Absa Group Limited · JSE:ABG
Absa — Barclays Africa Group — Investor Day (November 2014)
113 slides from Absa's investor day presentation, Nov 7, 2014
Slide 1: Africa outside of South Africa
Africa outside of South Africa 7 November 2014
Slide 2: Financial overview
Financial overview David Hodnett
Slide 3: Our strategy differentiates between local, regional and global propositions
Our strategy differentiates between our local, regional and global propositions Competitors ‘Go-To’ Differentiator to win segments Fully global segments/ • Barclays’ global relationships, franchise footprint products and key capabilities • CIB – MNCs and regional clients • Provide local coverage and
Slide 4: Acquisition transformed our geographic mix
Acquisition transformed our geographic mix Rest of Africa total revenue (%) Rest of Africa headline earnings (%) 17 20 3 FY12 1H14 3 FY12 1H14 4
Slide 5: A quarter of our customers and staff
A quarter of our customers and staff Customer numbers (%) Employee numbers by geography (%) 23 24 77 76 South Africa Rest of Africa South Africa Rest of Africa 5
Slide 6: Above average rest of Africa contribution
Above average rest of Africa contribution Rest of Africa group earnings 1H14 (%) 25 17 10 7 10 6 3 Barclays Africa FirstRand * Nedbank ** Standard Bank *** Standard Chartered **** Notes: * FY14; ** includes ETI pro forma impact; *** to continuing earnings; **** includes SA 6
Slide 7: A balanced rest of Africa portfolio
A balanced rest of Africa portfolio … 1H14 Revenue by country (%) Headline earnings by business (%) ** 5 3 6 29 9 43 10 54 14 12 12 3 Kenya Ghana Botswana Tanzania * Zambia Mauritius RBB WIMI CIB Uganda Mozambique Seychelles Note: * NBC and Barclays Bank Tanzania ** Retail and Business Banking, Weal
Slide 8: … and loan book
… and loan book 1H14 Loans by country (%) 1H14 Loans by business (%) 4 4 6 6 29 8 41 11 59 19 13 Kenya Mauritius Botswana Tanzania * Zambia Ghana Mozambique Uganda Seychelles RBB CIB Note: * NBC and Barclays Bank Tanzania 8
Slide 9: Strong capital and funding position
Strong capital and funding position Capital adequacy ratio 1H14 (%) Rest of Africa loans to deposits 1H14 (Rbn) Tier 2 Loans 1.3 54 Tier 1 Deposits 17.5 43 2.1 3.0 36 12.5 10.9 26 Absa Bank Limited Barclays Africa Rest of Africa * RBB CIB Group Notes: * weighted average 9
Slide 10: Rest of Africa improved our 1H14 growth
Rest of Africa improved our 1H14 growth Loan growth YoY (%) Revenue growth YoY (%) 12 22 6 4 SA Rest of Africa SA Rest of Africa Pre-provision profit growth YoY (%) Headline earnings growth YoY (%) 16 34 4 6 SA Rest of Africa SA Rest of Africa 10
Slide 11: Revenue growth, lower credit cost drove earnings
Revenue growth, lower credit cost drove earnings Rest of Africa headline earnings drivers (Rm) +12% -3% +10% 640 12 331 +8% +34% 66 1 013 758 1H13 Revenue Credit impairments Operating expenses Tax and other 1H14 11
Slide 12: Rest of Africa 1H14 salient features
Rest of Africa 1H14 salient features Lower net interest margin (%) Improving credit loss ratio (%) 9.49 1.69 7.49 1.32 1H13 1H14 1H13 1H14 Non-interest income to total relatively Cost to income ratio improving (%) low (%) 63.3 34 62.0 33 1H13 1H14 1H13 1H14 12
Slide 13: All businesses contributed to pre-tax growth
All businesses contributed to pre-tax growth Profitable Retail franchise Profit before tax (Rm) Opportunities in: 16% 27% 1H13 993 – Corporate Banking 1H14 895 856 – Markets 705 – Business Banking – WIMI 36% 39 53 RBB CIB WIMI 13
Slide 14: Contributing to achieving our targets
Contributing to achieving our targets Rest of Africa 20% to 25% of total revenue Top 3 by revenue in our 5 biggest markets - South Africa, Kenya, Ghana, Botswana and Zambia Cost to income ratio in the low 50s by 2016 RoE 18% to 20% by 2015 14
Slide 15: Risk Overview
Risk Overview 1 BARCLAYS Anil Hinduja
Slide 16: Enterprise Risk Management Framework outlines approach to managing risk
Enterprise Risk Management Framework outlines approach to managing risk Integrated risk management Strengthened team Implemented three lines of defence Well positioned for execution 16
Slide 17: Credit risk profile
Credit risk profile Balanced portfolio 1H14 loans by country (%) 1H14 retail vs wholesale (%) Uganda 4 Zambia Seychelles 8 Botswana Ghana 3 13 6 32 Tanzania 11 Mozambique 68 6 Kenya 29 Mauritius 19 Wholesale Retail Note: Wholesale includes Business Bank and CIB 17
Slide 18: Retail
Retail Improving performance, opportunity for targeted growth 1H 2014 Portfolio by product (%) Balances and credit loss ratio 500 31 000 VAF 450 29 058 1 Cards 29 000 4 400 26 415 27 000 350 Other 300 286 25 000 Mortgages 2 20 250 23 000 Scheme 214 40 200 21 000 Overdrafts 2 150 19 000 100 Personal
Slide 19: Wholesale
Wholesale Risk appetite defined along client/sector/product & geography 1H14 Portfolio by industry (%) Balances and credit loss ratio Agriculture 250 40 000 Transport, IT & Comms Utilities 3 222 35 570 2 2 35 000 200 Commercial 30 000 Banks 26 829 17 25 000 150 Sovereign Hospitality 20 000 28% and L
Slide 20: Operational risk
Operational risk Increased focus on enhancing control Technology investment prioritised to improve resiliency and support growth Customer/Client centric approach to on-boarding Fraud Risk management continues to be an area of investment People are a core component as we build out the franc
Slide 21: Market and funding risk
Market and funding risk Traded risk remains low (average DVaR < 4m) Focus is on expanding product to deliver risk management solutions to clients Lack of derivatives market makes it difficult to hedge non-traded risk Strong deposit franchises in countries Liquidity risk management approach
Slide 22: In conclusion
In conclusion Investing in core capabilities to enable sustainable growth Focussing on effective risk management and control Augmenting risk-adjusted returns, while reducing volatility Leveraging global expertise Monitoring potential headwinds to course correct 22
Slide 23: Corporate and Investment Bank
Corporate and Investment Bank Stephen van Coller
Slide 24: Follow our Pan-African clients into Africa
Follow our Pan-African clients into Africa Rapid expansion of South African corporates across the continent No. of companies 1990 - 2006 No. of companies 2006 - 2013 Expansion of emerging African corporates e.g. Ghanaian Corporates e.g. Ugandan Corporates e.g. Botswana Corporates • Multi-domestic fo
Slide 25: Meeting the needs of global clients across Africa
Meeting the needs of global clients across Africa Africa’s trade with the world is not Europe only growing 104 / 325 North America China quickly, it is 36 / 85 7 / 182 Middle East increasingly 11 / 55 Other Developing Asia reflecting ties 12 / 95 Intra-Africa with the fastest 22 / 123 Latin America
Slide 26: Growing economies … an exciting opportunity
Growing economies … an exciting opportunity SSA GDP, US$ bn CAGR % SSA GDP by sector, US$ bn CAGR % 2008-13 1 924 2008-13 Nigeria 522 20 357 -5 South Africa 351 5 1 518 Egypt 272 11 Mining 294 22 Ghana 48 11 376 Agriculture Kenya 44 8 280 39 Consumer 242 Zambia 22 9 209 37 Services Mozambique 15 202
Slide 27: The opportunity in Africa
The opportunity in Africa South Africa Africa Economy 1994 2014 Economy 2004 2014 No. of sovereign 10 22 JSE market cap US$ 101 bn US$ 843 bn* credit ratings GDP US$ 1.9 trn US$ 2.39 trn* GDP US$ 136 bn US$ 382 bn Trade Volumes* US$ 241 bn US$1,005 trn CPI 8.94% 5.90% CPI 13.3% 4.2% US$ 10 bn Wholes
Slide 28: The strategy remains unchanged
The strategy remains unchanged Strategic Scorecard Targeted strategic approach objectives metrics Corporate Products IB* Products Markets Products • Client franchise Client SA RoA SA RoA SA RoA Be a preferred contribution Cash Management Debt Capital Markets Rates partner for clients • Customer serv
Slide 29: Winning client confidence
Winning client confidence Overall African #1 Investment # 1 in brokerage #1 M&A Deal of the Year Adviser by weighted Solar Deal of the South Africa 2013 transaction value category Year 2013 ranking African Power #1 Sponsor by ‘Dealing: Fixed (by Deal Value) Deal of the Year transaction value Interes
Slide 30: CIB strategy gaining traction
CIB strategy gaining traction Absa Capital SA 1 CAGR CIB * CAGR 12% Net revenue Cost 11% PBT 3% 7% 17% 29% 2010 2011 2012 2013 2014 2012 2013 2014 1 Absa Capital SA normalised for exclusion of non-core businesses; * 2014 is 1H annualized, not a full year forecast 30
Slide 31: Creating returns accretive business a priority
Creating returns accretive business a priority Risk weighted assets (Rbn) + Basel + Addition of corporate + Addition of Africa business + Asset growth - Unwinding of 167 derivatives and equity exposures 38 97 86 - AIRB saving RWA 119 optimisation 11 2009 2011 2013 RoRC 11,79% 16,53% 18,71% RoRWA 3,9
Slide 32: The mid-corporate opportunity is significant
The mid-corporate opportunity is significant Lower average ‘Corporate’ RWAs (%) Average RWA (%) versus book sizes 62 61 Standard Bank 184 61 301 60 Barclays 59 119 191 58 97 180 57 69 56 56 41 41 55 13 13 23 23 55 54 53 52 AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- <B- Barclays Standard Bank RMB Low
Slide 33: Robust plan to deliver business platforms
Robust plan to deliver business platforms Supporting strategic Delivery schedule Business priorities initiatives 2014 2015 2016 Host to Host KEN, ZAM, GHA, MUS, MOZ, TZA, SIM, SYC BWA Channel Barclays.Net RSA Corporate Business Online ZAM, GHA, BWA, KEN, MOZ, TZA, UGA MUS, EGY ZIM, SYC Doc Trade Pla
Slide 34: … as well as delivery of infrastructure platforms
… as well as delivery of infrastructure platforms Delivery schedule Business Supporting strategic initiatives 2014 2015 2016 2017 priorities • Golden source of data in Africa KEN, ZNB, GHA, MUS, EGY, BWA, • PCG reporting consolidation in Africa RSA MOZ, TZA, UGA, ZIM, SYC Improving • SWIFT upgrade a
Slide 35: Client centricity will change the way we go to market
Client centricity will change the way we go to market Rationale Our approach Client Commoditisation of core Client business IB Corporate Sales 1. Rapid change in operating Coverage Coverage environment 2. Drives product development, 3 Competition drives margin IB Product Corporate Trading Centralise
Slide 36: Building e-Bank to respond to changing dynamics
Building e-Bank to respond to changing dynamics Digital banking drivers Focus building blocks of e-bank Success for the bank • Keep clients by linking them to the bank: Keep revenue intact “ To stay competitive, companies must stop • Grow clients by connecting them with each other: Growing revenue f
Slide 37: Citizenship is becoming a business imperative
Citizenship is becoming a business imperative Becoming a company that is concerned with the broader environment has a more sustainable future 43% of global consumers said they are 1681% willing to spend more for a product or Cumulative returns (%) 1180% service that supports a cause Examples: US Fir
Slide 38: Retail and Business Banking
Retail and Business Banking Craig Bond
Slide 39: A leading African franchise
A leading African franchise 39
Slide 40: Solid underlying growth
Solid underlying growth Pre-tax drivers 1H14 Healthy loan growth 14% 10% Regulatory changes and lower rates 9% 136 reduced net interest margin 263 (7%) 100% 16% Improving transaction volumes offset 253 25 14 993 pricing pressure 856 Credit quality improved Constant currency costs well cont
Slide 41: Key RBB initiatives
Key RBB initiatives Move from product driven operating model to customer needs led, centrally solutions and locally executed Physical and digital channels to be future Putting customers at the heart of everything proof sales and service channels, where NPS we do – get service right, no matter what i
Slide 42: Retail strategy focus areas
Retail strategy focus areas Building leadership and simplifying structure Building customer needs-led and product management discipline Driving culture of accountability and ownership Getting management process and governance right (council driven) Building product management discipline
Slide 43: Business Banking focus areas
Business Banking focus areas Embed culture of the client at the centre of everything we do Sectors Coverage & Channels Products Refine operating model to ensure greater focus on Relationship Business Integrator & B.Net Branch and ATMs providing appropriate solutions Business Transactional Accoun
Slide 44: Wealth Investment Management and Insurance (WIMI)
Wealth Investment Management and Insurance (WIMI) Lanz Zulu
Slide 45: WIMI strategy
WIMI strategy Our ambition is to be the ‘Go-To’ provider of integrated non-banking financial solutions Strategic Pillars WIMI Solutions in South Africa 1. Leverage bancassurance • Credit life • Accident competency Life • Complex life • Funeral Build on 2. Grow multi-channel Insurance cover strengths
Slide 46: Strategy and business model overview
Strategy and business model overview Market strategy – Operate where Barclays has established a presence including Botswana, Egypt, Ghana, Kenya, Mozambique, Tanzania, Uganda, and Zambia – Appropriate local approach to manufacturing, sales and distribution Strategic philosophy – Regional capabil
Slide 47: WIMIs integrated Pan-Africa strategy
WIMIs integrated Pan-Africa strategy Pan-African components Business focus areas Products Customer segments Channels • Work closely with RBB in-country • Full value proposition for • Premier – grow • Grow multi-channel to deepen penetration target segments across: • Standard – grow distribution capa
Slide 48: Positive progress to date
Positive progress to date Commitment Achievements Next steps Accelerate • Barclays Life Botswana (March 2011) • Kenya greenfield business operationally ready, identifying expansion into • Global Alliance, Mozambique (September 2011) suitable target for both life and non-life acquisition new markets
Slide 49: Solid growth to date
Solid growth to date 1H14 FY13 FY12 FY11 Gross premium income (Rm) (Rm) (Rm) (Rm) growth (Rm) Global Alliance 494.1 Mozambique 25,0 40,3 23,3 11,2 382.5 330 Barclays Life Botswana 24,6 26,3 17,1 (8,1) Barclays Life Zambia 0,8 (3,2) (4,8) - Total 2012 2013 1H14 50,4 63,4 35,6 3,1 CAR cover Sept 1H14
Slide 50: Expansion plans
Expansion plans Present in 8 markets by 2016 Provide full product offering (life, short-term, wealth and investment management) where commercially viable Kenya – full WIMI proposition Ghana – planned WIMI entry in 2015 Egypt – consider entering after bedding down West and East Africa Acc
Slide 51: Kenya
# BARCLAYS Kenya Jeremy Awori
Slide 52: Key market statistics
Key market statistics GDP 2013 (US$ bn) 53,3 GDP per capita 2013 (US$) 1 229 GDP growth 2014E1 (%) 5.5 Central Bank Reference Rate (%) 8,5 Inflation (%) 6,60 Credit rating B1 (Moodys); B+ (Fitch) Public debt to GDP (%) 48 Population (million) 44,3 Source : Government of Kenya; GDP up 25% following r
Slide 53: Stable market with strong growth opportunities
Stable market with strong growth opportunities Inflation (%) and US$:KSH 90 Central 89.3 15.0% 89 Bank 88.3 13.0% rate 88 8,5 87.1 86.9 87.4 87.6 87.8 11.0% Disciplined monetary policy 87 86.2 86.3 86.3 86.5 9.0% 86 7.0% 85 84.5 7.4 7.2 6.3 7.3 7.7 6.6 5.0% Stable exchange rate 84 3.0% 83 1.0% 8
Slide 54: Barclays Bank Kenya
Barclays Bank Kenya 1H14 PBT split (%) Operating metrics Established 1917 11 BAGL ownership (%) 68,5 Outlets 121 17 ATMs 232 Employees (permanent) 2 815 Customers (thousand) 742 Ranking by revenue (1H14) 4 72 Market capitalisation (KSH bn) * 90,7 RBB CIB Treasury * As at 5 November 2014 54
Slide 55: Earnings impacted by one offs
Earnings impacted by one offs Revenue growth (%) Earnings growth PAT (%) 11 74 4 13 10 8 2 2 1 14 -1 24 2009 2010 2011 2012 2013 1H14 2009 2010 2011 2012 2013 1H14 55
Slide 56: Double digit growth in customer loans
Double digit growth in customer loans Customer loans (KES bn) 1H14 Loan split (%) 128 118 104 99 36 87 64 2010 2011 2012 2013 1H14 RBB Corporate 56
Slide 57: Rising competition increases cost of funding
Rising competition increases cost of funding Customer deposits (KES bn) 1H14 Deposit split (%) 151 148 138 16 124 124 84 2010 2011 2012 2013 1H14 RBB Corporate 57
Slide 58: Strong cost control whilst still investing for growth
Strong cost control whilst still investing for growth 1H14 1H13 Change Rm Rm % Net interest margin pressure Net interest income 1 180 1 124 5 dampened revenue growth Non-interest income 519 547 (5) Lower non-interest income Total revenue 1 698 1 671 2 Core costs grew 3% - industry Credit losse
Slide 59: Steady performance in a competitive and turbulent environment
Steady performance in a competitive and turbulent environment 1H14 1H13 (%) (%) Net interest margin 10,73 12,12 Lower rates and deposits pressure hurt net interest margin Non-interest income to total 30,5 32,7 revenue Cost to income ratio remains Cost to income ratio * 51,0 50,1 close to target
Slide 60: Strategic challenges
Strategic challenges Rapid technological innovation Intense competitive landscape Insecurity and terrorism Devolution and political transition Increasingly complex regulatory environment War for talent 60
Slide 61: Strategic opportunities
Strategic opportunities Retail Credit cards CIB and Treasury • Propositions versus products • Substantial room for growth • Holistic end-to-end client solutions • Grow balance sheet • Cross sell • Deepen segment penetration • Rapid digitisation • Build on leadership position • Tap into economic grow
Slide 62: Building on a strong foundation
Building on a strong foundation Start to build momentum Outstanding delivery Driving sustainable value One Africa Profit and balance sheet Greater contribution of Review and define clear growth new revenue streams strategic agenda Drive digital agenda Leader in innovation and Drive bal
Slide 63: Share information
Share information 19 18 18 17 17 16 16 15 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Listed on the Kenyan Stock Exchange Average monthly trade KES 26bn in 1954 (R3bn) Market capitalisation KES 90.7bn* (R11,3bn) Note: *At 5 November 2014 63
Slide 64: Botswana
Botswana Reinette van der Merwe
Slide 65: Key market statistics
Key market statistics GDP 2013 (US$, bn) 5,9 GDP per capita 2013 (US$) 7 040 GDP growth 2014E1 (%) 4.6 Key interest rate (Prime) 9,0 Inflation (%) 4,6 Credit rating (foreign currency long term debt) A2 (Moody’s) Public debt (% of GDP) 2 18,5 Population (million) 2,0 Source: Barclays Botswana researc
Slide 66: Moderate growth outlook
Moderate growth outlook 10 10.0% 8.87 National elections unlikely to affect 9 8.5% 8.39 9.0% 8.2% 8 7.61 8.0% macro environment meaningfully 7.12 6.9% 7 6.82 Monetary policy expected to support 7.5% 7.0% 6 6.79 5.9% 6.0% growth and rate unchanged through 2014 and 2015 5 4.5% 5.0% 4 4.0% Inflat
Slide 67: Barclays Bank Botswana
Barclays Bank Botswana 1H14 PBT split (%) Operating metrics Established 1950 2 BAGL ownership 67,8 Outlets 43 34 ATMs 112 Employees 1 245 Customers (thousand) 132 64 Ranking by revenue (1H14) 3 Market capitalisation (BWP bn) * 2,9 RBB CIB Treasury * As at 5 November 2014 67
Slide 68: Substantial decline in earnings
Substantial decline in earnings Earnings growth YoY (%) 21 9 -2 -12 -22 -28 2009 2010 2011 2012 2013 1H14 68
Slide 69: Continued growth in loans and advances
Continued growth in loans and advances Customer loans (BWP bn) 1H14 Loan split (%) 7.8 7.3 22 6.3 6.1 5.6 78 2010 2011 2012 2013 1H14 Retail Corporate 69
Slide 70: Focus on growing core liabilities reduces deposits
Focus on growing core liabilities reduces deposits Customer deposits (BWP bn) 1H14 Deposit split (%) 9.7 9.6 9.6 9.3 9.3 39 9.2 61 8.7 2008 2009 2010 2011 2012 2013 1H14 Retail Corporate 70
Slide 71: Lower NIM and bank charge freeze…
Lower NIM and bank charge freeze… 1H14 1H13 Change Rm Rm % Interest income affected by 200 Net interest income 528 564 (7) bps cut in 2013 Non-interest income 205 213 (4) Central Bank announced fees Total revenue 733 777 (6) moratorium for 2014/5 Credit losses 123 99 24 Impairments mainly due
Slide 72: Key performance ratios
Key performance ratios 1H14 1H13 (%) (%) Net interest margin 8,14 8,89 NIM reflects optimised balance Non-interest income to sheet and lower rates 28,0 27,7 total revenue CIR higher due to increased Cost to income ratio 56,9 52,5 strategic investment and Credit loss ratio 1,36 1,28 declining inc
Slide 73: Successes in 2014
Successes in 2014 Relatively low cost base Grew corporate balance sheet by 70% Diamond financing deals initiated Partnering with government and VISA in the e-government strategy Increased wallet share under Ministry of Finance and Development Planning Banker to US$25 million USAID credit
Slide 74: Challenges
Challenges Regulatory pressure on fees Lower GDP growth and interest rates Increased competition due to new entrants Household debt at 80% of total country debt on the back of limited savings 74
Slide 75: Strategic focus areas
Strategic focus areas Create an empowered culture where employees are appropriately rewarded and are proudly Barclays Increase customer and client convenience through more services through electronic channels Offer a range of lifestyle products such as insurance and FX Deepen public sector c
Slide 76: Key messages
Key messages Becoming the ‘Go-To’ bank for our stakeholders Revenue streams will continue to diversify Continue to invest in technology to improve customer convenience and extract operational efficiencies Optimising our balance sheet Improve RoE and PBT growth 76
Slide 77: Zambia
Zambia BARCLAYS Saviour Chibiya
Slide 78: Key market statistics
Key market statistics GDP 2014E (US$ bn) 27,0 GDP per capita 2014E (US$) 2 054 GDP growth 2014E (%) 6,5 Key interest rate – 6 month T-bill rate (%) 16,6 Inflation 2014E (%) 7,9 Credit rating B (Fitch) B+ (S&P) Public debt to GDP (%) 27 Population (million) 14,6 Source: EIU report, August 2014 78
Slide 79: Strong growth expected
Strong growth expected 18 16 GDP growth expected to be higher than 14 6,5% 12 Fairly stable inflation rate 10 Presidential by-elections in January 8 2015 and general elections in 2016 6 Expect a surplus current account 4 balance going forward 2 Currency has been relatively stable in 0 2H14
Slide 80: Barclays Bank Zambia
Barclays Bank Zambia 1H14 PBT split (%) Operating metrics 2 14 Established 1918 BAGL ownership (%) 100 48 Outlets 55 ATMs 150 36 Employees 1 044 Customers (thousands) 233 Ranking by revenue (1H14 ) 4 CIB Retail Business Bank Markets 80
Slide 81: Strong rebound in revenue and earnings
Strong rebound in revenue and earnings Revenue growth (%) Earnings growth (%) 17 153 7 67 1 13 22 5 12 2010 2011 2012 2013 1H14 218 2010 2011 2012 2013 1H14 81
Slide 82: Solid loan growth
Solid loan growth Customer loans (ZMK bn) 1H14 Loan split (%) 3.5 3.1 2.9 29 52 1.5 19 2011 2012 2013 1H14 Retail Business Banking Corporate 82
Slide 83: Improving deposit growth
Improving deposit growth Customers deposits (ZMK bn) 1H14 Deposit split (%) 4.7 4.3 3.6 3.7 37 51 12 2011 2012 2013 1H14 Retail Business Banking Corporate 83
Slide 84: Substantial growth on large positive JAWS
Substantial growth on large positive JAWS 1H14 1H13 Change Rm Rm % Strong balance sheet growth and Net interest income 368 354 4 increased fee income across all Non-interest income 280 201 39 segments Total revenue 648 556 17 Lower credit charge on improved portfolio Credit losses 17 43 (61) C
Slide 85: Improving efficiency and returns
Improving efficiency and returns 1H14 1H13 (%) (%) Net interest margin down due to Net interest margin 5,36 6,03 higher cost of funding Non-interest income to total Positive JAWS improve efficiency revenue 43,2 36,2 Credit loss ratio below through-the- Cost to income ratio 64,9 74,3 cycle leve
Slide 86: Strategic challenges
Strategic challenges Lack of diversification of the economy which is heavily dependent on copper mining Regulation and legislation adversely impacting banking sector e.g. statutory capital requirement to $100m from $2.5m, introduction of controls on maximum lending rates and FX margins Stiff c
Slide 87: Strategic focus areas
Strategic focus areas Increase market share in key economic sectors of mining, energy, agriculture, manufacturing, telecommunications and public sector Continue leveraging regional and global capabilities, expertise and relationships Drive growth in Premier (affluent), Prestige (mass affluent)
Slide 88: Key messages
Key messages Positive macro backdrop with strong GDP growth Focus on increasing market share in key economic growth sectors Strong rebound in revenue and earnings improving returns Improving balance sheet growth Focus on providing excellent customer and client service Regulatory changes
Slide 89: Mauritius
Mauritius ® BARCLAYS Ravin Dajee
Slide 90: Key market statistics
Key market statistics GDP 2014E (US$, Bn) 20.2 GDP per capita 2013 (US$) 9 160 GDP growth 2014E (%) 3,7 Savings interest rate 3,5 Inflation (%) 3,9 Credit rating Baa1 (Moody’s) Public debt to GDP (%) 50,3 Population (million) 1,3 Source: International Monetary Fund 90
Slide 91: Steady economic growth with a positive outlook
Steady economic growth with a positive outlook GDP growth and inflation rate (%) Steady economic growth despite weak 4.2 EU main trading partner 3.6 3.4 3.2 3.5 Outlook for 2014 broadly positive with 3,7% GDP growth and 3,9% inflation 2010 2011 2012 2013 2014 Main short-term risk is renewed EU
Slide 92: Barclays Bank Mauritius
Barclays Bank Mauritius 1H14 revenue split (%) Operating metrics Established 1919 9 BAGL ownership (%) 100 Outlets 24 ATMs 42 51 Employees 814 40 Customers (thousands) 93 Ranking by revenue (1H14) 4 CIB RBB Treasury Note: * August 2014 92
Slide 93: Lower revenue reduced earnings
Lower revenue reduced earnings Revenue growth (%) Earnings growth (%) 33 * 102 5 5 5 1 28 28 38 42 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Note:*2010 includes proceeds from sale of Custody business. 93
Slide 94: Stable loan growth since 2012
Stable loan growth since 2012 Customer loans (MUR, bn) 1H14 Loan split (%) 45.9 43.8 43.1 16 39.1 35.4 42 42 Retail Corporate Domestic 2010 2011 2012 2013 1H14 International Banking 94
Slide 95: Comfortable liquidity position
Comfortable liquidity position Customer deposits (MUR, bn) 1H14 Deposit split (%) 94.3* 79.7 80.2 23 72.8 68.7 57 20 Retail Corporate Domestic 2010 2011 2012 2013 1H14 International Business Note: * Driven by one client deposit of US$ 600m 95
Slide 96: Higher credit impairments dampen earnings
Higher credit impairments dampen earnings 1H14 1H13 Change Rm Rm % Net interest income Strong net interest income 380 311 22 growth Non-interest income 123 158 (22) Lower non- interest revenue Total revenue 503 470 7 mainly due to slack FX Credit losses 32 12 172 activity Operating expenses 306
Slide 97: Stable returns in challenging environment
Stable returns in challenging environment 1H14 1H13 (%) (%) Net interest margin rose on Net interest margin 2,19 1,85 sustained balance sheet growth Non-interest income to total 24,5 33,6 assets and liabilities revenue Cost to income ratio 60,7 60,9 Lower CIR from cost containment and efficiency
Slide 98: Focus areas
Focus areas Mauritius as an international financial centre Corridor strategy using Mauritius as an investment hub for US/UK/EU/Asian multi-national corporations into Africa In-depth knowledge of sophisticated products and specialised sectors Ability to draw talent from the group Loan booki
Slide 99: Challenges
Challenges Legacy systems and heavy processes Uncompetitive credit policies, conditions and covenants Deposit pricing competition Better global alignment (offshore banks) Improve marketing Lacking market data and intelligence (customer profiling) Gaps in resourcing and skills 99
Slide 100: Key messages
Key messages Cost control improves earnings growth Low FX activity and interest rates dampen revenue growth Stable 10% annual growth in customer loans for the last 2 years Comfortable liquidity position in both domestic and international banking businesses Growth strategy aligned to govern
Slide 101: Ghana
Ghana Patience Akyianu # BARCLAYS
Slide 102: Key market statistics
Key market statistics GDP 2013 (US$ bn) 48,9 GDP per capita 2013 (US$) 1 838 GDP growth 2014E (%) 6,9 Key interest rate (%) 19 Inflation (%) 15,9 Credit rating B Negative (Fitch) Public debt to GDP (%) 55,8 Population (million) 25,9 Sources: World Bank, Ghana Statistical Service , Bank of Ghana, Eco
Slide 103: Strong growth along bumpy road
Strong growth along bumpy road 16.0 Inflation (%) Stable political climate post-election 13.5 judicial decision 8.5 8.6 8.8 Strong GDP growth High interest rates and inflation Weak Cedi 2009 2010 2011 2012 2013 Fiscal deficit Exchange rate GHS:US$ Current IMF engagement 2.35 Power defi
Slide 104: Barclays Bank Ghana
Barclays Bank Ghana 1H14 PBT split (%) Operating metrics Established 1917 BAGL ownership (%) 100 28 Outlets 74 45 ATMs 158 Employees 1 147 Customers (thousand) 518 Ranking by revenue (1H14) 4 27 RBB CIB Markets 104
Slide 105: Strong growth since 2009…
Strong growth since 2009… Revenue growth (%) Earnings Growth (%) 31 432 29 30 15 35 31 34 6 152 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 105
Slide 106: … with substantial loan growth
… with substantial loan growth Customer loans (GHS million) 1H14 Loan split (%) 1 240 45 43 887 709 589 436 12 Retail Business Banking Corporate 2010 2011 2012 2013 1H14 106
Slide 107: Strong deposit base …
Strong deposit base … Customer deposits (GHS million) 1H14 Deposit split (%) 1 790 1 592 1 454 1 332 35 1 094 53 12 Retail Business Banking Corporate 2010 2011 2012 2013 1H14 107
Slide 108: Resilient 1H14 performance
Resilient 1H14 performance 1H14 1H13 Change Rm Rm % 22% revenue growth driven by Net interest income 708 595 19 strong Market and Corporate Non-interest income 291 225 30 business Total revenue 999 820 22 Consistent inflation and fuel Credit losses 61 35 72 price increases drove up costs Operati
Slide 109: Consistent ratios with room for improvement
Consistent ratios with room for improvement 1H14 1H13 (%) (%) Cost of fixed deposits in high rate Net interest margin 13,33 14,18 regime reduced net interest margin Non-interest income to total Non-interest income to total income 29,2 27,4 revenue was higher in1H14 compared to prior Cost to inco
Slide 110: Strategic challenges
Strategic challenges Increasingly difficult macro backdrop High interest rate environment and pressure on traditional deposit base Increased competition from incumbents and new participants Technology change impacting bricks and mortar banking as mobile banking alternatives emerge Regulato
Slide 111: Strategic focus areas
Strategic focus areas Leverage global and regional presence and experience in oil and gas, public sector and infrastructure Deploy leading technology platforms in country Market leading turnaround time for onboarding via smart technology Bring to market leading mobile banking solutions Inv
Slide 112: Key messages
Key messages Strong performance in a tough operating environment Significant competitive pressures Regulatory changes Improving balance sheet Focus on providing excellent customer service 112
Slide 113: Disclaimer
Disclaimer Forward-looking statements Certain statements (words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘believes’, ‘intends’, ‘plans’, ‘may’, ‘will’ and ‘should’ and similar expressions in this document are forward looking. These relate to, among other things, the plans, objectiv