Slide 1: First National Bank
First National Bank In the business world, the rear view mirror is always clearer than the windshield. Warren Buffett UBS Conference October 2005 An Authorised Financial Services Provider
Slide 2: Outline
Outline Historical turning points Regulatory Competitive Macro-environment Creating the future First National Bank Page 2 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 3: FNB's historic turning points
FNB’s historic turning points Good to great •Unified FNB •Segment structure Outward focus Cultural revolution • Management replaced by investment bankers • Businesses chunked • CEO’s empowered 1998 2002 2004 First National Bank Page 3 | 21 October 2005 | First National Bank | A Division of FirstRand
Slide 4: The ability to respond
The ability to respond Smart Solutions Personal Wealth Commercial Corporate Public Sector First National Bank Page 4 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 5: Regulatory
Regulatory First National Bank Page 5 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 6: Customers feel they overpay
Customers feel they overpay First National Bank Page 6 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 7: …but there is another side to the story
…but there is another side to the story SA perceived to be most expensive Structural reasons Pressure from consumerism with possible regulatory response Fees Õ margins First National Bank Page 7 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financ
Slide 8: A cigarette box illustration
A cigarette box illustration 4.00% Required adjustment for 10% decrease in NIR Up 17bps 3.00% 2.00% Advances First National Bank Page 8 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 9: Already taking action
Already taking action Deliberate positioning as low cost provider Innovative pricing options Customer education campaign First National Bank Page 9 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 10: Charter spells opportunities
Charter spells opportunities Voluntary signing – 17 October 2003 Integral part of transformation Requires innovative response First National Bank Page 10 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 11: Mass – playing to our strength
Mass – playing to our strength 1 313 mini-ATMs 22 Community banks 300 +182% +75% Payout (R’m) 200 100 0 2004 2005 2004 2005 Microloans Smart Housing Plan First National Bank Page 11 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service P
Slide 12: Commercial – playing to our strength
Commercial – playing to our strength FNB Enterprise Solutions (FES) Enterprises experiencing difficulty with raising capital due to: o Early stage of development o Lack of equity or adequate security o Complexity of financing requirements 100 FES Payout (R’m) And growing… 50 0 2004 2005 First Nation
Slide 13: National Credit Bill
National Credit Bill Positives Negative Opens microloan market More cross-subsidisation for ethical players across risk profiles Disclosure will favour the Regulations will determine trusted brand financial impact No R10 000 exemption First National Bank Page 13 | 21 October 2005 | First Nation
Slide 14: Competitive
Competitive First National Bank Page 14 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 15: Retailers getting more aggressive
Retailers getting more aggressive Retailer advantages • Large credit books • Deals need proper structuring • Extensive infrastructure • Branch operating hours • Dominate point of sale • Preference for intra-FirstRand deals • Better operating hours • Partnering with large banks First National Bank Pa
Slide 16: So are the cellphone operators
So are the cellphone operators SMS and USSD (not WIG and WAP) Any network, any cellphone Transactions processed 2.1m SMS customers per month since launch Botswana and Namibia next 200 Transactions per month (‘000) 100 0 March April May June July August First National Bank Page 16 | 21 October 20
Slide 17: Even Branson can't resist!
Even Branson can’t resist! Homeloan direct First National Bank Page 17 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 18: Putting pressure on mortgage originators
Putting pressure on mortgage originators 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Mortgage Switching Mobile sales Cashback originators First National Bank Page 18 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 19: Barriers to entry are high
Barriers to entry are high First National Bank Page 19 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 20: Large corporate lending is tough
Large corporate lending is tough 2.00% 50 40 1.00% 30 0.00% % ch an g e Y -o -Y Overnight lending - money market 20 2003 2004 2005 10 0 -10 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 First National Bank Page 20 | 21 October 2005 | First National Bank | A Divi
Slide 21: Macro-environment
Macro-environment First National Bank Page 21 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 22: A structural shift
A structural shift Higher economic growth World Cup catalyst for growth Emerging market Balancing act: Top line growth vs. cost containment First National Bank Page 22 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 23: Emerging market
Emerging market % 1980 10 20 30 40 50 60 70 80 90 100 TOP 10% 10 NEXT White 10% 20 30 MIDDLE Coloured 40 & Indian 50 % Black 60 70 BOTTOM 50% 80 90 100 Source: FinMark Trust 2002 Source: FinMark Trust 2002 First National Bank Page 23 | 21 October 2005 | First National Bank | A Division of FirstRand
Slide 24: Emerging market
Emerging market % 1991 10 20 30 40 50 60 70 80 90 100 TOP 10% 10 NEXT White 10% 20 30 MIDDLE 30% 40 Coloured & 50 Indian % Black 60 70 BOTTOM 50% 80 90 100 Source: FinMark Trust 2002 Source: FinMark Trust 2002 First National Bank Page 24 | 21 October 2005 | First National Bank | A Division of FirstR
Slide 25: Emerging market
Emerging market % 10 20 30 40 50 60 70 80 90 100 2001 TOP 10% 10 NEXT White 10% 20 MIDDLE 30 30% 40 Coloured & 50 Indian % Black 60 70 BOTTOM 50% 80 90 100 Source: FinMark Trust 2002 Source: FinMark Trust 2002 First National Bank Page 25 | 21 October 2005 | First National Bank | A Division of FirstR
Slide 26: Well-positioned in growing black market
Well-positioned in growing black 100% market 16% 90% 24% 80% 52% 54% 70% 62% 63% 61% 60% 78% White 50% 84% 40% 76% Black 30% 48% 46% 20% 38% 37% 39% 10% 22% 0% FNB Other FNB Other FNB Other FNB Other Banks Banks Banks Banks Mass Consumer Wealth Business R0-60K R60 – R750K R750K+ R60k – R400m Other b
Slide 27: Capitalising on growth
Capitalising on growth Branch repositioning Mobile sales force FNB Private Clients FNB Housing Finance Cellphone Banking Commercial Property Finance First National Bank Page 27 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Servic
Slide 28: Creating the future
Creating the future First National Bank Page 28 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 29: Single product to integrated solution
Single product to integrated solution First National Bank Page 29 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 30: Encouraging savings despite low interest rates
Encouraging savings despite low interest rates First National Bank Page 30 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 31: Entrepreneurs need single entry
Entrepreneurs need single entry First National Bank Page 31 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 32: FirstRand building blocks
FirstRand building blocks First National Bank Page 32 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider
Slide 33: Thank you.
Thank you. First National Bank Page 33 | 21 October 2005 | First National Bank | A Division of FirstRand Bank Limited | An Authorised Financial Service Provider