FirstRand Limited · JSE:FSR
FirstRand — Investor Presentation (July 2004)
41 slides from FirstRand's investor presentation, July 2004
Slide 1: FirstRand Ltd Retail Presentation – July 2004
FirstRand Ltd Retail Presentation – July 2004 Michael Jordaan
Slide 2: Agenda
Agenda • Retail in group context • Economic environment • FNB • WesBank • Financial Services Charter • Conclusion
Slide 3: Retail in Group context
Retail in Group context FirstRand Limited 100% 100% 62% Momentum Group FirstRand Bank Discovery Limited Holdings Limited Rand Merchant Bank First National Bank (FNB) FNB Corporate RMB Private Bank
Slide 4: Retail in Group context
Retail in Group context Retail Customer Service Short-term WesBank FNB Africa Solutions Network insurance HomeLoans Branch Business OUTsurance Botswana banking Transactional Motor First Link Namibia banking Direct Fleet Swaziland channel Investments Services Lesotho eDelivery Card Collection Banking
Slide 5: Retail – big chunk of advances
Retail – big chunk of advances Retail = 52% of FirstRand Banking Group Advances (Dec 03)
Slide 6: Good fundamentals
Good fundamentals Economic indicators (average %) 2003A 2004F 2005F GDP 1.9 3.0 3.0 Prime 15.2 11.5 10.5 CPIX 6.8 5.0 5.0 • Stronger currency Differential wider trading band - between 5.00-7.50 to USD Interest rates (8% vs 1.25%(USA),2%(Europe) Weakening USD Improving economic fundamentals
Slide 7: Confidence improving
Confidence improving • Employment Modestly growing in retail and building sectors Reducing in mining and manufacturing sectors • Business confidence Highest reading in 15 years • Consumer confidence Highest reading in 22 years Increase in disposable income 2010 World Cup Soccer
Slide 8: Mixed impact on banking
Mixed impact on banking • Structurally low inflation and interest rate environment Margin squeeze – Endowment effect – Endowment hedge + Asset growth + Bad debts + • Consumer pricing Consumer awareness regarding “higher” bank charges Value-added services using technology New revenue streams
Slide 9: First National Bank
id First National Bank A division of FirsiRand Bank Limited
Slide 10: FNB's journey
FNB’s journey • 1998 – FNB widely perceived as a laggard • Management replaced by investment bankers • Business units “chunked” and CEOs empowered • 1998 to 2002 – back to basics • 2002 to 2004 – low hanging fruit • 2004 good to great
Slide 11: Our positioning
Our positioning • Customers 5.5 million customers 223,000 Internet bankers • Footprint 640 branches 2,965 ATMs • Balance sheet FNB Retail total assets R114.2bn (December 2003)
Slide 12: FNB brand – strong but can be stronger
FNB brand – strong but can be stronger Spontaneous ad awareness How we stand • Mass – strongly committed • Middle (Black/Coloured) – strongly committed • Middle (White/Asian) – needs working on • Upper – needs more sophisticated products • Business – holding our own Source: BrandVision
Slide 13: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 14: Branches ready for load
Branches ready for load • Centralised back-office • Refocus MIS towards sales and service • Implemented sales culture 2 years ago • Staff asking for products, processes and systems Micro-managing sales real-time
Slide 15: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 16: Streamlined banking with multiple advantages
Streamlined banking with multiple advantages One low interest rate One monthly statement One monthly payment One account for life Get One ‘™ st National Bank | How can wo help you? wewtnh cota
Slide 17: Changing the game
Changing the game • FNB One Account Exciting concept in new markets A single banking solution for all primary needs Individual risk rating Truly integrated back-end
Slide 18: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 19: New age service channels
New age service channels • Internet banking - our competitive strength Very high security with DigiTag & InContact Money back guarantee for fraud Forex and investment products online • Growth opportunities Cellphone banking – prepaid top-ups WIG, WAP and USSD
Slide 20: Improving access
Improving access • Mini-ATM Allows ATM expansion into under represented areas Overcomes lack of infrastructure in rural areas • Portable Branches
Slide 21: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 22: Leveraging the insurance businesses
Leveraging the insurance businesses • Subscribe to broad definition of bancassurance • Embedding credit life into core products (0 to 1 million lives in 2 years) • Insurance skills migrated • Selling and distribution mindset
Slide 23: Is bancassurance profitable?
Is bancassurance profitable? Retail income from insurance operations up 58% year-on-year Dec 02 Dec 03 June 03 % Division Rm Rm Rm ∆HY/HY OUTsurance 40 68 85 70% First Link 18 25 62 39% WesBank 75 100 160 34% HomeLoans - 35 46 n/a FNB Life 18 22 42 22% FNB Consultants 18 17 33 -6% Total 169 267 428
Slide 24: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 25: Give customers what they want
Give customers what they want • Investment in market and behavioural analysis • System support consolidated offerings • Targeted growth segments with go-to-market strategies, examples: Business card One Account Emerging market Commercial property
Slide 26: Key growth drivers
Key growth drivers • Branch readiness • Product innovation • Channel innovation • Leveraging the insurance businesses • Segment focus • Rewards program
Slide 27: eBucks – a success story
eBucks – a success story • Commenced operations 3+ years ago (Oct 2000) to influence behavior and retention • Voted best Financial Services rewards programme in 2003
Slide 28: Making customers behave better
Making customers behave better • eBucks rewards on Cheque accounts eBucks earners 23% less likely to close their accounts eBucks earners transact 90% more than non eBucks earners • eBucks Credit Card customers 47% more profitable than non eBucks customers 50% more likely to be retained as cr
Slide 29: International entrants: threat or opportunity?
International entrants: threat or opportunity? • Barclays Single product – card • Standard Chartered Single product and channel
Slide 30: WesBank
@Q— WesBank
Slide 31: WesBank is the market leader
WesBank is the market leader • Number one in “wheels” finance • Innovation and passion for customer service • Compound growth in profits over 20 years – 19.2% • Successful point-of-sale presence partnership strategy
Slide 32: Still growing market share
Still growing market share New vehicle market share 35 30 25 20 15 10 5 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr WesBank Standard Absa Cash
Slide 33: Blue-chip partners
Blue-chip partners AD vcsce: CLD <CM H » LF/LIN/A/N/C/E| tndersedty @ « WesBank Financial Services wri tg aa > TOYOTA @) (@) McCarthy Finance =a @® y WasBenk Supermarket Finance a Finance Volkswagen = Services NISSAN FINANCE Investment Cars Finance A DIVISION OF WESBANK swson oe WesBank Honda Financ
Slide 34: Lots of growth opportunities
Lots of growth opportunities • Organic SANTACO, InspectaCar, Private Leasing, Business Division growth strategy, Islamic Finance and Collection Solutions External • Acquisition Actively looking for opportunities that will add load, e.g. Barloworld Equipment book • Greenfields Australia and oth
Slide 35: Financial Services Charter An opportunity
Financial Services Charter An opportunity
Slide 36: Retail a key contributor
Retail a key contributor • Signatories to the Charter at the FirstRand Limited level • Retail Cluster key to achieving all Charter compliance areas (except ownership) Employment equity Access to financial services Empowerment financing Procurement and enterprise development
Slide 37: Our strategic approach
Our strategic approach • Not about compliance • It’s how we do business • Business case driven within a framework of sustainability • We had already begun Sustainability Shareholder value Socio-economic growth (Sustainable profits) (Sustainable growth) Charter
Slide 38: Agenda recap
• Retail in group context • Economic environment • FNB • WesBank • Financial Services Charter • Conclusion
Slide 39: Our prospects are good
Our prospects are good • The economy is picking up • Branches are ready • Strong product innovation • Channel innovation continuing
Slide 40: Our prospects are good
Our prospects are good • Leveraging on insurance strengths • Segment focus creates an opportunity pipeline • Rewards program paying off • WesBank remains a star performer • The Charter spells opportunity
Slide 41: FIRSTRAND
FIRSTRAND