FirstRand Limited · JSE:FSR
FirstRand — FY2006 Earnings Presentation
17 slides from FirstRand's earnings presentation, Sep 23, 2006
Slide 1: Momentum operational review
Momentum operational review
Slide 2: Challenging operating environment
Challenging operating environment Low savings Bulking Regulatory compliance Consumerism Higher interest rates Strong equity markets
Slide 3: Volumes drive strong performance
Volumes drive strong performance Normalised earnings R' mil (pre-IFRS) • Embedded Value R 14 438m 2,000 • Change in Embedded +22% 1,600 22% Value 1,200 • Value of 800 New Business +18% 400 • Retail Net Flow 0 of Funds +37% 2002 2003 2004 2005 2006
Slide 4: Unpacking the earnings
Unpacking the earnings R’ mil June ’06 June ’05 %∆ Insurance operations 940 685 37 • Local 883 726 22 • FNB Collaboration 58 18 >100 • International (1) (59) 98 Asset management operations 347 247 40 • Local 243 178 37 • International 104 69 51 Investment income 280 355 -21 Normalised earnings (pre-
Slide 5: Unpacking the earnings
Unpacking the earnings R’ mil June ’06 June ’05 %∆ Insurance operations 940 685 37 • Local 883 726 22 • FNB Collaboration 58 18 >100 • International (1) (59) 98 Asset management operations 347 247 40 • Local 243 178 37 • International 104 69 51 Investment income 280 355 -21 Normalised earnings (pre-
Slide 6: New business volumes offset margin pressure
New business volumes offset margin pressure Local Insurance Earnings Strong new business growth R' mil 1,000 +22% PLUS 800 600 Acquisitions 400 DESPITE 200 0 2005 2006 Reduced margins
Slide 7: Strategy delivering
Strategy delivering Recurring premiums R' mil 1,200 +29% • New markets 800 • Distribution strategy 400 • Continued success in risk business 0 2002 2003 2004 2005 2006
Slide 8: Well positioned to capitalise on market shift
Well positioned to capitalise on market shift Lump sums R' bn • Up by 46% over the year 24 +51% • Continued shift toward 20 discretionary unit trust 16 inflows 12 8 • Open architecture +34% 4 0 • Focus on specialised 2005 2006 investment brokers On-balance sheet Off-balance sheet
Slide 9: Sage acquisition paying off
Sage acquisition paying off Recurring premium distribution mix • Acquired in-force book and distribution force 13% 24% – New business compensates for run-off – Diversifies distribution 87% 76% • Integrated in 100 days • Service levels following 2005 2006 acquisition regained Brokers Agents
Slide 10: Despite margin pressure
Despite margin pressure New Business Margin 18.7% R' mil 2,000 16.7% 1,500 1,000 500 0 2005 2006 Recurring Risk Recurring RA Recurring Endow ment Lump Sums
Slide 11: Volumes more than compensate
Volumes more than compensate New Business APE R' mil 2,000 28% s + me Volu 1,500 +45% 1,000 +26% 500 -15% +27% 0 2005 2006 Rec urring Risk Rec urring RA Rec urring Endowment Lump Sums
Slide 12: Unpacking the earnings
Unpacking the earnings R’ mil June ’06 June ’05 %∆ Insurance operations 940 685 37 • Local 883 726 22 • FNB Collaboration 58 18 >100 • International (1) (59) 98 Asset management operations 347 247 40 • Local 243 178 37 • International 104 69 51 Investment income 280 355 -21 Normalised earnings (pre-
Slide 13: Local asset management benefits from strong markets
Local asset management benefits from strong markets R' mil Earnings 300 • Growth in unit trusts business +37% • Disappointing short-term 200 investment performance 100 • Market share – Retail: 4% – Institutional: 11% 0 2005 2006
Slide 14: Adapting to a changing environment
Adapting to a changing environment • Continued focus on traditional business – Relentless focus on financial advice – Product innovation – Awesome service • Corporate action – Extract efficiency benefits • Business diversification – Segment FNB Collaboration – Distribution Agents – Product Momentum
Slide 15: New channels growing strongly
New channels growing strongly Recurring premium distribution mix 5% FNB Collaboration 4% 18% Agents 28% 20% ABSA Brokers 14% 13% 13% FNB Brokers Independent 49% 36% Brokers 2002 2006
Slide 16: New products key to growth strategy
New products key to growth strategy Health Beneficiaries under administration • Acquisitions 561,628 – Sovereign ( full year) – African Life Health • More than doubled beneficiaries under 247,790 administration • Momentum Health Open Scheme members +28% • Geared for growth 2005 2006
Slide 17: Africa presents good opportunities
Africa presents good opportunities • Momentum Africa (Health) • Administration and risk for employer-based health plans • Back-office in South Africa • Footprint in 8 countries (excluding SA)