Slide 1: Absa Group FY18 results presentation
Absa Group FY18 results presentation 11 March 2019 Jason Quinn
Slide 2: Normalised salient features
Normalised salient features FY17 FY18 % % Diluted headline EPS growth 4 4 Dividend per share growth 4 4 Net asset value per share growth 5 4 Return on equity 16.5 16.8 Profit after regulatory capital charge (Rbn) 2.6 2.7 Net interest margin 4.83 4.64 Operating JAWS (3) (2) Cost to income ratio 56.7
Slide 3: Shape of income statement in line with guidance
Shape of income statement in line with guidance Change Normalisation FY17 FY18 Rm (%) adjustments Net interest income 42 319 43 425 3 330 Non-interest income 30 671 32 235 5 525 Total income 72 990 75 660 4 855 Impairment losses 7 022 6 324 (10) - Operating expenses 41 403 43 642 5 (3 161) Other* (1
Slide 4: IFRS 9 reduced net interest margin
IFRS 9 reduced net interest margin Change in net interest margin* (basis points) (12) 483 (3) 3 (3) (3) (2) (3) 3 (2) 3 464 Loans Deposits 0 (8) FY17 IFRS 9 Pricing Mix Pricing Mix Endowment Capital Hedge ** ARO *** Other FY18 Note: * average interest bearing assets; ** interest rate risk management
Slide 5: Group loan growth momentum continued
Group loan growth momentum continued Gross customer loans (Rbn) Retail SA gross customer loans (Rbn) 450 5% 2% 400 228 232 FY17 FY18 350 FY17 FY18 300 25% 250 12% 200 115 103 150 100 11% 4% 26% 25% 50 42 44 12% 19 21 0 Retail Business CIB RBB CIB Home Loans Vehicle & Asset Card Personal Loans Financ
Slide 6: Improvement in RBB deposits while lower in CIB SA
Improvement in RBB deposits while lower in CIB SA Deposits (Rbn) FY17 FY18 11% 208 (2%) 187 177 174 23% 10% 134 125 114 (8%) 109 98 91 5 (1%) 5 Retail Banking Business Banking CIB WIMI Treasury and other Absa Regional Operations South Africa up 4% 6 |
Slide 7: Broad-based momentum building in non-interest income
Broad-based momentum building in non-interest income Non-interest income by division (Rbn) Retail Banking SA fee & commission growth (%) 5% 18.1 17.2 7 FY17 FY18 6 6 4 6% 6% 3 7% 5.2 5.2 5.5 4.6 4.9 4.3 2 RBB South CIB South Absa Regional WIMI Africa Africa Operations 1H16 2H16 1H17 2H17 1H18 2H18 7
Slide 8: Continued to manage costs while investing
Continued to manage costs while investing FY18 Change Mix Rm % % YoY constant currency growth (%) 12 Staff 24 031 4 55 Property-related 3 365 1 8 10 Revenue Technology 3 194 2 7 Operating expenses 8 Depreciation 2 320 17 5 Professional fees 2 151 9 5 6 Marketing 1 595 (7) 4 Communication 1 404 0 3 4
Slide 9: Credit impairments improved further
Credit impairments improved further Underlying Credit impairments (Rbn) Credit loss ratio (%) FY17 FY18 FY18 * RBB SA 1.10 0.94 1.06 26% Retail Banking 1.20 1.04 1.15 8.8 Card 4.53 3.42 3.58 (20%) 7.0 (10%) VAF 0.87 1.02 1.11 6.3 Home Loans 0.30 0.05 0.16 Personal Loans 6.09 5.51 5.80 Business Banki
Slide 10: Maintained strong capital levels
Maintained strong capital levels Absa Group Common Equity Tier 1 ratio (%) 2.0 (1.2) 12.8 0.8 12.1 (0.9) 12.0 Board target range 10.0% - 11.5% FY17 normalised RWA movement Profit Dividend FY18 normalised Barclays Plc FY18 IFRS contribution 10 |
Slide 11: Stable underlying divisional returns
Stable underlying divisional returns Divisional return on regulatory capital (%) 24.0 23.1 FY17 FY18 21.7 20.8 18.5 16.3 16.6 15.6 RBB SA CIB SA Absa Regional Operations * WIMI * Note: * return on equity 11 |
Slide 12: We benefit from a well-diversified portfolio
We benefit from a well-diversified portfolio Divisional headline earnings (Rm) Headline earnings mix FY18 (%) * 2% 8 8 748 8 880 5 FY17 FY18 14 38 20 (1%) 9% 15 3 411 3 367 3 218 2 954 3% 1 231 1 268 Retail Banking SA Business Banking SA CIB SA CIB ARO RBB SA CIB SA Absa Regional WIMI RBB ARO WIMI O
Slide 13: Regaining RBB leadership in SA a priority
Regaining RBB leadership in SA a priority • Returns remain healthy, while we aim to improve Headline earnings drivers (Rm) revenue and earnings growth (10%) 5% 2% (1 294) 984 483 1% 2% • Grow consumer finance business 8 748 (41) 8 880 • Regain retail deposit market share • Deliver best in class cust
Slide 14: Strong retail loan production while improving pricing
Strong retail loan production while improving pricing Retail SA YoY loan production (%) New business pricing YoY change (bps) 1H17 2H17 1H18 2H18 29 70 22 19 19 16 15 14 13 12 9 9 7 5 2 (1) 12 (11) 6 0 Home Loans Vehicle and Personal Credit card Home Loans Vehicle and Personal Loans Card Asset Finan
Slide 15: Card and Payments underpinned RBB SA growth
Card and Payments underpinned RBB SA growth Headline earnings (Rm) FY17 FY18 1% (3%) 2508 2521 2375 2311 0% 15% 1735 1736 1723 1497 (9%) 966 877 7% 430 461 Home Loans Vehicle and Asset Card and Payments Transactional and Personal Loans Business Banking Finance Deposits 15 |
Slide 16: Underlying momentum in WIMI
Underlying momentum in WIMI • Solid growth in SA and continuing line earnings Embedded value of new business (Rm) • Enhanced collaboration with RBB SA 15% 690 • Strong growth in Life embedded value of new 10% 21% 599 business 547 • Strong growth in SA Short-term Insurance • Improved 2H flows in Inve
Slide 17: Corporate drove CIB's earnings growth
Corporate drove CIB’s earnings growth CIB headline earnings (Rm) 2% 5 759 5 875 FY17 FY18 (4%) 21% 2 287 2 196 2 003 4% 1 652 1 124 1 171 (27%) 696 505 Corporate Investment Banking Corporate Investment Banking Total CIB CIB SA down 1% CIB ARO up 7% 17 17 |
Slide 18: Lower interest rates across portfolio, spot Rand weaker
Lower interest rates across portfolio, spot Rand weaker Change in average interest rates YoY (%) Change in currency versus the Rand (%)* 15 0.0 Average FY18 Spot YoY 10 -1.0 5 -2.0 0 -3.0 -5 -4.0 -10 -5.0 -15 -6.0 -20 Mozambique Tanzania Botswana Ghana Tanzania Uganda Mozambique Seychelles Kenya Zam
Slide 19: Absa Regional Operations enhanced our growth
Absa Regional Operations enhanced our growth Headline earnings growth (%) Absa Regional Operations RoE (%) 24 * Additional constant 17 currency growth 18.5 16.6 15.1 13.5 13 * 12.6 12.6 4 9 7 3 2 FY17 FY18 FY17 FY18 FY13 FY14 FY15 FY16 FY17 FY18 South Africa Absa Regional Operations Note: * constant
Slide 20: Maintained separation progress
Maintained separation progress FX trading (CIB) 103 of 198 services terminated in line with Complete Acquiring rebranding Transitional Services (debit card) Corporate (ARO) Agreement channels migration Issuing Core (CIB) (ARO) (credit card) Fincrime migration systems (ARO) Front end (Group) Retail a
Slide 21: Separation remains on track
Separation remains on track Spend to date Separation spend and remaining contribution • Project execution and support R7.6bn (Rbn) • Group systems rebuild (HR re-platform, Corporate 12.6 7.6 channels and financial crime) • Technology infrastructure replacement • Localizing contracts 3.8 7.3 • Removi
Slide 22: Outlook for 2019
Outlook for 2019 • Improved deposit growth to exceed loan growth • Net interest margin is expected to decline slightly • Costs will remain well controlled, with positive JAWS for the full year, although challenging in the first half • Credit loss ratio is expected to increase • RoE is likely to impr
Slide 23: 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