FirstRand Limited · JSE:FSR
FirstRand — UBS Conference October 2006
25 slides from FirstRand's conference presentation, October 2006
Slide 1: The quest for positive jaws
The quest for positive jaws UBS Conference Sizwe Nxasana CEO FirstRand Bank
Slide 2: Strong economic fundamentals
Strong economic fundamentals • Economic stability • Business confidence • Low interest rates • Low inflation • Buoyant equity markets
Slide 3: Even leaky boats float...
Even leaky boats float... | FTSEIJSE AFRICA ALL SHARE, FTSE/JSE AFRICA FINANCIALS INDEX ‘a Daily 2002/09/20-2006/07/20 JONI [TE MAI TATSfo ND], [FIA [uly [ATS fon 2002 2003 2004 — FTSENSE AFRICA ALL SHARE (21028.539,20722.789) — (J580) (18331.660,18080.949) CAWATe) integrated | ® |
Slide 4: Economic growth set to continue…
Economic growth set to continue… • R370bn in government spending over next 3 years • Long term stable economic environment – Managed increase in interest rates – Marginal increase in long term inflation expectations • Leading up to 2010 • Emerging Black Consumer and BEE
Slide 5: All our businesses are well positioned
All our businesses are well positioned Emerging Infrastructure Black BEE transactions spend consumer 9 9 9 9 9 9 9 9
Slide 6: Well positioned for growth opportunities…
Well positioned for growth opportunities… • FNB – Growing rapidly in “growth” segments – mass, commercial, consumer – Focus on innovation is paying dividends – i.e. cellphone banking – Investment in footprint paying-off – Collaboration with Momentum • RMB – Strong private equity pipeline – Market le
Slide 7: Key driver to sustained future growth is maintaining a strong 'positive jaws' discipline
Key driver to sustained future growth is maintaining a strong ‘positive jaws’ discipline Driving Focus on Gearing and TOP-LINE Cost level of Growth efficiency Capital
Slide 8: Driving TOP-LINE Growth
Key driver to sustained future growth is maintaining a strong ‘positive jaws’ discipline Driving Driving Focus on Gearing and TOP-LINE TOP-LINE Cost level of Growth Growth efficiency Capital
Slide 9: Top line growth always a focus
Top line growth always a focus • Organic growth • Product and channel innovation – Mini ATMs, cellphone banking, One Account – Joint Ventures (Vodacom, Kulula, Clicks) – Coroprate Advisory • BEE • Niche international expansion
Slide 10: International opportunities emerging
International opportunities emerging • Offshore growth and expansion – Commercial bank – emerging markets – Asset based finance – emerging and developed markets – Investment banking – emerging and developed markets • Niche market players with an exportable value proposition • Incremental growth stra
Slide 11: Growing our international presence
Growing our international presence • WesBank • Momentum – Australia – Africa – UK – UK • RMB • Discovery – Dublin – USA – Australia – UK – UK • Ashburton • FNB – Channel Islands – Namibia – Botswana • FirstRand Bank – Lesotho – Dubai – Swaziland
Slide 12: Top line growth always a focus
Top line growth always a focus • Collaboration – Discovery Card/FNB – Momentum/FNB
Slide 13: Collaboration adding value
Collaboration adding value FNB branded products Product skills Distribution Middle market Mass market Increased contribution to earnings after tax from R18m to R58m
Slide 14: Bancassurance still growing strongly
Bancassurance still growing strongly Retail NPBT from insurance operations up 28% Existing operations June 05 (R’m) June 06 (R’m) % change OUTsurance 214 225 5 FirstLink 60 68 13 WesBank 267 394 48 HomeLoans 63 63 0 FNB Life 20 49 >100 FNB Consultants 49 63 29 Total 673 862 28
Slide 15: With significant growth in the pipeline
With significant growth in the pipeline Start up operations R’ mil Date started June 06 FNB middle market Jan 06 (23) Discovery Card Oct 04 (93) Total (116)
Slide 16: Gearing and level of Capital
Key driver to sustained future growth is maintaining a strong ‘positive jaws’ discipline Gearing Driving Focus on Gearing and TOP-LINE Cost and level level of of Growth efficiency Capital Capital
Slide 17: Optimising the gearing
Optimising the gearing Target Actual R ’mil % % Target capital adequacy 12 - 13 12.8 Tier I 8.8 - 10 9.0 - Core Tier I 7–8 7.8 - Non-cumulative, non-redeemable preference shares 1.8 – 2 1.1 Tier II 2.2 – 3 3.8 - Other qualifying instruments and tertiary capital 1.1 – 1.5 0.9 - Subordinated debt (max
Slide 18: Focus on Cost efficiency
Key driver to sustained future growth is maintaining a strong ‘positive jaws’ discipline Focus on Driving Focus on Gearing and TOP-LINE Cost Cost level of Growth efficiency efficiency Capital
Slide 19: Search for cost efficiencies
Search for cost efficiencies • Prime strategic issue • Have we taken decentralisation too far? • Revenue growth remains the most important lever for value creations BUT • We need a deliberate focus on cost – Not at the expense of revenue growth
Slide 20: All brands more efficient
All brands more efficient Top line Cost Cost to growth growth income ratio R’m % % % FNB 20 16 64.2 WesBank 29 18 43.0 RMB 37 36 37.7 Africa 11 7 45.3 FirstRand Banking Group 26 17 52.7
Slide 21: Pressure on top Line
Pressure on top Line • Pressure on margins – Regulation – Structurally lower interest rates – Consumerism – Competition – New entrants – sharing the profit pool – Marginal cost of funding rapid asset growth • Additional pressure – Funding competitively in international markets – Alliances /JV’s – gi
Slide 22: Identified key issues
Identified key issues • Federal model creates duplication • Looking for common platforms and standardisation • Replace fixed with variable costs
Slide 23: Initiatives already underway
Initiatives already underway • Centre-led procurement function • Financial management and reporting • Human resources – MIS for group • Plug and play IT platforms R36 million saving on Communication and data lines
Slide 24: Conclusion
Conclusion FirstRand has always been good at • Revenue heroes • Balance sheet management NOW EQUALLY FOCUSSING ON • Cost efficiency
Slide 25: THANK YOU
THANK YOU WORLD CUP De OD) | OI integrated | @ |