Slide 1: FirstRand North American Investor Roadshow
FIRSTRAND NORTH AMERICAN INVESTOR ROADSHOW May 2016
Slide 2: FirstRand's financial position and track record
FirstRand’s financial position and track record… FINANCIAL HIGHLIGHTS ZAR USD NORMALISED EARNINGS for the six months ended 31 December 2015 million million ZAR million Total assets (normalised) 1 139 523 72 860 25 000 Normalised net asset value 95 878 6 130 14% 21 286 Normalised earnings 10 915 802
Slide 3: Delivered by a specific strategy post 2008/9 cycle
… delivered by a specific strategy post 2008/9 cycle • Objectives • Be the African financial services group of choice • Create long-term franchise value • Deliver superior and sustainable returns within acceptable earnings volatility • Maintain balance sheet strength • ... driven by two growth strat
Slide 4: Current revenue mix an outcome of this strategy
Current revenue mix an outcome of this strategy Revenue* (R million) Insure International Rest of Africa Invest 25 000 Transact 20 000 Lend South Africa 15 000 10 000 5 000 0 Transactional Lending Investing Deposits Insurance Investment Markets and FNB Africa Capital Other management structuring end
Slide 5: Asked ourselves if we could continue to outperform with this strategy
Asked ourselves if we could continue to outperform with this strategy • Analysed FirstRand’s portfolio: • Geographic diversification • Macroeconomic environment • Profit pools/income streams • Regulatory challenges and competitive threats • Other headwinds (cost pressures)
Slide 6: This resulted in an adjusted strategy
This resulted in an adjusted strategy • South Africa • Protect and grow existing banking franchises Platform- and franchise-neutral • Broaden financial services offering business model a key enabler • Rest of Africa – still aim to be dominant regional player • Developed markets – a protection and di
Slide 7: Objective is to increase relative contribution from other financial services
Objective is to increase relative contribution from other financial services, whilst growing existing franchises CURRENT REVENUE MIX Large opportunity given our market share of customers Save, Save, invest and insure invest and insure Transact and lend Transact and lend Protect and grow banking fran
Slide 8: Leveraging a portfolio of building blocks
Leveraging a portfolio of building blocks Distribution channels Clearing house Customer bases Made available to all Licenses Systems PLATFORM AND FRANCHISE NEUTRAL
Slide 9: Still want to be a regional player
Still want to be a regional player • Risk/reward landscape in the rest of Africa has changed • Negative commodity cycle – (structural rebalancing of Chinese economy from investment to consumption) • Undiversified markets susceptible to macro shocks often exacerbated by policy mistakes • Higher corre
Slide 10: Aim to build a portfolio of businesses
Aim to build a portfolio of businesses APPROACH INFORMED BY: PORTFOLIO THINKING (SHAREHOLDER VIEW) BUSINESS STRATEGY • Profit pools • Balanced portfolio • Transact South Africa Nigeria • Invest • Avoid Lesotho Mozambique • Lend concentrations • Diversify risk and • Insure Swaziland Ghana earnings st
Slide 11: Our approach?
Our approach? • Prioritise • Profit pools • Competitive and differentiated client value proposition • Operational capacity • Disciplined financial resource allocation • What this means • Not necessarily universal banking • Temper our aspirations (size and timing) • Smaller bets
Slide 12: DM required to protect existing strategies
DM required to protect existing strategies… • Access to hard-currency funding will enable rest of Africa strategy • Protect cross-border counterparty status to access financial markets • MotoNovo (ring-fence in CFC)
Slide 13: …and provide growth and diversification
…and provide growth and diversification • MotoNovo • Demonstrated exportable value proposition • 8 years later it constitutes a significant part of WesBank’s business • Provides diversification for WesBank which it did not have in the previous cycle • Sizeable business (approximately R1 billion PBT)
Slide 14: The updated strategic framework provides broader opportunities for growth
The updated strategic framework provides broader opportunities for growth South Africa Rest of Africa Other (UK, Channel Islands and India) Protect and grow banking franchises Broaden financial services offering Protect and diversify Portfolio approach will capitalise on long-term growth opportunity
Slide 15: Resulting in a revised statement of intent
Resulting in a revised statement of intent… • FirstRand’s portfolio of leading financial services franchises: • provides a universal set of transactional, lending, investment and insurance products and services • seeks to operate in markets and segments where franchises can deliver competitive and d
Slide 16: Superior and sustainable economic returns to shareholders
…which will underpin delivery of… ...superior and sustainable economic returns to shareholders within acceptable levels of volatility and maintain balance sheet strength