FirstRand Limited · JSE:FSR
FirstRand — H1 2006 Earnings Presentation
124 slides from FirstRand's earnings presentation, March 2006
Slide 1: FirstRand unaudited results for the six months ended 31 December 2005
financial services FIRSTRAND unaudited results for the six months ended 31 December 2005
Slide 2: Agenda
Agenda Overview The numbers Operating performance Prospects
Slide 3: Overview
overview (&) FIRSTRAND
Slide 4: Sustained structural shift
Sustained structural shift We continue to benefit from a sustained structural shift • Economic stability • High growth • Low interest rates • Lower inflation
Slide 5: Interest rate, inflation and GDP growth
2 3 4 5 effective rand rate 6 7 8 9 10 11 12 cpi/cpix inflation rate 10 8 26 6 24 22 prime overdraft rate 4 20 2 18 16 14 12 10 5 real GDP growth (%) 4 3 2 1 0 94 95 96 97 98 99 00 01 02 03 04 05 06
Slide 6: Confidence at all time high
Confidence at all time high RMB/BER business 100 confidence index 80 60 Confidence neutral 40 20 0 94 95 96 97 98 99 00 01 02 03 04 05 06
Slide 7: How did this affect the banking businesses?
How did this affect the banking businesses? Strong growth in retail advances Strong growth in transaction volumes Excellent performance from equity businesses Margin pressure Competitive pressures
Slide 8: How did this affect the insurance businesses?
How did this affect the insurance businesses? Strong retail new business growth Increase in asset management profits • Equity market growth • Retail product inflows Savings pool (low savings rate) Margin pressure (value for money)
Slide 9: Half year results December 2005
Half year results 31 December 2005
Slide 10: Key numbers
Key numbers Headline earnings per share 20% Normalised earnings 19% Headline earnings 17% Return on equity 30% Dividend per share 20%
Slide 11: Factors influencing the numbers: operational issues
Factors influencing the numbers Operational issues Margin compression Hedges Cost of funding Increase in expenses Infrastructure New business National Treasury settlement Dividend on perpetual preference shares
Slide 12: Factors influencing the numbers: accounting issues
Factors influencing the numbers Accounting issues Discovery BEE costs FirstRand shares held by policyholders IFRS currency translation differences
Slide 13: Strong operational performance
Strong operational performance R’m % Headline earnings +17 Currency translation (6) Sub total +11 National Treasury settlement charge 1 Impact of BEE transaction (Discovery) 3 FirstRand shares: Policyholders & Mutual Funds 4 Normalised earnings +19
Slide 14: The component parts
The component parts 2004 2005 5% 3% 16% 16% 81% 79% FirstRand Banking Group Momentum Discovery
Slide 15: All businesses performed
All businesses performed R’m H106 H105 % Banking Group 3 640 3 046 20 Momentum Group 742 592 25 Discovery Group 209 126 66 FSR company (102) (116) 12 Consolidation of share trust (134) (78) Perpetual preference share (114) Sub total 4 241 3 570 19
Slide 16: Strong operating performance
Strong operating performance R’m H106 H105 % Banking Group 3 640 3 046 20 Momentum Group 742 592 25 Discovery Group 209 126 66 FSR company (102) (116) 12 Consolidation of share trust (134) (78) Perpetual preference share (114) Sub total 4 241 3 570 19
Slide 17: Banking Group
Banking Group
Slide 18: The component parts
The component parts YOY growth Other 12% Other 11% +31% Africa 6% Africa 8% +3% WesBank WesBank +31% 15% 15% RMB 21% RMB 18% +41% FNB 46% FNB 48% +18% H1 06 H1 05
Slide 19: Key revenue drivers
Key revenue drivers R’m Interest income 18% 5 405 Bad debts 41% (576) Non-interest income 28% 6 888 Income from associates 90% 772 Revenue growth 26% 12 489
Slide 20: Key revenue drivers
Key revenue drivers Interest income 18% Bad debts 41% Non-interest income 28% Income from associates 90% Revenue growth 26%
Slide 21: Excellent retail advances growth
Excellent retail advances growth Growth 41%, market 260 share of new business at 20% 250 20 YoY increase of 26%, 240 further growth in market share Card up 42%, 230 Wealth up 35% 15 253 220 3 2 4 6 210 211 212 200 Dec '04 Africa RMB BGT Sub total Other FNB W esBank Homeloans Dec '05 Annualised incre
Slide 22: Excellent retail advances growth
Excellent retail advances growth 84% Retail advances as % of total advances 88% 260 250 % 20 30 + s 240 ce an a dv 230 il 253 ta 15 Re 220 3 2 4 6 210 211 212 200 Dec '04 Africa RMB BGT Sub total Other FNB WesBank Homeloans Dec '05 Annualised increase of 21%
Slide 23: Unpacking the margin
Unpacking the margin 4.40% 0% 0.09% (0.08%) (0.04%) 0.18% Margin (0.17%) 4.38% Endowment capital Volume effect Hedges Mix Pref 2% Endowment Shares deposits 2% 1% 4% 5% Interest income 5 208 14% 4 598 Dec 04 Dec 05
Slide 24: Asset margins under pressure
Asset margins under pressure Weighting Dec June Dec 2005 2005 2005 2004 Asset-backed mortgages 31 2.31 2.38 2.68 Instalment sales & lease debtors 23 3.72 3.66 3.79 Card debtors 3 8.33 7.79 8.00 Overdraft & other loans 4 4.55 4.53 4.79 Personal loans 3 7.51 6.47 6.62 Other advances 7 4.20 4.85 5.48 F
Slide 25: Liability margins stable
Liability margins stable Weighting Dec June 2005 2005 2005 2004 Current & savings 25% 3.51 3.49 3.55 Call accounts 7% 1.65 1.63 1.55 Notice deposits 5% 1.30 1.28 1.35 Fixed deposits 6% 0.73 0.63 0.76 Group Treasury 56% Total 100% 1.16 1.10 1.14
Slide 26: Shift in funding mix
Shift in funding mix 100% 13% 21% 24% 75% 25% 30% 29% 50% 60% 25% 45% 44% 0% 31/1/2/04 31/12/05 Marginal funding Professional Foreign entities Business, commercial & corporate Retail
Slide 27: Key revenue drivers
Key revenue drivers Interest income 18% Bad debts 41% Non-interest income 28% Income from associates 90% Revenue growth 26%
Slide 28: Bad debts & NPLs will normalise
Bad debts & NPLs will normalise 1.5 5.6 1.3 Ignoring the effect 1.1 of listed investment transactions 0.9 4.3 0.8 3.5 0.8 3.6 0.7 2.6 0.6 0.5 0.47 0.46 2.4 0.44 0.39 2.1 2.0 0.4 0.40 0.39 1.7 1.7 1.6 1.4 1.6 1.5 1.4 1.2 1.3 1.1 1999 2000 2001 2002 2003 2004 'Dec 04 'Jun 05 'Dec 05 NPLs (%) Provision
Slide 29: Long run expected loss
Long run expected loss 5.6 Turbulent:1.60 4.3 3.5 3.6 Long run average: 0.64 2.6 2.4 2.1 2.0 Calm:0.40 1.7 1.7 1.6 1.4 1.6 1.5 1.4 1.2 1.3 1.1 1999 2000 2001 2002 2003 2004 'Dec 04 'Jun 05 'Dec 05 NPLs (%) Provisions (%) Bad debts (%)
Slide 30: WesBank arrears levels normalising
WesBank arrears levels normalising Arrears % 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2002 2003 2004 2005 Arrears in line with expectation
Slide 31: HomeLoans arrears levels normalising
HomeLoans arrears levels normalising Arrears % 14% 12% 10% 8% 6% 4% 2% 0% Jan Feb March April May June July Aug Sept Oct Nov Dec 2002 2003 2004 2005 Arrears in line with expectation
Slide 32: Key revenue drivers
Key revenue drivers Interest income 18% Bad debts 41% Non-interest income 28% Operational non-interest income 24% Income from associates 90% Translation gains >100% Revenue growth 26%
Slide 33: Strong NIR growth
Strong NIR growth R’bn 4.5 21% 4 3.5 3 2.5 2 1.5 (12%) 1 94% 27% 0.5 35% (43%) 0 Transactional Trading Investment Insurance Knowledge Other 2004 2005
Slide 34: Driven by FNB
Driven by FNB Africa R’bn 6% WesBank 11% 21% 4.5 4 3.5 3 2.5 11% 2 1.5 1 79% 17% FNB 37% 14% 83% 0.5 0 Transactional Trading Investment Insurance Knowledge Other 2004 2005
Slide 35: Volumes driving fee income
Volumes driving fee income % Banking commissions and fees 30 25 20 15 19.5 14.2 10 Inflation 5 5.1 4.5 0 2004 2005 Price Volume
Slide 36: Pressure on annuity income
Pressure on annuity income R’bn 4.5 21% 4 Difficult trading conditions 3.5 • Non-trending markets 3 2.5 • Low volatility 2 1.5 (12%) 1 0.5 0 Transactional Trading Investment Insurance Knowledge Other 2004 2005
Slide 37: Big contribution from Private Equity
Big contribution from Private Equity 1,070 910 R’bn 867 715 698 2,567 4.5 21% 556 544 4 3.5 320 1,279 271 3 116 2.5 Jun '02 Jun '03 'Jun 04 Jun '05 Dec '05 2 Private equity contribution Unrealised proft Private equity assets 1.5 (12%) 1 94% 17% 37% 14% 0.5 0 Transactional Trading Investment Insuranc
Slide 38: Insurance income continues to grow
Insurance income continues to grow R’bn FNB 4.5 44% 21% 4 35% growth 3.5 WesBank 3 56% 2.5 36% growth 2 1.5 (12%) 1 94% 37% 35% 14% 0.5 0 Transactional Trading Investment Insurance Knowledge Other 2004 2005
Slide 39: Key revenue drivers
Key revenue drivers Interest income 18% Bad debts 41% Non interest income 28% Income from associates 90% Revenue growth 26%
Slide 40: Private Equity drives Associates
Private Equity drives Associates Other 3% Outsurance 19% WesBank 6% Private equity 71% Private Equity OUTsurance WesBank Six monthly - Dec 2003 to Dec 2005
Slide 41: Key revenue drivers
Key revenue drivers Interest income 18% Bad debts 41% Non-interest income 28% Income from associates 90% Revenue growth 26%
Slide 42: Operational leverage drivers
Operational leverage drivers Operating expenditure 22% Taxation 29% Expenses growth 23%
Slide 43: Investing for growth
Investing for growth Infrastructure New business Base costs +7% +6% + 6% +19% Consolidation IFRS WesBank FRAEM RMB 2% Ansbacher 3% 1% FNB 2% 2% 3% 7 025 Expenses 13% 5 758 2004 2005
Slide 44: Investing for growth
Investing for growth Infrastructure New business Base costs +6% +6% + 6% +18% Infrastructure New business Base costs +17% +33% + 14% +64% Infrastructure New business Base costs +5% +11% + 5% +21%
Slide 45: Operational leverage
Operational leverage 58 56 56 55 55 54 2002 2003 2004 Dec 04 2005 Dec 05 Cost to income
Slide 46: Operational leverage drivers
Operational leverage drivers Operating expenditure 22% Taxation 29% Expenses growth 23%
Slide 47: Effective tax rates
Effective tax rates 30% 5.8% 6.4% 15% 22.3% 23.6% 0% 2004 2005 Direct tax Indirect tax Effective tax rate at previous year levels
Slide 48: Superior ROE and economic value
Superior ROE and economic value 2005 2004 Return on assets 1.97 1.78 X X Gearing multiple 14.3 15.7 Return on equity 28.1 28.0 - - Cost of equity 11.9 12.7 Shareholder value add 16.2 15.3 Continued shareholder value creation
Slide 49: Momentum Group
Momentum Group
Slide 50: Key numbers
Key numbers Normalised earnings 25% Headline earnings 12% Return on equity - 25% Return on EV 27%
Slide 51: Excellent operating performance
Excellent operating performance R’m Dec05 Dec04 %Δ Operating earnings 742 592 25% National Treasury settlement (27) Operating earnings 715 592 21% IFRS (63) (9) Headline earnings 652 583 12% Settlement R204m after tax Momentum: R100m Sage R104m Provided 30 June ’05 Provided 31 Dec ’05 Impairment of
Slide 52: Key numbers
Key numbers Operating earnings 25% Headline earnings 12% Return on equity - 25% Return on EV 27%
Slide 53: All divisions perform well
All divisions perform well R’m H106 H105 % Insurance operations 423 299 41 Asset management operations 151 107 41 Group operating profit 574 406 41 Investment income on 168 186 (10) shareholders’ assets Group headline earnings (pre IFRS) 742 592 25
Slide 54: All divisions perform well
All divisions perform well R’m H106 H105 % Insurance operations 423 299 41 Asset management operations 151 107 41 Group operating profit 574 406 41 Investment income on 168 186 (10) shareholders’ assets Group headline earnings (pre IFRS) 742 592 25
Slide 55: Positive gearing
Positive gearing Strong equity market growth Retail new business APE +22% • New recurring individual life +21% Positive • Single premiums +8% gearing • Lump sum annuities +23% • Linked products +95% Organic expense growth +8%
Slide 56: All divisions perform well
All divisions perform well R’m H106 H105 % Insurance operations 423 299 41 Asset management operations 151 107 41 Group operating profit 574 406 41 Investment income on 168 186 (10) shareholders’ assets Group headline earnings (pre IFRS) 742 592 25
Slide 57: Strong performance RMBAM
Strong performance RMBAM R’m H106 H105 % Local operations 123 75 64 International operations 28 32 (13) Operating profit 151 107 41
Slide 58: Strong growth in funds under management - RMBAM
Strong growth in funds under management - RMBAM R'bn 16% R'bn 180 55% 20 170 18 R24 bn 16 160 R6.5 bn 14 150 12 140 10 130 8 6 120 4 110 2 100 0 2003 2004 2005 H1'06 2003 2004 2005 H1'06 Institutional Retail
Slide 59: Key numbers
Key numbers Operating earnings 25% Headline earnings 12% Return on equity - 25% Return on EV 27%
Slide 60: Return on embedded value
Return on embedded value Related to investment returns +13% +27% Related to operations +14%
Slide 61: Discovery Group
Discovery Group
Slide 62: Strong growth from local operations
Strong growth from local operations R’m H106 H105 % Discovery Health 266 245 9 Discovery Life 246 190 29 Vitality 16 9 78 Destiny Health (80) (41) PruHealth (68) (80) Investment Income 146 76 Operating profit 526 399 32
Slide 63: Headline earnings before BEE
Headline earnings before BEE R’m H106 H105 % Profit from operations 526 399 32 Financing costs (10) (28) 29 Forex loss - (33) Profit before tax 516 338 53 Taxation (178) (143) Attributable earnings 338 195 73 Available for sale (42) (15) Headline earnings before BEE 296 180 64
Slide 64: EV growth continues
EV growth continues R’m 12000 10 080 10000 9 173 8000 6 832 5 777 6000 4000 3 321 3 212 2 114 2000 0 2000 2001 2002 2003 2004 2005 Dec-05
Slide 65: Capital Management
Capital -|Management
Slide 66: Financial targets met
Financial targets met 35% Banking Group +20% 30% 25% Discovery +25% +66% ROE Momentum Group 10% plus FirstRand WACC 20% 15% 10% real growth 10% 0% 10% 20% 30% 40% Headline earnings growth
Slide 67: Active capital management
Active capital management Issued R1.5bn non-cumulative non-redeemable preference shares to: • Invest R500m in Momentum • Restructure the vendor finance of BEE transaction Optimal capital plan in low interest rate environment
Slide 68: Capital jaws expanded
Capital jaws expanded R’m Restructure BEE 23000 transaction Pref issue 21000 R1,1bn Tier 2 issue BEE 19000 transaction 17000 15000 13000 Jun-04 Dec-04 Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Capital available Regulatory capital requirement
Slide 69: Capital invested in growth
Capital invested in growth Capital adequacy - rolling 12 month forecas 16% 15% 14% March dividend Sep dividend 13% 12% Target range 11% Buffer for volatility 10% Regulatory requirement 9% 8% Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Forecast capital requirement Internal c
Slide 70: Momentum's capital movements
Momentum’s capital movements CAR cover As at 30 June 2005 2.2x Less: Sage acquisition (0.5x) Add: Aflife transactions 0.2x Net 1.9X Add: Perpetual preference shares 0.2x 2.1x Add: Favourable conditions 0.3x As at 31 December 2005 2.4x Full impact of corporate actions in second half (ALH, MCubed) in
Slide 71: Superior ROE generation
Superior ROE generation Average Headline ROE economic ROE shareholders earnings capital funds allocated R’m FNB 8,394 1,798 40% 43% RMB 4,918 830 35% 34% WesBank 7,317 538 29% 15% Outsurance 350 103 59% 59% FRAEM 1,126 166 43% 30% All businesses deliver in excess of target
Slide 72: Dividend policy
Dividend policy
Slide 73: Stability in dividend
Stability in dividend Based to 100 390 CAGR: 24% 340 CAGR: 21% 290 CAGR: 21% CAGR: 21% 240 190 140 90 40 1999 2000 2001 2002 2003 2004 2005 Headline earnings per share Normalised earnings per share Net asset value Dividend per share
Slide 74: Capital optimisation
Capital optimisation Maintain the dividend cover of range 2.0 to 2.5 times Current 2.5 times • Utilise surplus to fund the growth Capacity created for further Tier 2 issue • Momentum Debt Rating AA+/ AA/ Stable • Over and above growth projections
Slide 75: Operating performance
operating performance (4%) FIRSTRAND
Slide 76: FirstRand grew faster than the market
FirstRand grew faster than the market Market FirstRand WesBank new business 28% 34% FNB HomeLoans new business 35% 81% FNB Card advances 39% 40% RMB Private Bank advances 20-25% 35% Momentum recurring new business 5-10% 21% Discovery Life new business 5-10% 18%
Slide 77: Capital, new business, acquisitions, leverage
CAPITAL NEW BUSINESS ACQUISITIONS IARI \. LEVERAGE
Slide 78: Innovation continues to deliver
Innovation continues to deliver FNB One Account – R3.5bn book value Million-a-month-account – 237 000 accounts Cellphone banking – 180 000 customers • Broke even in 9 months WesBank Islamic financing – total new business for H1 2006 of R101m
Slide 79: Acquisitions, capital, innovation, market growth
ACQUISITIONS CAPITAL INNOVATION MARKET NEW BUSINESS / GROWTH \
Slide 80: Leveraging the integrated model
Leveraging the integrated model Momentum/FNB Consultants • Sales through FNB consultants (R112m) • 30% increase in new business Momentum middle market initiative • Momentum products • FNB’s distribution Momentum Short Term Insurance • FirstRand short term insurance products • Momentum’s distri
Slide 81: Short Term Insurance gaining momentum
Short Term Insurance gaining momentum Momentum Short Term Insurance Company Quotes Sales Monthly Conversion Avg (#) (#) Premium (R) ratio Premium (R) Sep‘05 154 57 45 168 37% 792 Oct ‘05 754 180 167 751 24% 932 Nov ‘05 1 418 379 315 073 27% 831 Dec ‘05 933 179 108 342 19% 605 Total 3 259 795 636 335
Slide 82: Bancassurance remains meaningful
Bancassurance remains meaningful Pre tax profits up 36% year-on-year Dec 05 Dec 04 % change (R’m) (R’m) YOY OUTsurance 135 101 34% FirstLink 47 37 27% WesBank 166 122 36% HomeLoans 32 32 - FNB Life 20 4 >100% FNB Consultants 32 23 39% Total 432 319 36%
Slide 83: New business leverage
NEW BUSINESS LEVERAGE NATURAL MARKET MARKET GROWTH ,
Slide 84: Momentum continues to consolidate
Momentum continues to consolidate Load: Sage Holdings • 14.8% per policy cost reduction • 518 new agents (130% increase) Strategic: African Life Health (post-December 2005 event) • 3 new market segments • Presence in Lesotho, Kenya, Botswana
Slide 85: Leverage, innovation, acquisitions
LEVERAGE INNOVATION / / NATURAL \ NEW BUSINESS MARKET ACQUISITIONS f GROWTH >
Slide 86: Active capital management
% Ja n- 19 8 10 12 14 16 18 20 22 24 26 28 8 9 Ja n- 19 9 0 Ja n- 19 9 1 Ja n- 19 9 2 Ja n- 19 9 3 Ja n- 19 9 4 Ja n- 19 9 5 Ja n- 19 9 6 Ja n- 19 9 7 Ja n- 19 9 8 Ja n- 19 9 9 Ja n- 20 0 0 Ja n- 20 0 1 Ja n- 20 0 2 Prime Ja ROE n- 20 0 3 Ja n- 20 0 4 Ja n- 20 0 5 Active capital management
Slide 87: Diverse portfolio of businesses
Diverse portfolio of businesses Profit before taxation R’m % growth RMB 1 117 40% FNB 2 344 18% WesBank 748 24% Momentum 1 065 41% OUTsurance 135 34% Discovery 343 53%
Slide 88: Rand Merchant Bank
RAND MERCHANT BANK
Slide 89: Debt vs Equity
Debt vs Equity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002 2003 2004 2005 Dec-05 Debt Equity Excellent performance from equity businesses Mixed fortunes for debt business
Slide 90: Businesses leveraged to equity markets
Businesses leveraged to equity markets Strong performance from advisory business Good equity results • Arbitrage • Trading • Agency Record performance from Private Equity
Slide 91: Private Equity – in a harvest cycle
Private Equity – in a harvest cycle Excellent climate for realisations, included in the results: • WACO • Fidelity Guarding • Bluestone Strong growth in equity accounted earnings Maintained broad portfolio and healthy unrealised profits in a “harvest cycle”
Slide 92: …but sustainable going forward
…but sustainable going forward Rm 3500 3000 2500 2000 1500 1000 500 0 2002 2003 2004 2005 Dec-05 Profit before tax Unrealised profits Assets (excl Debt) New investments R327m
Slide 93: Debt businesses on the comeback trail
Debt businesses on the comeback trail Rm 250 200 150 100 50 0 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Strong performances from: • Property • Acquisition and leverage finance • Debt capital markets
Slide 94: Investing for growth
Investing for growth Variable in nature Investing in operating platform Growing business Important focus area
Slide 95: First National Bank
> First National Bank How can we help you?
Slide 96: Continued benefit from segment focus
Continued benefit from segment focus Market share gains across the board Strong asset and liability growth Particularly strong performances from: • Consumer • Mid-Corporate • Card • Commercial • Mid-Corporate • Business • Property Finance Significant increase in transactional volumes
Slide 97: Advances – still growing our market share
Advances – still growing our market share Home Loans 42% Credit Card Loans 42% Business & Agric Loans 36% Corporate Term Loans -26% Overdrafts 7% Total Advances 28% -30% -20% -10% 0% 10% 20% 30% 40% 50% Advanc es growth
Slide 98: Gaining ground
Gaining ground 28 26 26 25 24 24 24 % Market share 22 22 21 20 20 20 19 19 18 16 14 12 10 Smart Personal Wealth Business Medium Solutions Banking Corporate Dec-04 Dec-05
Slide 99: …But
…But Costs • Base relatively flat • Investment strategies continue • 3 year plan to get to single-digit cost growth Margin • Hedges • Funding • Competition
Slide 100: It was tough in Africa
It was tough in Africa Tough economies – suffering from strength in SA Botswana up 15% (2.1% in Rand) Namibia up 7.5% Swaziland up 27.2% under very tough conditions Lesotho recorded maiden monthly profit in Dec 2005. 12 months ahead of expectations
Slide 101: WesBank
eeeeTTiTiiiLibiie RN <n. Put us to the test A division of FirstRand Bank tta
Slide 102: Growth continues
Growth continues Total SA New Vehicle Market Year Total Sales Growth 2003 381 664 2004 481 092 26.05% 2005 618 011 28.46%
Slide 103: …across the board
…across the board Divisional performance New business growth Relative size YOY – Dec 2005 of division Motor 29.5% 73% Corporate & Fleet 37.3% 21% Loans 72.7% 5%
Slide 104: Motor growth from…
Motor growth from… Industry buoyancy Market Share growth Domination at point of sale Partnership strategy
Slide 105: Corporate growth from…
Corporate growth from… FNB Collaboration Industry focus New Channels Market Share growth
Slide 106: ea O Z << ~ =) n
ea O Z << ~ =) n
Slide 107: OUTsurance OUTperforms
OUTsurance OUTperforms Growth • Organic growth in Personal and Business OUTsurance • Business OUTsurance - strong new business volumes • Essential OUTsurance - launched successfully Strategies paying off • Focus on client service, particularly quick claims settlement • Direct distribution growin
Slide 108: Some challenges
Some challenges Sustain growth given increasing competition Improving cost efficiencies in spite of increased compliance costs Pro-actively managing BEE procurement strategies, particularly in the panel-beating industry
Slide 109: Momentum
omentum
Slide 110: Sources of growth
Sources of growth Strong organic growth Corporate action Market New market focus + Diversification Product
Slide 111: Strong operating performance
Strong operating performance Annualised retail new business inflows +23% Assets under management/administration +24% Embedded value of new business +28% New business margin +21%
Slide 112: Corporate action continues
Corporate action continues Sage + African Life Health + Advantage + African Life - Futuregrowth -
Slide 113: Sage integrated in less than 100 days
Sage integrated in less than 100 days Rationale Target Achieved Cost per policy 10% 14% Agency Force 550 518 Time to Completion <100 days <100 days Additional Benefits Premium Income +R950m Assets +R12bn Operating Profit +R28m
Slide 114: Exciting new markets
Exciting new markets Products Distribution Short term insurance
Slide 115: Discovery
© Discovery
Slide 116: Increasing diversity
Increasing diversity 100% 90% 80% PruHealth 70% Destiny 60% 50% Vitality 40% Life 30% Health 20% 10% 0% 2001 2002 2003 2004 2005
Slide 117: Good organic growth
Good organic growth Health grew off a high base Life exceeded expectations PruHealth – gaining traction Destiny disappoints Discovery Card exceeds 300 000
Slide 118: Going forward
Going forward Health – increased focus on efficiencies Life – increase market share and pursue Pru partnership Destiny – some bold steps taken PruHealth – focus on growing new business
Slide 119: Prospects
prospects (4%) FIRSTRAND
Slide 120: There are significant challenges
There are significant challenges Foreign competition / new entrants Consumerism & regulation Loss of pricing power Funding growth Greater cost efficiency required
Slide 121: Also significant opportunities
Also significant opportunities FNB • Growing black market • Commercial property finance growing nicely off a low base • Benefit from focus on mid-corporate and business segments RMB • BEE continues to provide opportunities • Well positioned for infrastructure spend • Relationship strategy • Good
Slide 122: Also significant opportunities
Also significant opportunities WesBank • Continued vehicle market growth • Looking at new markets Momentum • Industry consolidation continues to provide opportunities • African Life Health provides access to African markets • Better industry dynamics after settlement with adjudicator
Slide 123: A positive picture
A positive picture Favourable environment + Businesses firing on all cylinders + Relentless focus on innovation + Increased focus on efficiencies = Organic Growth + New markets + Active capital management = Real return to shareholders
Slide 124: FirstRand financial services
financial services { (2-) FIRSTRAND