Firstrand Limited · JSE:FSR
Firstrand — UBS 26th SA Financial Services Conference (October 2023)
15 slides from Firstrand's conference presentation, Oct 10, 2023
Slide 1: Resilience through diversification
resilience through diversification UBS 26th SA Financial Services Conference
Slide 2: Through-the-cycle approach anchored to strategy and FRM
Through-the-cycle approach anchored to strategy and FRM 2 Headline inflation rate (CPI) Repo rate % y/y % 9 9 SA repo rate 8 SA inflation 8 7 7 6 5 6 4 SA inflation 5 (June 2020 forecast) –3 4 SA repo rate 2 (June 2020 forecast) 3 1 0 2 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 19 Jun 20 Jun 21 Jun 22
Slide 3: Superior and sustainable economic returns within acceptable levels of volatility
Superior and sustainable economic returns within acceptable levels of volatility whilst maintaining balance sheet strength 3 • Holistic management of the balance sheet and its income streams within the macro context • Dynamically tilting the balance sheet to optimise shareholder outcomes through eco
Slide 4: Diversification operationalised across the portfolio
Diversification operationalised across the portfolio 4 • Discerning origination – credit outcomes through the cycle Balance sheet • Advances mix diversification • Funding optimisation • Capital-light/non-bank revenues NIR • Customer franchise strength diversification • Mix diversification Geographic
Slide 5: Diversification operationalised across the portfolio
Diversification operationalised across the portfolio 5 • Discerning origination – credit outcomes through the cycle Balance sheet • Advances mix diversification • Funding optimisation • Capital-light/non-bank revenues NIR • Customer franchise strength diversification • Mix diversification Geographic
Slide 6: Balance sheet through-the-cycle demonstrates origination decisions
Balance sheet through-the-cycle demonstrates origination decisions 6 Advances R billion UK operations - currency impact UK operations - constant currency Centre Broader Africa Retail unsecured WesBank VAF Commercial Residential mortgages RMB CIB 2019 2020 2021 2022 2023
Slide 7: Performance from the origination strategy is as expected
Performance from the origination strategy is as expected 7 Retail mortgages Retail Mortgages WesBank VAF 7.3% 7.0% 3.6% 3.5% 3.6% 3.7% 5.7% 3.4% 3.2% 3.1% 4.6% 5.9% 4.0% 3.7% 3.5% 2.0% 2.1% 4.5% 1.5% 3.6% 3.4% 3.4% 3.5% 1.4% 1.5% 3.2% 1.2% 1.1% Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Jun 23 Jun 20
Slide 8: Credit outcomes meaningful to ROE through-the-cycle
Credit outcomes meaningful to ROE through-the-cycle 8 ROE (%) 23.0 22.8 12.9 18.4 20.6 21.2 Gearing 12.0 13.0 13.3 13.0 12.2 12.4 (times) % 8 7 6 5 3.05 2.76 2.39 2.39 2.50 2.51 4 3 1.92 1.75 1.69 1.71 2 1.41 0.97 1 3.73 3.78 3.53 3.43 3.51 3.66 - (1) (3.47) (3.38) (3.13) (3.05) (3.15) (3.20) (2) (3
Slide 9: Balance sheet resilience also underpinned by deposit-led funding strategy
Balance sheet resilience also underpinned by deposit-led funding strategy 9 Funding composition – 2018 vs 2023 Institutional funding as % of total funding 100% 2% 1% AT1/Tier 2 42% 6% 6% Other 90% 19% Institutional funding 40% 80% 33% 70% 38% 18% Aldermore savings franchise 60% 36% 10% 5% Broader Af
Slide 10: Diversification operationalised across the portfolio
Diversification operationalised across the portfolio 10 • Discerning origination – credit outcomes through the cycle Balance sheet • Advances mix diversification • Funding optimisation • Capital-light/non-bank revenues NIR • Customer franchise strength diversification • Mix diversification Geographi
Slide 11: Growing transactional franchise provides revenue resilience
Growing transactional franchise provides revenue resilience 11 Investing Insurance Save/ • The relative size and quality of the invest** transactional franchise allows the group Other to achieve high levels of capital-light earnings growth Transact Revenue split • Key growth imperatives: by activity
Slide 12: Further diversification adds to resilience
Further diversification adds to resilience 12 Other Total investment Fee and Fee andcommission commission income reflects income*,** 7% 5% relative size and strength of transactional Trading and franchise other 12% NIR At risk given digitisation, and regulatory by activity and competitive pressures
Slide 13: Diversification operationalised across the portfolio
Diversification operationalised across the portfolio 13 • Discerning origination – credit outcomes through the cycle Balance sheet • Advances mix diversification • Funding optimisation • Capital-light/non-bank revenues NIR • Customer franchise strength diversification • Mix diversification Geographi
Slide 14: Geographic diversification presents long-term growth optionality
Geographic diversification presents long-term growth optionality 14 Geographic normalised earnings mix – 2018 vs 2023 •Broader Africa Broader Africa: 100% UK operations** • FNB: mix of high-ROE systemic banks 5% 9% (2023 ROE 11.6%) and scaling newer subsidiaries 90% 11% Broader Africa* 11% (2023 ROE
Slide 15: Diversification operationalised across the portfolio
Diversification operationalised across the portfolio 15 • Discerning origination – credit outcomes through the cycle Balance sheet • Advances mix diversification • Funding optimisation • Capital-light/non-bank revenues NIR • Customer franchise strength diversification • Mix diversification Geographi
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