FirstRand Limited · JSE:FSR
FirstRand — Investor Presentation (2004)
17 slides from FirstRand's investor presentation, 2004
Slide 1: Credit Card Issuing
Credit Card Issuing Jan Kleynhans
Slide 2: Card Key Highlights … Dec '03
Card Key Highlights … Dec ‘03 FNB Card Share of Retail Cluster Advances ¾ Card loans up 20.1% 4% ¾ Cardholder numbers up 7.5% ¾ 14.8% growth in cardholder turnover ¾ Deposits up 11.6%
Slide 3: Our Key Focus Areas
Our Key Focus Areas ¾ Thorough understanding of customer profitability and credit risk ¾ Highly differentiated card products ¾ Great prospects for growth.
Slide 4: Evolution of FNB Card
Evolution of FNB Card Split issuing and acquiring, to Settling down Focussed on Focussed on More aggressive data service business and getting database getting Balance base selling and cost segment. entrenching mining sales transfers up and management. management. going. running. 2000 - 2001 2001 - 2
Slide 5: Credit Card Loans market share
16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.0% 25.0% 26.0% 27.0% 28.0% 29.0% 30.0% Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 FNB before offset Jun-02 Credit Jul-02 Aug-02 Sep-02 ABSA Oct-02 Nov-02 CREDIT CARD LOANS Dec-02 Jan-03 Card Loans Nedcor Feb-
Slide 6: Credit Card Loans market share before deposit off-set
16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0% 24.0% 25.0% 26.0% 27.0% 28.0% 29.0% Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 FNB before offset Nov-01 Dec-01 Jan-02 Feb-02 ABSA Mar-02 Apr-02 May-02 Jun-02 Nedcor Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Standard CREDIT CARD LOANS Dec-02 Jan-03 Credit Card Loans F
Slide 7: Customer Growth
Customer Growth ¾ Reviewed SA credit card market and saw potential threat of international monolines into the market ¾ International best practice and skills transfer from US-based Providian Financial (and hard lessons learned!) ¾ Moved from reactive branch-only walk-in sales to proactive database m
Slide 8: Customer Account Growth
Customer Account Growth Accountnumbers Account Numbers 780000 760000 740000 720000 700000 680000 660000 640000 620000 600000 Se 1 Se 2 Se 3 Ja 1 N 3 Ja 3 N 1 N 2 Ja 2 2 3 M 2 M 3 04 M 2 M 3 4 l-0 l-0 l-0 0 -0 0 -0 0 -0 -0 -0 0 0 -0 -0 -0 p- p- p- n- n- n- ov ov ov ay ay ar ar ar Ju Ju Ju M Shows imp
Slide 9: Customer Focused Marketing
Customer Focused Marketing ¾ Managing effective credit risk and account utilisation ¾ Customer management is about increasing the economic value of each customer account. Active marketing means putting a better product or offer in front of the customer more often in the hope of attracting the custom
Slide 10: Customer Profitability Decision-Making Model
Customer Profitability Decision-Making Model High Most Least Profitable Opportunity Most Customers Utilisation Are in Here Sizable Least Opportunity Profitable Low Low Risk High
Slide 11: Customer Risk Distribution
Customer Risk Distribution 40% 35% 30% 25% % of Customers 31-Dec-02 20% 30-Jun-03 31-Dec-03 15% 10% 5% 0% FR0-20 FR21-30 FR31-40 FR41-50 FR51-60 FR61-70 FR71-80 FR81-100 Credit Risk Ratings
Slide 12: Customer Profitability Analysis
% of Total Profit Customer Profitability Analysis 31-Dec-02 31-Dec-03 Less -R100 to R0 R0 to R50 to R100 to R200 to R300 to R400 to R500 to R600 to R700 to R800 to R900 to over than - R0 R50 R100 R200 R300 R400 R500 R600 R700 R800 R900 R1000 R1000 R100 Risk-adjusted Profit Bands
Slide 13: Products Offered to Increase Economic Value
Products Offered to Increase Economic Value ¾ Balance Transfers ¾ Limit increases and decreases ¾ Add-On Product Sale e.g. Petro cards ¾ Product Upgrade ¾ Cash advances e.g. budget ¾ Account closure ¾ eBucks Rewards upgrade ¾ Do Nothing
Slide 14: eBucks Rewards Driving Profitable Customer Behaviour
eBucks Rewards Driving Profitable Customer Behaviour ¾ 23% of customer base linked to eBucks Rewards programme ¾ eBucks credit card customers are o 47% more profitable than non eBucks customers o 50% more likely to be retained as credit card customers o using their credit card 75% more than non - eB
Slide 15: Card Product Differentiation
Card Product Differentiation ¾ Credit Electron for low income, higher risk end of market ¾ eBucks Rewards programme ¾ Embedded Insurance features o Debt Protection o Comprehensive Global Travel Insurance o AA Emergency Roadside Assistance o Lost Card and Card replacement insurance ¾ E-commerce produ
Slide 16: Growth Prospects
Growth Prospects ¾ Leverage off 2 year investment in analytical and database mining skills ¾ World-class credit application and behavioural scoring systems ¾ New income estimation and pre-scoring database mining techniques leveraging off group investment in GIS ¾ Credit Electron product for previous
Slide 17: Our Challenges
Our Challenges ¾ Basel II preparations ¾ Credit Card fraud ¾ EMV smartcard chip implementation ¾ New competitors o Barclaycard o Standard Chartered