Absa Group Limited · JSE:ABG
Absa — Debt Investor Presentation (April 2019)
25 slides from Absa's debt investor presentation, April 2019
Slide 1: Absa Group Limited Fixed Income Investor Roadshow
Absa Group Limited Fixed Income Investor Roadshow
Slide 2: Table of Contents
Table of Contents 1. Group Performance Update 2. Strategic Update 3. Funding and Liquidity Management 4. Capital Position 5. Fixed Income Overview 6. Appendix
Slide 3: Group Financial and Operating Performance
Group Financial and Operating 1 Performance
Slide 4: Normalised performance in line with guidance
Normalised performance in line with guidance Change Normalisation FY161 FY172 FY182 Rm (%) adjustments Net interest income 42 003 42 319 43 425 3 330 Non-interest income 30 391 30 671 32 235 5 525 Total income 72 394 72 990 75 660 4 855 Impairment losses 8 751 7 022 6 324 (10) - Operating expenses 3
Slide 5: Group loan growth improving
Group loan growth improving Gross customer loans (Rbn) South Africa Absa Regional Operations 5% 25% 11% 26% 25% Source: Financial results booklet for the reporting period ended 31 December 2018 * Percentage data points on both graphs represent year-on-year percentage changes 5
Slide 6: Credit impairments improved further
Credit impairments improved further Underlying Credit loss ratio (%) FY17 FY18 FY18 1 RBB SA 1.10 0.94 1.06 26% Retail Banking 1.20 1.04 1.15 Card 4.53 3.42 3.58 (20%) (10%) Vehicle and Asset Finance 0.87 1.02 1.11 Home Loans 0.30 0.05 0.16 Personal Loans 6.09 5.51 5.80 Business Banking 0.43 0.35 0.
Slide 7: Strategic Update
Strategic Update | 2
Slide 8: A strategy for growth
A strategy for growth Three strategic commitments • Growing our portfolio while contributing to the growth of the markets we serve • Reducing costs by creating a more efficient and effective organisation • Delivering top, sustainable returns that maximise long-term value Three strategic targets To g
Slide 9: Separation journey
Separation journey FX trading (CIB) 103 of 198 services terminated in line with Complete Acquiring rebranding Transitional Services (debit card) Corporate (ARO) Agreement channels migration Issuing (credit Core (CIB) (ARO) card) Fincrime migration systems (ARO) Front end (Group) Retail application C
Slide 10: Separation remains on track
Separation remains on track Spend to date Separation spend and remaining contribution (Rbn) • Project execution and support R7.6bn • Group systems rebuild (HR re-platform, Corporate channels and financial crime) • Technology infrastructure replacement • Localizing contracts • Removing ‘Member of Bar
Slide 11: Funding and Liquidity Management
Funding and Liquidity Management 3
Slide 12: Asset and liability management position in line with risk appetite
Asset and liability management position in line with risk appetite Absa Group Key Risk Metrics1 FY 18 FY 17 o The liquidity position of the Group remained strong, in line with risk appetite, and above the minimum regulatory requirements. Net Stable Funding Ratio (NSFR) (%) 110.1 - o The NSFR became
Slide 13: Capital Position and Themes
Capital Position and Themes 4
Slide 14: Capitalised in excess of regulatory requirements
Capitalised in excess of regulatory requirements Absa Group Limited Regulatory Capital Levels 18% 16.1% 16% 15.4% 13.5% 14% 12.8% 12.8% 12% 12.0% 10% 11.1% 11.1% 8% 8.9% 8.9% 7.0% 6% 7.4% 7.4% 4% 4% 2% 4% 0% 1 2 CET 1 Tier 1 CAR Leverage Barclays Contribution Impact SARB Minimum Requirement1 Source:
Slide 15: Excess loss absorption capacity c. 8% of RWA
Excess loss absorption capacity c. 8% of RWA Key buffers Absa Group loss absorbency capacity Percentage of RWA (Rbn) o Headline Earnings: 60 o Consistent earnings delivers approximately 2% capital generation per annum o Regulatory Buffers in excess of minimum requirements: 40 4.6% (R38bn) o CET 1 of
Slide 16: Group asset and earnings mix
Group asset and earnings mix Group Exposure Split (Rbn and %) Absa Group Limited Absa Bank Limited (Holding Company) (South Africa) Assets R1,288bn R1,080bn (84%) Income R77bn R52bn (68%) RWA R819bn R570bn (70%) NAV R121bn R85bn (70%) CET1 R99bn R64bn (65%) Headline Earnings Mix (%)1 Source: Financi
Slide 17: Fixed Income Overview
Overview Fixed Income | 5
Slide 18: Capital market instrument pricing progression
Capital market instrument pricing progression Previous Pricing Points for 5year Senior, Tier II and AT1 Floating Rate Notes 1 Bps over Jibar 700 650 600 550 500 450 Idiosyncratic stress 400 ABL Cabinet Reshuffle 350 Introduction to curatorship Draft Recovery & Basel III Resolution Regime 300 ANC Ele
Slide 19: Group ZAR debt maturity profile
Group ZAR debt maturity profile 12,000 10,000 8,000 6,000 4,000 2,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2029 Absa Senior Absa Tier 2 Group Tier 2 Group AT1 Note: Graph excludes unlisted and structured notes Graphed to call date where applicable. The call of subordinated instruments is s
Slide 20: Appendix
Appendix 6
Slide 21: 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 22: Issuance at the Group entity is currently down-streamed to Absa Bank Limited
Issuance at the Group entity is currently down- streamed to Absa Bank Limited o Losses follow the hierarchy of claims, as they arise in the operating entities. No creditor is worse off (NCWO) than in liquidation, as ascribed by the FSB Key Attributes of Effective Resolution Regimes. o Due to minorit
Slide 23: Quick Links
Quick Links • Liquidity Coverage Ratio (Jan 2013) - http://www.bis.org/publ/bcbs238.htm • Net Stable Funding Ratio (Oct 2014) - http://www.bis.org/bcbs/publ/d295.htm • TLAC - http://www.financialstabilityboard.org/wp-content/uploads/TLAC-Condoc-6-Nov-2014-FINAL.pdf Basel / FSB / EBA • MREL - https:/
Slide 24: Contacts
Contacts Absa Group Limited Syndicate Deon Raju – Absa Group Treasurer Matthew Duggan – Head Tel no. 011- 895 7107 / deon.raju@absacapital.com Tel no. 011- 895 7864 / matthew.duggan@absacapital.com Rolf van den Heever – Head, Capital Market Execution & BSM Muhammad Motala Tel no. 011- 895 6381/ rolf
Slide 25: Disclaimer
Disclaimer This document has been compiled by Absa Corporate and Investment Bank (“Absa CIB”), a division of Absa Bank Limited, a registered bank in the Republic of South Africa (Registration number 1986/04794/06) and with its registered office at Absa Towers East, 170 Main Street, Johannesburg ("Ab