Firstrand Limited · JSE:FSR

Firstrand — Debt Investor Presentation (November 2020)

21 slides from Firstrand's debt investor presentation, November 2020

  1. Slide 1: Capital and Funding Update

    investor presentation CAPITAL AND FUNDING UPDATE 11 – 13 November

  2. Slide 2: Financial resource management

    financial resource CAPITAL AND FUNDING UPDATE management 11 – 13 November

  3. Slide 3: Group crisis response framework to protect shareholder value

    3 Group crisis response framework to protect shareholder value • FirstRand implemented specific actions in March to weather the storm and ensure the group can fully capitalise on recovery • Anchored business to financial resource management principles for next 18 to 24 months: • Carefully price for

  4. Slide 4: Bank has protected its balance sheet

    4 Bank has protected its balance sheet ACTUAL TREND Assets in marketable format >R335 billion Increased (improved liquidity) Liquid assets as % total assets 23.8% Increased (improved liquidity) LCR: 124% The group entered COVID-19 in a strong liquidity LCR and NSFR* position, which has been maintain

  5. Slide 5: Funding and liquidity

    funding and liquidity CAPITAL AND FUNDING UPDATE 11 – 13 November

  6. Slide 6: The economic crisis and subsequent response has had a profound effect on funding and liquidity conditions

    6 The economic crisis and subsequent response has had a profound effect on funding and liquidity conditions Private sector Economic crisis • Lower credit demand and appetite Global policy actions have spanned all • Increased uncertainty channels Public sector • Increased borrowing requirement Econom

  7. Slide 7: Flows to banking sector reflects precautionary savings amidst uncertainty

    7 Flows to banking sector reflects precautionary savings amidst uncertainty Changes in deposits SA banks 6m to Aug 20 All-in cost of 12m NCDs 1.6% Other -3 1.4% Foreign currency -67 Mostly revaluations 1.2% Debt securities -8 1.0% Institutional funding 3 0.8% Housholds 67 0.6% SME 9 0.4% 0.2% Corpor

  8. Slide 8: Elevated government financing spreads across bonds and treasury bills

    8 Elevated government financing spreads across bonds and treasury bills 12-month SA T-Bill spread SAGB Z-spreads across nominal and ILB bps bps 400 105 350 85 300 65 250 45 200 25 150 5 100 -15 50 -35 0 -55 0 50 100 150 200 250 300 Tenor (m) -75 Apr 17 Sep 17 May 14 May 19 Mar 15 Mar 20 Jan 16 Jul 1

  9. Slide 9: Economic forces have not cleared – reflected in a very steep yield curve

    9 Economic forces have not cleared – reflected in a very steep yield curve • Increased precautionary savings Levels households and corporate “liquidity hoarding” • Intertemporal - demand high liquidity • Allocation to issuers of par on demand “money claims” • Banks credit and regulatory liquidity de

  10. Slide 10: Capital

    capital CAPITAL AND FUNDING UPDATE 11 – 13 November

  11. Slide 11: Healthy capital position

    11 Healthy capital position CET1 RATIO 14% 12.3% 12% Current CET1 capacity above capital conservation: CET1 target 11% – 12% R34.3 billion 10% • Surplus above target: R10.0 billion • Demonstrates dividend affordability for the group 8% 7.75% • Surplus sufficient to support ongoing regulatory changes

  12. Slide 12: Ongoing optimisation of the capital stack

    12 Ongoing optimisation of the capital stack % 18.0 16.0 15.7 • D-SIB disclosure of 1.5% provides additional >14.25 2.9 transparency around minimum requirements 14.0 2.3 0.5 12.0 • Optimisation of Additional Tier 1 (AT1) 12.0 1.0 2.3 • To meet internal targets 10.0 • Support proposed large exposure

  13. Slide 13: Regulatory update

    13 Regulatory update • Finalisation of Basel III reforms • Guidance note 7/2020 – proposed implementation dates for specified regulatory reforms • Discussion paper, South Africa’s intended approach to bank resolution (July 2019) • Objectives of the resolution framework, and planning and conducting a

  14. Slide 14: Issuance anchored to a 'multiple point of entry' strategy

    14 Issuance anchored to a ‘multiple point of entry’ strategy Listed holding company (FirstRand Limited, JSE: FSR) 100% 100% 100% 100% 100% 100% FirstRand EMA FirstRand FirstRand Investment FirstRand Investment Entities FirstRand Bank FirstRand Insurance Holdings (Pty) Ltd International Limited Holdi

  15. Slide 15: Appendix

    appendix CAPITAL AND FUNDING UPDATE 11 – 13 November

  16. Slide 16: FRB exceeds LCR and NSFR requirement

    16 FRB exceeds LCR and NSFR requirement Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) • June 2020: 124% • June 2020: 116% • Effective 1 April 2020, temporary COVID-19 relief • In addressing the LCR, the bank adopted strategies measures introduced, reducing the LCR minimum to reduce

  17. Slide 17: Continued focus on optimising the funding base

    17 Continued focus on optimising the funding base SOURCES OF FUNDING FUNDING INSTRUMENTS R826bn R885bn R974bn R1 065bn R1 095bn 37% 36% 35% 36% 32% Deposit franchise*: 72% 22% 20% 21% 21% 21% June 2020 19% 20% 20% 21% 23% 10% 11% 11% 11% 11% 6% 5% 5% 5% 6% 7% 6% 8% 6% 6% 1% 1% Current and savings ac

  18. Slide 18: Resolution blueprint – key elements

    18 Resolution blueprint – key elements Key elements of resolution planning Identification of resolution groups and resolution Interconnectedness entities Critical functions and services (for financial Liability structure and loss-absorbing capacity stability) – operational continuity per institution

  19. Slide 19: Resolution blueprint - key considerations for banks

    19 Resolution blueprint - key considerations for banks • Flac calibration/requirement • Awaiting finalisation of PwC/World Bank flac survey • Level, cost and timeframes • Structure changes and its effect on new issuance • Finalisation of financial conglomerate framework • Preparing for operational c

  20. Slide 20: FRB credit ratings

    20 FRB credit ratings SOUTH AFRICA FIRSTRAND BANK LIMITED SOVEREIGN RATINGS CREDIT RATINGS FOREIGN CURRENCY LOCAL AND FOREIGN CURRENCY Long term/ Long term/ Long-term Standalone outlook outlook national scale credit rating* S&P Global BB-/Stable BB-/Stable zaAA bbb- Moody’s Ba1/Negative Ba1/Negative

  21. Slide 21: Disclaimer

    21 Disclaimer This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. Any decision to purchase securities in the context of a proposed offering of securities,

FirstRand — Debt Investor Presentation (November 2020) on 6ix