18 months. By all accounts, Mauritius' unusually short time on the gray list was thanks to a great deal of tightly coordinated effort led from the top, Mauritius is, of course, a smaller economy than South Africa. We would, of course, be delighted if South Africa were able to move this fast, a longer period may well be on the cards.
Most people here and on the call are likely to be familiar with this slide, which was introduced at our strategic update event in August 2021. It summarizes our purpose, our strategic priorities, and our key group targets for 2025. Despite the complex environment that I referred to, we made good progress during the year towards meeting all these targets by 2025. Despite the complex operating environment, we successfully defended and grew our core client franchise by improving our service. We've also made good progress in executing our ecosystem and platform strategy. We have over 40 solutions up and running today. These include LookSee, a holistic home management offering, TradeR, which assists SMEs with both working capital and logistics, and OneHub, which provides a comprehensive set of solutions to our corporate clients. Our franchise momentum continued in 2022. We were pleased to have more clients doing more with us.
Starting on the left, our Consumer high-net worth active client base grew by 8% to 16.9 million clients, with the South African client base up 6% and Africa regions up 12%. We're encouraged by the 16% growth in private banking clients and 13% growth in youth clients. We now have 1 million active youth clients. We continue to enhance our digital capabilities and to encourage digital adoption, growing our digitally active client base by 12%. Our Digital transaction volumes increased by 25%. Instant Money, our Digital Wallet, achieved a 22% increase in turnover to more than ZAR 32 billion as we expanded our range of Instant Money partners. Our BCC client base grew by 4% to 791,000 clients whole.
The number of clients using our Digital platforms continued to increase. With more than half of our clients now using our Digital channels. This resulted in an increase in digital transactional volumes of 5%. Card acquiring turnover grew by 20% to over ZAR 300 billion. CIB recorded strong revenue growth, 23% higher than the prior year. We expanded our sustainable finance offering, delivering a number of industry firsts. We successfully mobilized ZAR 55 billion for clients across a number of sectors and countries. All three of CIB's businesses delivered double-digit revenue growth, with a particularly strong performance from TPS, whose revenue grew by 34%. Liberty sales increased. Long-term index new business rose 7% to more than ZAR 9.8 billion. New business value was up by more than 100% to ZAR 390 million.
Normalized operating earnings grew by 17% to over ZAR 1.5 billion. Liberty had 3.9 million policyholders. Our performance was supported by strong revenue growth, which grew by 18% year-on-year. Within this, net interest income increased by 24% thanks to good balance sheet growth and significantly higher interest rates. Secondly, non-interest income was 11% higher thanks to a larger client base and increased client activity. Revenue growth was well ahead of cost growth, which created strong positive operating leverage. Pre-provision operating profit grew by 26% from the previous year. On the left, we show the trend in our costs over the last 6 years to the end of 2022. Total operating expenses grew by 5% on average.
Within this, IT costs grew by 11% in line with our plan. Investment in IT was funded by savings in other areas. On the right, the graph shows our average cost growth relative to our peers over the last five years. Our average cost growth absorbed high inflation in our Africa regions countries. Our cost growth over this time is lower than that of our peers, aided by deliberate savings in other operating expenses. As this slide demonstrates, the pandemic disrupted our progress towards consistently generating positive jaws. It temporarily worsened our cost-to-income ratio. Since the end of the pandemic, progress towards our 2025 cost goals has resumed. We remain focused on managing our costs diligently and responsibly as we are acutely aware that operational leverage is the single most important driver of return on equity.
In 2022, thanks to strong positive jaws, our cost-to-income ratio declined by 290 basis points to 54.9%. This puts us well on our way to meeting our 2025 cost target of generating a cost-to-income ratio approaching 50%. I'll return to this point a little bit later. This slide shows the group's 11-year earnings trend and highlights how the diversity and strength of the group has delivered growth. Starting with South Africa. This is the largest part of our group and is, of course, extremely important in providing the capital that we use for growth and expansion. Our South African business has been very resilient in a slow-growing economy, especially during the difficult pandemic years.
We retain our leading positions in many markets, including home loans and corporate deposits, and our South African balance sheet is by far the largest amongst our peers. Our South African regions business is a portfolio of 19 countries with great strength and diversity. It has a demonstrated capacity for rapid and sustained growth, having grown on average by 18% over the last 11 years. Our Africa Regions portfolio is our most distinctive and hard-to-replicate competitive advantage and source of strategic differentiation. It is the core of our investment case. As long-term investors will know, we've been building this portfolio up since the 1980s, and it is now a very strong set of businesses. This year, despite a significant disruption in one part of the portfolio, Ghana's restructuring, Africa Regions still produce a very strong result, up 36% compared to the prior year.
As I mentioned, in 2022, our return on equity rose above our cost of equity again for the first time since the pandemic, meaning that we are generating positive value for our shareholders once again. The good growth in earnings and our strong capital position supported growth in our total dividend of 38% with an overall payout ratio of 58%, very close to the upper end of our target payout ratio. The total dividend per share in 2022 of ZAR 12.06 equates to a total amount of ZAR 20 billion paid to our shareholders from our earnings of ZAR 34 billion. We strive to deliver sustainable growth and shared value in the communities and societies in which we operate, mostly in the ordinary course of our business.
For instance, we employ 50,000 people full-time, which means that we support another 150,000 people in jobs at the financial sector multiplier of three. We paid ZAR 15.5 billion in tax to governments of the countries where we work. We provided nearly ZAR 5 billion worth of new home loans to over 8,000 affordable housing mortgage clients in South Africa. However, we probably have the largest positive impact in supporting the construction of Africa's hard and soft infrastructure. On the hard infrastructure side of things, we support investment in rail, ports, dams, and in power generation and distribution. On the equally important soft infrastructure side of things, we support and facilitate investment in health and education. For example, in our partnership with the government of Kenya and General Electric to provide access to advanced diagnostics.
These kinds of investments have high desirable properties. They increase Africa's potential and actual growth rates. They reduce risk and lower the cost of capital throughout the economy. They support increases in consumer demand. They simultaneously make Africa a better place and improve the profitability and sustainability of our business. One particularly important subset of this kind of investment is investment in energy infrastructure, which is what we are focusing on today. One of the greatest impediments to growth in Africa is the energy shortage. 600 million people in Africa do not have access to reliable electricity. Working with governments and our clients, we need to find ways to lift this constraint. Accordingly, we support the principle of a just energy transition for Africa. Massive investment is required. New energy solutions require inputs from a variety of client sectors and industries, all of whom we bank today.
As the largest financial institution on the continent, we're very well-placed to source, to fund, and to structure these solutions. We aspire to be the market leader in sustainable finance in Africa. Importantly, this extends to funding both green and social projects. In 2022, we published our climate policy, setting out our path to a net- zero portfolio by 2050, with subsector-based targets. To be clear, this policy enables us to invest in transitional projects where these are part of a credible path towards net- zero. In our view, refusal to support transitional projects would amount to denying Africa's right to sustainable development. Over the past several centuries, Africa has borne very considerable economic and human costs for other regions. A total or immediate ban on further transitional projects in Africa in order to help reduce environmental pressure in much richer nations would be a cost too far.
In terms of our climate policy, we are committed to mobilizing more than ZAR 250 billion of sustainable finance solutions by 2026. In 2022, we made good progress on a number of fronts. Most importantly, we mobilized ZAR 55 billion in sustainable finance, 2.5x more than in 2021. With that, I'll hand you over to Arno to take you through the details of the results. Thank you for now.
Thank you, Sim. I'm now gonna take you through the group's results for the year ended 31st of December, 2022, starting on Slide 16. The Standard Bank Group delivered a strong financial performance across all key metrics. The Group recorded continued positive momentum and client franchise growth across all our businesses and geographies. Revenue growth was well ahead of cost growth, which supported strong positive operating leverage, 26% growth in pre-provision operating profit, and a decline in the cost-to-income ratio to 54.9%. Group head on earnings of ZAR 34.2 billion was generated, and that is 37% higher than the prior period. The growth was supported by a credit loss ratio of 75 basis points, slightly higher than the prior year.
Our Board has approved a total dividend for the year of ZAR 12.06, and that is 38% higher than in 2021. Our most important metric, return on equity, improved to 16.4% from 13.5%. On Slide 17, we show the group's income statement. Very strong net interest income growth of 24% and good non-interest revenue growth resulted in total income of ZAR 133 billion, up 18%. Expenses grew to ZAR 73 billion, up 12%, which allows for the strong pre-provision operating profit referred to in the previous slide. Credit charges of ZAR 12 billion were up 22%. Standard Bank activities generated headline earnings of ZAR 30.5 billion, and once we include Liberty and ICBCS, the group headline earnings for the year amounted to ZAR 34.2 billion, as referred to earlier.
Slide 18 illustrates the largest contributors to the group's growth in earnings. The most notable movement in this waterfall chart is the very strong NII growth. Together with NRR growth, total income growth was up an excellent 18%. This robust revenue growth more than absorbed higher costs and normalizing credit charges. The excellent turnaround from Liberty and good results from ICBCS are evident here too. Slide 19 looks at trends in loan growth over the last three years. In 2022, gross loans to clients grew by 9%. In Home Services, disbursements were up 12%, lower than last year, but still well ahead of pre-pandemic levels. We still added ZAR 71 billion of new home loans onto our balance sheet, which then translated into a 6% book growth.
Commercial VAF was strong, with disbursements up 11% to ZAR 19 billion, and retail VAF disbursements were flat at ZAR 25 billion. This resulted in 8% loan growth overall in Vehicle and Asset Finance. Business and Corporate lending growth was strong, reflecting improved underlying activity levels after a difficult year in 2021. In Investments Banking, both deal origination and disbursements picked up meaningfully in the second half of 2022. You can also see here from a geographic perspective, loan growth in Africa regions at 14% outpaced growth in South Africa. Deposit growth momentum has been good over the last three years, and in 2022, deposits grew by 6%. Good growth in current account deposits of 8% was achieved.
Over the last year, focus was placed on raising longer-term deposits and NCD issuance was resumed in the local market to support asset growth. Deposits placed with our offshore operations in the Isle of Man and Jersey grew to GBP 6.7 billion as at the 31st of December. The group's commitment to continue to support our clients through the cycle is evident on Slide 21. Over a five-year period, average interest earning assets have grown by a steady 7% and liabilities by 9%. In the current reporting period, the group's average balance sheet expanded further, with average interest earning assets growing by 11% and interest bearing liabilities growing by 9%. Strong average balance sheet growth shown on the previous slide and wider margins supported net interest income growth of 24% to ZAR 77 billion.
Here you can see margins widened by 45 basis points to 427 basis points, of which 34 basis points relate to positive endowment. The negative impact of tighter pricing was more than offset by mixed benefits of higher margin Africa regions balances growing faster than South Africa balances. Fee and Commission revenue grew by 7% and was driven by good momentum in our client franchises. In Consumer and High Net Worth, as Sim referred to earlier, our active client base grew to 16.9 million customers, and in Business and Commercial to 791,000 clients. Our improved digital capabilities drove high adoption and hence strong growth in volumes. Customer transactions on digital platforms grew by 14% in South Africa in Consumer and high net worth, and by 37% in Africa regions.
Transactions processed on our point of sale terminals grew by 17% in South Africa and up by a high 35% in Africa regions. These volumes helped drive growth in revenues from electronic banking up 12% and card up 17%. Trading revenue grew by 15% off an already high base in 2021 to ZAR 17 billion. Our Global Markets business remains uniquely positioned to provide flow and structured solutions across the continent. Our client base and source of income remain diverse, and market conditions in 2022 contributed to increased client demand for currency as well as commodity hedging. On Slide 25, we now turn to credit provisions and start by looking at our balance sheet positions at year-end. Year-end balances, as you can see here, grew by 6%, and Stage 3 loans continue to make up 5% of the book.
In the graph shown in the center of this slide, you can see balance sheet provisions for credit, which grew faster than the book to ZAR 56 billion. Stage 3 provisions of ZAR 39 billion are held against the Stage 3 book of ZAR 77 billion, This provides a Stage 3 cover ratio of 50%. Over a longer time series, it is evident that our stock of balance sheet provisions is high and coverage remains strong. We are well-positioned to weather the impacts of high inflation and interest rates and also sovereign vulnerabilities. In relation to the group's exposures to the Ghanaian sovereign debt impacted by the proposed sovereign debt restructure. The group's exposure, net of settlements year to date, equates to ZAR 2.6 billion.
Balance sheet credit provisions held at year-end equated to ZAR 1.4 billion, and combined with fair value adjustments, carrying values of sovereign debt have been adjusted by ZAR 1.5 billion, and this equates to a 56% coverage ratio. The cre dit impairment charge in the income statement increased by 22% to ZAR 12.1 billion. The increase in the charge was driven by balance sheet growth, increased impairments in Africa regions, particularly in Ghana, as I mentioned, where flows into non-performing loans increased and sovereign exposures were revalued. On Slide 28, we can see the group credit impairment charge of ZAR 12 billion split by Client segment. In Consumer and High Net Worth and Business and Commercial clients, charges were fairly similar to the prior year as improved collection processes were successfully implemented and legacy payment holiday portfolios improved.
A reversal in CIB from a release in the prior year to a charge of ZAR 2.5 billion in the current year drove the group's increased charge. Increased charges in CIB were driven by single name defaults in Kenya and in the consumer sector in South Africa, increased charges on corporate lending in Ghana, given stress in that market, and write-downs on Ghanaian foreign currency and local currency sovereign debt. CIB's credit loss ratio to customers of 37 basis points remains below the CIB target range. In 2022, we released a centrally held COVID-19 provision amounting to ZAR 500 million. Operating expenses increased by 12% below the group's weighted average cost of inflation or weighted average rate of inflation, rather, of 14.7%. Staff costs were 12% higher, driven by higher inflation and higher incentive accruals aligned to the improved performance.
Other costs were impacted by inflation, higher marketing spend to support customer campaigns, and an insurance recovery in the prior year of 2021. IT costs are discussed on the next slide. In South Africa, where inflation was 7%, cost growth was 8%. In Africa regions, where inflation on average was 30%, cost growth was 21%. This slide shows total IT spend and illustrates our support for strategically important digital initiatives. IT costs increased by 13%, largely due to higher spend on cloud and cloud-related software licenses. IT staff costs were up 8%, depreciation up 3%, and amortization down 4%, resulting in the overall growth of 8% for the IT function spend across the group. The IT function's focus on resilience and stability is bearing fruit, and we had no major outages in the second half of 2022.
We also continue to simplify our IT landscape and continue to decommission legacy systems. Moving to capital and liquidity on Slide 31. Capital optimization remains top of mind, and we are focused on ensuring available capital is either put to work or returned to shareholders. The group's Common Equity Tier 1 ratio declined to 13.5%, but remains well above minimum requirements. The group's Basel III liquidity coverage ratio, as well as the net stable funding ratio, are well above regulatory requirements. On Slide 33, we have represented Standard Bank activities in three ways, and these are earnings views. The first is by Client segment based on client types. The middle chart shows our product or Client Solution view of earnings. The third chart on the right is our regional split, where we have used legal entities as a proxy for regions.
In this period, Africa region's contributions to group headline earnings was 36%. Clearly, this chart demonstrates the diversity and breadth of our client franchise across Client segment, Solution, and Geography. This waterfall chart clearly illustrates the positive contributions from all our business units to the group's earnings growth. Consumer and High Net Worth delivered headline earnings of ZAR 8.9 billion, up 27%, and a return on equity increase to 17.3%. Consumer and High Net Worth strong performance was largely driven by continued momentum in our client franchise, demonstrated by good growth in account transaction fees, card-based commissions, and electronic banking fees. Business and Commercial Clients delivered headline earnings of ZAR 8 billion, an increase of 51% and a return of equity at nearly 34%.
The net interest income growth was very strong, driven by double-digit balance sheet growth and positive endowment impact from higher interest rates. CIB headline earnings increased by 11% to ZAR 14.8 billion and an ROE over 19%. Revenue grew by double digits across all three CIB business segments and across all Client sectors. Liberty's operational performance improved to deliver a strong turnaround from a loss in the prior period to ZAR 1.8 billion of earnings in the year. The new business value, which represents estimated profitability on new contracts, reflected a very strong recovery. The Liberty minority buyout was successfully completed in February 2022, and the process of integrating Liberty into the group is well underway. ICBCS continued to benefit from closer integration into ICBC. Our 40% stake in ICBCS contributed ZAR 1.9 billion of group earnings.
That is ZAR 1.4 billion higher than the prior year. ZAR 1.2 billion thereof related to an insurance settlement, as you may know, and ZAR 700 million thereof related to the improved ICBCS operational performance. Our South African mostly Banking business, SBSA, delivered headline earnings growth of 26% and our ROE improving to 15.2%. Revenues grew on the back of balance sheet growth, margin expansion linked to higher interest rates, and good momentum and activity growth in our Client franchise. Credit charges increased by 10% reflective of book growth and a difficult economic environment in South Africa. Costs were well managed to deliver positive jaws of 427 basis points. Our Africa Regions franchise delivered a robust performance. Headline earnings grew by 36% and ROE improved to 21%.
Revenues grew by 30% driven by larger balance sheet, higher interest rates, higher transactional volumes, a recovery in international trade, and strong growth in trading revenue. The business more than absorbed an elevated growth rate in costs to deliver positive jaws of 9%. As Sim mentioned earlier, our Africa Region portfolio spans 19 countries, and its strength is in its diversity and growth profile. In these graphs, we show the headline earnings contributions from Africa regions. The diverse portfolio has delivered an impressive 18% compound annual growth rate in rands over the period. On the left side, we have shown our summarized regional split to which you have become accustomed to. Illustrating a 16% CAGR for South and Central, 17% in East Africa, and 29% in West Africa.
On the right-hand side, we have included a split of our top eight countries and their respective CAGRs are shown here. Given that some of our listed subsidiaries have not yet released their results, we have not shown the split by country in 2022 here. The portfolio recorded a strong rebound in 2022 off a softer base in 2021. In 2023, global growth is expected to slow and inflation is expected to start declining. This may pro vide an opportunity for monetary policy easing in certain markets. The International Monetary Fund is forecasting global real GDP growth of 2.9% for 2023, accelerating slightly to 3.1% in 2024. China's reopening post the lifting of COVID restrictions should provide some support.
The IMF expects Sub-Saharan Africa to grow at 3.8% and 4.1% in 2023 and 2024 respectively. High sovereign debt levels in certain African countries remain a concern, particularly in Ghana, Kenya, Malawi, and Nigeria. In South Africa, monetary tightening is expected to slow. We are anticipating an additional 25 basis points rate hike in interest rates in the first half of this year, and this is in addition to the 25 basis points we've already had in January this year. Thereafter, we expect to pause in interest rate tightening. Inflation in South Africa is expected to moderate to 5.9% in the year ahead. The economy is expected to grow at 1.2%, held back by severe electricity shortages and structural constraints.
As a group, we have both capital and appetite to support our clients' growth. Our balance sheet growth, however, will remain subject to the economic growth, policy, and enabling frameworks in the country in which we operate. In turn, our clients' confidence to invest. In South Africa, meaningful structural reform and an improvement in electricity supply could lift confidence and accelerate economic growth, job creation, and social upliftment. We stand ready to support, amongst others, renewable energy and infrastructure projects. Over the medium- term, we expect our ROE to progress into the target range using the following levers. The first lever is revenue growth from traditional banking in South Africa. Of course, somewhat constrained by the growth in the country. Supplemented by foster growth in foster growing markets, particularly where we have opportunities to gain market share.
Good growth in insurance and asset management will also drive revenue growth. New revenues from platforms and partnerships, which Sim has already referred to. The second lever is operational efficiencies, which we will be extracting by growing costs slower than revenue. By growing business as usual costs lower than inflation, we allow for investments in carefully prioritized and chosen areas. The third lever is capital optimization, where we are focusing on creating an ideal optimized capital structure, which allows for high quality business growth as well as strong dividend payouts. For 2023, we expect NII growth to be in the low teens, supported by balance sheet growth, particularly from renewables and infrastructure and higher interest rates. We expect NRR growth likely to moderate to mid-single- digits. Trading revenue growth, of course, will be subject to client activity and related flows.
We remain committed to delivering below inflation cost growth and positive jaws. The group's credit loss ratio is expected to increase to above the midpoint of the group's through the cycle target range of 70-- 100 basis points. The group's 2023 return on equity is expected to improve from the current 16.4%. Progression into the target range will continue, driven by growth in our mainstay South African Banking businesses and supplemented by deliberate allocation of capital to high growth markets. The dividend payout ratio is likely to remain in the target band of 45%-60%. We strive to deliver increasingly attractive returns to our shareholders and continued net positive impact in the economies and societies in which we operate. That brings the results analysis to a conclusion. Thank you for your attention. I will now hand over to Sim to conclude.
Thank you, Arno. We're very pleased to be able to report that we've delivered what we said we would in 2022. We said that we would deliver the following, which we did. First, we made good strategic and financial progress. Second, we've made good progress towards optimizing our capital, and we are well on our way to achieving our 2025 targets. Our four focus areas for 2023 are the following: First, sharpen our competitiveness and continue to meet our clients' needs better. We will focus intensely on growing our market shares and revenues in each of our business units. Second, maintain and extend our partnership, our leadership in African sustainable finance, particularly in renewables in South Africa. Third, diligently work towards delivering on our 2025 commitments. Fourth, continue to optimize our capital structure and to rebalance our portfolio to achieve a higher ROE.
Here is a reminder of our 2025 targets. In order to achieve these, all our businesses have robust plans to defend, grow, and optimize their business. We are constantly working on simplifying our organization in order to maximize the time we spend on meeting our clients' needs. We will constantly strive to become truly human and truly digital. Making progress in areas like artificial intelligence and analytics, but also ensuring that we serve our clients with human empathy and personal advice. As I emphasized earlier, our large, diverse, and robust African franchise is unique and is our most distinctive competitive differentiator. We are the obvious financial services partner for any business or investor with African ambitions. We are now well on our way to delivering our 2025 targets. The graphs on this slide use a straight line to illustrate the group's trajectory towards achieving these targets.
Although of course, the real world is never linear. The actual outcome will, of course, depend on environmental and competitive forces, but these straight lines give a reasonable sense of where we are heading. Our target is to grow our revenues on average by between 7% and 9% from 2020- 2025. So far, over the last 2 years, we've grown our revenues on average by 11% as a result of growing our Client franchise with a diligent and focused focus on meeting the needs of our clients. We have made excellent progress in reducing our cost-to-income ratio, both by strongly growing our revenues and by judiciously focusing on our cost growth. This has resulted in a cost-to-income ratio improving to 54.9% in 2022.
We are confident that we will achieve a cost-to-income ratio approaching 50% by 2025. By growing our revenues and generating operational efficiency and by optimizing our capital, we have made progress in lifting our ROE towards the target of between 17% and 20% by 2025. We are close to the top end of our dividend payout ratio band, paying a remarkable dividend of ZAR 20 billion. Finally, we are making good progress in mobilizing finance for sustainable development. Recently, the group was ranked as the most valuable banking brand in Africa by Brand Finance. Our brand value increased by 10%, over 10%, in fact, to $1.74 billion. This award was as a result of my colleagues' sterling efforts throughout the year, and I'd like to thank them, all 50,000 of them, for the excellent work they have done.
I very much admire their courage, energy, expertise, courage, fortitude, and I'm often in awe of their commitment to serving our clients to the very best of our ability. I must also express our sincere gratitude to our policymakers and regulators for the world-class regulatory environments that they create for us and for our sector. Finally, our deepest gratitude to our clients, most importantly, in fact, our clients and our shareholders for your support and confidence in us. Thank you all. That concludes the presentation. At this point, I'd like to ask my colleagues, Funeka Montjane, Kenny Fihla, Arno Daehnke, Bill Blackie, and Margaret Nienaber to come and join me to field some questions. We'll start, of course, with people here at the leadership center. Then we'll go to the conference call, finally, we'll go to the BlueJeans webcast.
I have to mention this. This is an unruly group of colleagues. They're not sitting in the order they were meant to sit. Anyway, such is life. This is how we roll. Anyway, can we start here at the GOC? We can start at the back. I can't see 'cause the light is bright, if you could please mention your name, and you can use the microphone on the, on the desk. Thank you. To the back there.
There we go. Morning, Sim. It's James Starke from RMB Morgan Stanley.
Hi, James.
Thanks for the opportunity. Well done on the results. Two questions from my side. Firstly, if you could expand on your NII guidance, low teens. In particular, if you could just unpack the subcomponents around NIM, how you expect that to evolve, particularly on the funding side. The second question relates to a comment you made about rebalancing the ROE. What activities are you looking to upweight or downweight in the mix to achieve that rebalancing? Thank you.
Great. Arno, you take both.
Yeah, sure. We expect continuous strong NII growth, as mentioned. On NIM, another 20- 30 basis points of margining widening. Margin widening, as you have seen on the latest margin of 4.27 basis points. Of course, supplemented by continued good balance sheet growth in BCC, in CIB certainly as well, but also in the Consumer space. On the ROE drivers, you know, it really is across the entire spectrum of drivers, which will continue to improve the ROE. We do see an uplift, continued uplift in the consumer and high-net-worth Client segment. We continue to see a continued uplift in the Liberty business as well as driving higher ROE. As Africa Regions continues with its strong momentum, that will also be improving the ROE. All these parameters will come through in the near term.
Thanks. That must be Mr. Goemans. Clem?
Morning, Sim and fellow Standard Bankers. Firstly, congratulations on the great results and the comprehensive presentation. Long may the 2022 trend continue. Thank you also for this opportunity to address you on what I believe is a unique occasion. Financial year 2022 is the thirtieth year that the group has owned the 7 Grindlays banks, which you've now grown to 2022, which has become the foundation of the biggest part of the group. I think it's fitting that we should remember and celebrate this occasion and pay tribute to the foresight and vision of the Standard Bank Group, then named Stanbic, their leaders who saw and identified this one-time opportunity to expand the group into Africa. One thinks of Konrad Strauss, the Board, Eddie Theron, Mike Vosloo, Graham Bell, and Peter Prinsloo and his SBM London team.
Some of the aforementioned are no longer with us in more than one meaning. SBG London, to my knowledge, particularly Peter Prinsloo and Rob Leith, negotiated hard and long with ANZ and eventually got to the price to the bank's acceptable level. Mention must also be made of the late Eric Molobi and the other African directors on the board who, through their Africa-wide networks, facilitated the due diligence visits. Only yesterday, while preparing these notes, I came across the late Graham Bell's letter dated November 1992, in which he advised me of the final consummation of the ANZ deal and expressed the hope that, quote, "The culmination of this deal will bring with it in the future the satisfaction to you that the sacrifice and discomfort was worthwhile." Thank you, Graham, for those kind words. May you rest in peace.
I fully shared your hope then and still now. The due diligence process and subsequent acquisition was one of the highlights in my career in the bank. If I may, I'd like to now move to a question that Arno knows well about preference shares. Uncharacteristically, the bank has allowed other banks to lead it in the repurchase of the preference shares. Nedbank, Investec, FirstRand. Investec and FirstRand repurchased it at par, and FirstRand even paid the dividend accrued to the date of repurchase. The bar has thus been set very high for the bank. Please will you share with us your thinking on the subject and some detail of your plan to rid the bank of this economically unjustifiable form of capital.
Clem, first, before Arno answers, I must just acknowledge, what you have just said. We as this Management team regard ourselves as stewards, and we stand on the shoulders of giants, of which you are one. And the great men and women that you have referred to, and some of whom are no longer with us, are some of the giants on whose shoulders we stand. We are lifted, by them, and we're able to do what we're doing now precisely because of the great men and women that you referred to. Thank you for that, Clem. With that, Arno, do you want to answer
Yeah.
pertinent question?
Thanks, Clem. I did expect that question, thank you very much for following up on that. In the near- term, we will not be buying back our preference shares. We continue to optimize our capital stack, economically we can still have value in these preference shares as they are currently in our balance sheets. For now, it makes sense to keep them.
All right. Next, I'd like, if I may-
Mm-hmm
To go to a rather tender area. That is bankers' voice in national affairs. Since Alan Pullinger's comments last week during his presentation of FirstRand's results, the subject of bankers' leaders' role in national affairs has again surfaced. You, Sim, have been quite vocal in recent times, particularly in Business Day. I very much appreciated your detailed emailed response to me last Friday when I referred you to Alan Pullinger's comments. I would appreciate your further thoughts on this subject, although I recognize it to be very delicate and no doubt the subject of much board deliberation and likely a policy decision. Thank you.
Clem, we have the highest regard and respect for our rivals and our competitors. They do a great job in the market, and we do our best to topple them. One must acknowledge that. Secondly, each of the banks have got their own views as do other corporates about their roles as corporate citizens. Our role as a financial institution at Standard Bank has not changed since the times that you were working at Standard Bank. In other words, we will say what needs to be said to the extent that decisions made by politicians have an impact on our role as a financial institution and will eschew making political comments. The comment we can make on the delicate matter of the war in the Ukraine is that all wars are abhorrent.
They're abhorrent both from a moral perspective and also from a human rights perspective. We therefore would, like everybody else, condemn violence, particularly that in Russia. We will do the same as what is happening in Tigray, and we will do the same as what is happening in respect of what's happening in Afghanistan. The same voice would be as loud in relation to Russia as Russia and Ukraine as all other issues of conflict. The more important point is that we will say what needs to be said in respect of the need for financial institutions to be able to intermediate capital on the continent and globally. To the extent that policies have a negative impact on that, we will have our say.
We think it is important for South Africa to position itself appropriately in global affairs. In that context, I would refer you to something that was said by Kwame Nkrumah all those years ago. At Standard Bank, we look neither east nor west. We look forward. We will do what is right for the African continent, and we will do what is right in the context of what Secretary Blinken said in respect of the relationship between the United States and South Africa. We think that the position taken by the South African government at the moment is one of neutrality. One can have moral and political views about that. Our view is that whatever position they take must not have an adverse impact on our role as a financial institution.
To the extent that we have views as individuals, about the politics of the country, my colleagues at Standard Bank are not permitted to express them, but they can happily express them in the political parties that they belong to, but not off the Standard Bank platform. I hope that makes sense.
Thank you.
Can I see if there are any more hands? There is a hand at the back.
Okay. Good morning. Kunal here from Risk Insights. We rate Standard Bank on ESG, we have noticed that your Scope 3 emissions as a percentage of total is quite low. This is actually something we've seen across other banks as well in South Africa. Typically, it should account for more than 80% of total. Basically, my question is there a plan to competitively position the bank and measure Scope 3 more effectively? Thank you.
Thank you so much. For that purpose, I will ask David Hodnett, sitting in the front row here.
Yeah. Thanks. Thanks for the question. I think what I can refer to is just the climate policy which we've issued. I think we've got a clear stance now of what our position is. I think on the specific topic of emissions, I think we recognize the difficulty in measuring emissions across the group. In terms of our climate policy and the resolution approved by the board, in, for instance, the oil and gas area, we've got a clear commitment to accurately measure them going forward, and we'll disclose that. Thanks.
Do we have any more hands in the GLC? We don't. Should we start on the conference call? Any questions from the conference call?
Of course, sir. The first is [Distorted] . Please go ahead.
Hi, good morning, everyone. Thanks very much. Can you hear me?
Yes, we can.
Okay. Morning, everyone. Thanks very much for the opportunity. Yeah, I think well done on the Consumer High Net Worth growth and transactional activity. Can you give us a sense of the way, I guess, gaining customers in South African market from a consumer segment perspective? Do you think that acceleration in NII and Consumer High Net Worth is sustainable that we've seen in the second half into 2023? Secondly, just on ICBCS, can you give us a, I guess, sense of the primary driver of operating activity, particularly going into 2023? Will it be impacted by lower commodity prices? Thanks.
Okay. The first one is for you, Funeka.
Thank you for the question. Let me start at the, your last comment. Yes, we believe that the NIR growth in South Africa is sustainable. Secondly, from a client pro-growth perspective, the client growth that we are seeing in 2022 really has been driven primarily by growth in the Youth segment as well as growth in the Private Banking segment. We expect that to continue into 2023 as we get closer to the commitments that we've made towards 2025. Thank you.
Can I ask Kenny if you don't mind answering the ICBCS question?
Well, thank you very much, sir Sim. I mean, there are two elements, I guess, to the performance of ICBCS. Sim referred to one. It's better integration into the broader ICBC, and as a result of that, having access to a far more bigger and deeper sort of client flows. The second is the recovery at the back of the sort of losses that we suffered a couple of years ago, and the pairs explosion in the U.S. Naturally, that is not gonna recur going forward, but definitely the integration into ICBC and access to that client base should continue to bolster the performance of ICBCS.
Thanks, Kenny. Do we have more questions from the conference call?
We have one final question.
Okay.
From Citi. Please go ahead.
Morning, Sim, Arno, and team. Jamu Kunupi from Citi. Thank you for the opportunity. Congratulations on the results. Two questions from my side. Can you provide your endowment outlook? Also please unpack asset pricing pressure that you mentioned in the presentation further. Do you see the current trends persisting? Just on asset quality, the statements of the book seems to have remained stable despite a deteriorating macro outlook in South Africa. How have you seen arrears trending since year-end? Can you please provide color on where you're seeing strain on your book? Thank you.
Arno , do you mind taking all three?
Sure. On the endowments outlook, I mentioned 20-30 basis points wider margin. That will be partly driven by endowments. We do expect another ZAR 4 billion NII uplift because of endowments for 2023. That's ZAR 4 billion, and that compares to ZAR 6.1 billion endowments uplift in 2022. On pricing, we certainly have seen some pricing pressure in the domestic market in South Africa. In mortgages, for example, concession rates have increased. We're not competing for market share in the mortgage market, and we are prudently writing the right business in the current economic environment. We do have the mixed benefit, though, which is also quite powerful for us in the terms that Africa regions portfolios are growing faster than South Africa portfolios.
That does support our margin as it did in 2022, and we expect that trend to continue 2023. Asset quality remains relatively robust. We have seen some pressure in our portfolios, specifically in the card portfolio and some of the unsecured portfolios. Overall, we are well within risk appetite. We do find that the consumer in South Africa is relatively unleveraged, and you would have noticed metrics such as households, rather household debt-to-income type metrics remain at relatively low levels. We are prudently extending credit into this market, considering the forward-looking outlook for the market. In Africa regions, I think we obviously won't have the Ghanaian impacts again as severe as it's been this instance. We expect continued good credit outlook in Africa regions, notwithstanding the higher interest rates.
Thank you, Arno. Can we go to BlueJeans? Sarah, do you have any questions from BlueJeans?
Thanks, Sim. Can you hear me? Yeah.
Yes, we can.
The first question is from Charles Russell. It says. Morning, Sim, Arno, and team. Thank you for the presentation. Can you please elaborate on the difference between your FY 2022 fee income and trading income performance of +7% and +15% respectively, relative to your FY 2023 guidance of mid-single digits growth? What do you think the drivers of this slowdown will be?
Arno?
Yeah. We've had a very strong trading performance this year, particularly in Kenny's business, and, you know, that is subject to market volatility and client flow. We cautioning on that might not be as strong as it is at the moment. Yeah, I think overall we expect to continue good growth. I know we're guiding quite low at mid-single- digits. We may exceed that slightly, but, at the moment we remain cautious on promising anything beyond that.
Thanks. I've got two questions from Chris Stewart. I'll provide them together. Please can you elaborate on how you think about the exchange rate that you account the earnings from Nigeria versus the rate at which you'll be able to repatriate profits? The second question, in a high inflationary environment, Africa regions is recording very strong nominal revenue growth, especially NII. This is currently not being offset by relative foreign currency conversion rates. Do you believe that the Africa regions revenues are sustainable, or do you believe that you are overearning in Africa regions currently?
Okay. Thanks, Chris. The Nigerian exchange rate, we use the official exchange rate around NGN 450 to the dollar. We expect that to weaken towards the end of this year to NGN 520 to the dollar. We have been able to repatriate some dividends out of Nigeria, they are in our bank account in the group now. They were affected at slightly higher exchange rates than what I've mentioned now. That's on the exchange rate. Inflation Africa regions, on the podium, Chris, I spoke about a weighted average inflation of 30% in Africa regions, which is eye-watering. If we strip out Zimbabwe, which is the hyperinflationary component, the weighted average inflation by cost now of the group in Africa regions is only 13.7%, that's much more moderate.
We believe the currencies have weakened. As we translate that into rand, we appropriately represent that P&L at the group level. I wouldn't call it overearning in Africa regions currently, but rather the results of continued franchise development, continued market share growth, continued support for our multinational clients across sub-Saharan Africa. This is franchise momentum which we're reaping the benefits of.
The next question is from Charles Russell. Can you comment on your ambitions to expand in Africa regions and intended timelines?
I'll take that. Charles, the Banking business is a derived business in the sense that we do what the economy drives us to do, and we follow our clients. With that as the background, we are going to be delivering the targets to 2025 and indeed more long-term targets on the assumption that we continue to grow inorganically. Sorry, that we continue to grow organically. We're making assumptions that we're going to continue to lend to our clients, increase our client numbers, find solutions for our clients and so forth. The East Africa region is particularly attractive, and we've previously spoken about opportunities that we are searching for there. There are also opportunities in West Africa that we've spoken about, particularly in the MO region.
We've also spoken about the need for us to serve our clients in non-presence countries, particularly in the Maghreb. None of those ideas or opportunities are in our planning. We will execute them to the extent that they may be appropriate given the pricing, the risk and the circumstances of the group at the time those opportunities present themselves. In other words, we don't have timing, we don't have plans that we're going to be making any acquisitions in order to expand. The targets that you're seeing are based on organic growth. I'm not going to give any timelines because there aren't any.
The next question is from Warren Riley. Morning, could you comment on the current renewables lending book and the medium-term opportunity you see?
Mr. Fihla.
Yeah. The rate of growth in our sort of sustainable finance business is much higher. I mean, our book doubled in 2022 compared to 2021, and we see that growth as being sustainable for the next couple of years. Just linking to the earlier question to David on climate change and the role that we're playing to support energy transition, we have set ourselves a target for originating ZAR 250 billion-ZAR 300 billion by 2026. We are already sitting at about ZAR 54 billion. We suggest a great pace of origination, and there's no reason why that should slow down. If anything, with the lifting of the self-generation limit in South Africa, we can only see more self-generation initiatives coming onto the market, and consequently, that book will continue to grow.
Thank you, Kenny. The next question is from Ross Kreher. Thanks for the call and congratulations on the results. Firstly, the ZAR 500 million COVID-related overlay has now been released. Are there any other out of model provisions on balance sheets? The second question, Africa regions, what do the macro concerns in Nigeria, Ghana, and Kenya mean for both book growth and asset quality outlooks?
Do you wanna take both?
Yeah. There are no material out of model provisions, Ross. As you know, we apply IFRS 9, which has got a forward-looking, macroeconomic outlook built in. Obviously, we are providing relative to that forward-looking macroeconomic outlook. In terms of the macro concerns, you know, obviously we're calibrating our risk appetite all the time, and to the extent that we do see some higher pressure and concerns, sovereign concerns in Nigeria, Ghana, and Kenya, we'll be moderating our book growth down and calibrate our appetite accordingly.
Thank you. We've got one more question, from Eyal Maloof. For SBSA, when do you expect headline earnings and ROE to recover to above the 2029 levels, and what would be the driving factors thereof?
You can take that too, Arno.
We would expect that to be this year in 2023. I mean, we're just marginally behind 2019. This year, we would expect that. It's obviously driven by our continually improving client franchise, particularly in consumer. I think you've all seen the strong momentum we have in consumer's client segment. 8% increased active clients, up to over 10 million active clients. Good NRR generation, good product penetration to our client base and that's supporting us there. Obviously coupled also with the Liberty integration, where we've got now a combined sales force of the Liberty sales teams, the tiered and independent sales advisors. Obviously for Funeka's branch distribution network and digital distribution network allows us then to also drive the Insurance business more. That will also support SBSA but also support Liberty, of course, on both sides.
Those are important driving factors to both drive ROE and earnings. In CIB, the franchise is mature, but there are opportunities, and Kenny and Sindhu speak about specifically in the renewable space, sustainable finance space, and in BCC also. Although we have got high market shares in BCC, between sort of 20% and 30%, depending exactly are you looking at the Commercial or Enterprise sub-segments. There's also continued opportunity and strong growth, which Wil can evidence in his portfolio. It really is the overall portfolio coming together. We do expect a strong year for SBSA and South Africa overall in 2023.
Thank you. There are no more questions on the webcast.
Thank you very, very much, Sarah. Thank you, colleagues, the folks on the line and the people that are here at the GLC. Thank you very much for your time and for your engaging questions. Those of you that are able to and are willing, there's refreshments outside. Please join us for a cup of tea and some scones. Thank you. Have a lovely day.