Firstrand Limited · JSE:FSR
Firstrand — RMB Morgan Stanley conference 2010
24 slides from Firstrand's conference presentation, Sep 15, 2010
Slide 1: Winning Strategies in a Brave New World
Winning Strategies in a Brave New World RMB Morgan Stanley conference 15 September 2010
Slide 2: Index
Index Core economic view Conventional responses Innovative growth Conclusion 2
Slide 3: Our core economic view consistent with pressures on top-line banking growth
Our core economic view consistent with pressures on top-line banking growth 2010 2011 2012 2013 GDP growth 3.0 3.0 3.3 3.3 Inflation (y (year-end)) 3.8 5.0 5.5 5.5 Nominal disposable income (year -end) 8.5 8.5 8.8 8.8 Repo rate (year-end) 6.0 6.5 7.5 8.0 Rand/ dollar (average value) 7.5 8.0 8.3 8.5
Slide 4: Conventional/Generic strategies
Repricing credit Realigning Repricing b i business models d l transactional banking Conventional/ Generic strategies Changing balance Geographic diversification sheet composition Containing cost 4
Slide 5: Repricing credit
% of re egistered dea als 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 100% Jan-07 Feb-07 Mar-07 Apr-07 A May-07 Low risk Jun-07 Jul-07 B Aug-07 Sep-07 Oct-07 Repricing credit C Nov-07 Dec-07 Jan-08 D Feb-08 Mar-08 E Apr-08 May-08 Jun-08 F Jul-08 Aug-08 G Sep-08 Oct-08 Nov-08 Dec-08 H Jan-09 Feb-09 Mar-09
Slide 6: Repricing transactional banking
Repricing transactional banking Smart Transmission Silver Cheque 110 140 90 120 R 124 124.95 95 86.37 88.50 100 R 105.50 70 75.65 R 100.73 72.60 80 R 91.50 R 87.05 50 R 72.55 60 30 40 33.00 23.65 10 20 Smart Smart Easy Silver Achiever Classic q Cheque Plan Gold Cheque Platinum Cheque 270 320 220 270
Slide 7: Changing balance sheet composition
Changing balance sheet composition HomeLoans Smart Loans Advances Advances (R billi billions)) R millions 114 9 500 113 9 000 112 8 500 8 000 111 7 500 110 7 000 109 6 500 108 6 000 107 5 500 106 5 000 Jul '08 Jan '09 Jul '09 Jan '10 Jul '08 Jan '09 Jul '09 Jan '10 7
Slide 8: Cost containment
Cost containment FNB headcount (18 month trend) Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 H d Headcount thhas d dropped d55.4% 4% y/y / 8
Slide 9: FNB branch distribution in relation to GDP
FNB branch distribution in relation to GDP 2010 2009 GDP distribution distribution Free State 8% 11% 5% Northern Cape 4% 5% 2% Eastern Cape 12% 11% 8% Western Cape 15% 14% 15% North West 6% 6% 6% Limpopo 7% 6% 7% KZN 17% 16% 16% Mpumalanga 8% 8% 6% Gauteng 24% 23% % 35% Total 100% 100% 100% 9
Slide 10: Africa – expected GDP 2011
Africa – expected GDP 2011 Swaziland 2.4% Existing Lesotho 3.0% subsidiaries • Botswana Nigeria 3.0% • Namibia South Africa 3.0% • Mozambique • Lesotho Namibia 4.5% • Swaziland • Zambia Botswana 5 0% 5.0% Representative Angola 6.2% offices • Angola go a Z bi Zambia 6 5% 6.5% • Nigeria Tanzania 7.1%
Slide 11: CIB Coverage within Group
CIB Coverage within Group Corporate and Investment Banking Group (CIB) RMB Manbo FNB CBG EXCO Proprietary Board Business Development CIB Unit Client Co Coverage erage Relationship Mgmt Wholesale Credit Corporate Private Equities Investment FICC Transactional Equity Trading Banking Banking Risk & Com
Slide 12: Innovative growth
EasyPlan eWallet Owner-manager mindset Innovative culture BJM Innovative Quicksell growth Transaction volumes Cellphone Banking Accountt opening A i optimisation 12
Slide 13: Innovative culture
Innovative culture 2005 2006 2007 2008 2009 2010 Ideas originated 3 120 3 606 6 346 6 845 6 227 8528 Ideas implemented 222 359 530 733 641 779 26 347 staff 15 465 registered users 13
Slide 14: QuickSell
QuickSell Number of properties 400 350 300 250 200 150 100 50 0 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10 14
Slide 15: Account opening
Account opening Key objectives: • Significantly reduce the time and simplify the process to set up a customer and open accounts • Pre-populate and print rationalised, simplified customer agreements • Cross-sell appropriate services and value adds as part of the process • One standard process for a
Slide 16: Customer initiated financial transactions
Customer initiated financial transactions Customer initiated financial transactions (millions) 1 100 1,100 16% 1,000 13% 900 800 700 600 500 June 2008 June 2009 June 2010 16
Slide 17: Customer numbers still growing and cross-sell still increasing
Customer numbers still growing and cross-sell still increasing Customers Cross sell (millions) ratio 2.1 7 6 2 5 19 1.9 4 3 1.8 2 1.7 1 0 1.6 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 17
Slide 18: BJM Strategic Rationale
BJM Strategic Rationale Portfolio M Management t Wealth FNB Wealth building blocks Management Stockbroking • Stockbroking adds additional building block to FNB Wealth offering • Acquiring stockbroking businesses means by which competitors grew their wealth businesses • Cost of growing the busi
Slide 19: Owner-manager philosophy
Owner-manager philosophy Traditional Associate branches branch Measures: Direct cost growth 8% 5% NIR growth 9% 10% Cost to income 72% 63% 19
Slide 20: EasyPlan branch rollout
EasyPlan branch rollout Number of branches (actual vs budget) 100 80 60 40 20 0 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11 Actual Target 20
Slide 21: Cellphone banking
Cellphone banking Cellphone banking Users 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 21
Slide 22: eWallet
eWallet Monthly original send values R millions Onsend volumes 35 R 35,000,000.00 100,000 90,000 30 R 30,000,000.00 80 000 80,000 25 R 25,000,000.00 70,000 60,000 20 R 20,000,000.00 50,000 15 R 15,000,000.00 40,000 10 000 00010 R 10,000,000.00 00 30 000 30,000 20,000 5 R 5,000,000.00 10,000 R‐ 0 OCT
Slide 23: More innovations…
More innovations… best reward programme in financial services FNB Connect provides customers with free data Slow lounge very popular PayPal Instant Accounting now free Watch the reward space 23
Slide 24: Conclusion
Conclusion The economy is not going to make it easy to grow banking revenues We have successfully implemented a range of conventional initiatives Tough times create great growth opportunities if you have an innovative mindset 24