FirstRand Limited · JSE:FSR
FirstRand — Investor Day (May 2004)
19 slides from FirstRand's investor day presentation, May 25, 2004
Slide 1: Financial Overview
Financial Overview Mike Field RMB Investment Analyst Day 25 May 2004
Slide 2: 5 year earnings review
5 year earnings review • Consistent profit growth in all market conditions • CAGR 33.6 % over 7 years Rand surge and Flat market low corporate conditions growth Rand collapse 1200 & interest spike High yield 1000 market collapse 1071 Equity market 910 800 collapse R m’s 600 700 630 540 400 200 0 199
Slide 3: 5 year earnings review (cont.)
5 year earnings review (cont.) • At least 1 “rabbit” a year… • Benefits of diversification and “owner manager” Equities and 1200 Private Equity Treasury and Structured Finance 1000 Structured Finance 800 Treasury R m’s Private Equity 600 and Treasury 1071 400 910 700 540 630 200 0 1999 2000 2001 200
Slide 4: Return on utilised capital (Tier 1)
Return on utilised capital (Tier 1) • Superior ROE through active capital management 50% 6,000 44% 40% 5,000 37% 37% 35% 35% 4,000 30% 3,302 3,385 3223 3,000 20% 2,571 2,399 2,000 10% 1,000 0% 0 2000 2001 2002 2003 2004 Reg capital utilisation RORC (pre tax on notional Tier 1)
Slide 5: Financial control to sustain profits
Financial control to sustain profits • Understanding the business portfolios and diversification • Risk and capital management • Regulatory and economic capital • Identify, measure, price for risk • Appropriate incentive structures • Risk based capital allocation and incentivisation
Slide 6: Unpacking the profit
Unpacking the profit Dec 2003 Dec 2002 June 2003 R m’s (6 months) (6 months) (12 months) Trading income 247 233 469 Fee income 47 30 77 Investment income 499 348 943 Gross income 793 611 1 489 Operational expenditure 220 198 418 NIBT 573 413 1 071
Slide 7: Business unit NIBT % contribution
Business unit NIBT % contribution 50% 40% 30% 2002 2003 20% 2004 Int 10% 0% -10% T reasury Equity Structured Project SPJ Private Corporate Other T rading T rading Finance Finance International Equity Finance
Slide 8: Diversity of earnings
Diversity of earnings • RMB has increasingly diversified its earnings mix 100% 100% 5% 7% 8% 18% 80% 80% 23% 25% 20% 60% 70% 60% 19% 17% 19% 40% 40% 20% 50% 50% 20% 42% 25% 0% 0% 1992 2002 2003 2004 Int Annuity Risk based Fee Annuity (existing) Annuity (new) Risk based Fee income
Slide 9: Diversity of earnings per BU
Diversity of earnings per BU 100% 90% 80% 70% 60% Risk Fee 50% Annuity (new) 40% Annuity (existing) 30% 20% 10% 0% Treasury Corporate Equity Private Project Other Structured SPJ Trading Finance Trading Equity Finance Finance International
Slide 10: Debt versus Equity NIBT mix
Debt versus Equity NIBT mix Rm’s 800 700 600 500 400 Debt Equity 300 200 100 0 2001 2002 2003 2004
Slide 11: Diversity of clients
Diversity of clients • Service a range of client segments Parastatal Other 13% Large 4% Corporate Government 35% 8% Financial Industry 7% Medium Corporate 33%
Slide 12: Portfolio of businesses
Portfolio of businesses • Geographical split 10% 5% G7 Emerging Markets SA 85%
Slide 13: Risk and capital management
Risk and capital management • Deployed risk model supported by independent unit • Risk built into frontline decision making • Sophisticated measurement of risks • Market, credit, investment and operational risk • Pricing for risk • Multi-period pricing models • Direct link between risk, reward and r
Slide 14: Market risk
Rand Rand • Stress tests 0 10,000,000 20,000,000 30,000,000 40,000,000 (50,000,000) (40,000,000) (30,000,000) (20,000,000) (10,000,000) 0 10,000,000 20,000,000 30,000,000 40,000,000 (50,000,000) (40,000,000) (30,000,000) (20,000,000) (10,000,000) 1-Jul-02 1-Jul-02 Market risk 16-Jul-02 • Risk attrib
Slide 15: Credit risk
Credit risk • Corporate counterparty distribution (National Scale) as at Dec 03 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% CCC /D AAA/AA/A BBB BB B South Africa Offshore
Slide 16: Operational, compliance and other
Operational, compliance and other • Risk self-assessments • Loss data collection • Compliance risk management • Tax risk • Regulatory risk • Accounting • Internal audit • Insurance
Slide 17: Risk based capital allocation
Risk based capital allocation….. 100% 6% 12% 80% 17% 60% 12% 40% 55% 20% 0% RMB Economic capital % Credit risk direct Credit pre settlement risk Investment risk Market risk Operational risk
Slide 18: Looking forward
Looking forward • Active capital management • Regulatory • Economic • Basel II • Meeting compliance challenges • Tax and Accounting • Technology upgrade • Platform for growth
Slide 19: Thank You
RAND MERCH HANT BANK - A division of FirstRand Bank Limited