Absa Group Limited · JSE:ABG
Absa — Debt Investor Presentation (September 2020)
30 slides from Absa's debt investor presentation, September 2020
Slide 1: Absa Group Limited Fixed Income Investor Roadshow
Absa Group Limited Fixed Income Investor Roadshow September 2020
Slide 2: Table of Contents
Table of Contents 1. Group Performance Update and Outlook 2. Capital Position 3. Liquidity Position 4. Issuance Requirements 5. Appendix
Slide 3: Group Performance Update and Outlook
Group Performance Update and Outlook 1
Slide 4: A crisis like no other, an uncertain recovery
A crisis like no other, an uncertain recovery SA’s real GDP growth (%) Reduction in expected 2020 GDP (%) 4 0 2 -2 -4 0 -6 -8 -2 -10 -4 -12 -14 -6 -16 -18 -8 Zambia Ghana Seychelles Kenya Mauritius Uganda Tanzania South Africa Botswana Mozambique -10 15 16 17 18 19 20F 21F 22F 23F
Slide 5: Key market features
Key market features 170 Stimulus Provided by Major Central Banks* Bloomberg Emerging Markets Capital Flow Proxy Index 210 160 190 150 170 140 150 130 130 120 110 110 90 100 US Federal Reserve Bank European Central Bank Bank Of Japan * Values set 100 at September 2019 140 SA Market Rates 12 300 R186
Slide 6: Absa's initial response to Covid-19 pandemic
Absa’s initial response to Covid-19 pandemic Payment relief provided (Rbn) • Ensure colleague safety and wellbeing • Open for business to support customers 534 Customer loans Relief on loans • Provided substantial payment relief • Supporting vulnerable communities 308 • Protecting balance sheet and
Slide 7: Separation progress from Barclays completed
Separation Separation progressfrom to date Barclays completed
Slide 8: Income statement reflects impact of Covid-19
Income statement reflects impact of Covid-19 Change Normalisation 1H19 1H20 Rm (%) adjustments Net interest income 22 667 24 072 6 (52) Non-interest income 16 404 16 006 (2) (225) Total income 39 071 40 078 3 (277) Operating expenses 22 136 21 613 (2) 1 427 Pre-provision Profit 16 935 18 465 9 1150
Slide 9: Customer loan growth slowed …
Customer loan growth slowed … Gross customer loans (Rbn) RBB SA gross customer loans (Rbn) 600 4% 4% 500 1H19 1H20 245 237 1H19 1H20 400 6% 300 3% 123 127 200 7% 82 88 9% 100 24% 26% 10% 41 45 22 25 0 RBB CIB RBB CIB Home Loans VAF Personal Credit Relationship loans cards Banking South Africa Absa R
Slide 10: Robust deposit growth across the board
Robust deposit growth across the board Deposits (Rbn) 12% 392 1H19 1H20 349 17% 243 208 26% 176 140 8% 101 109 RBB SA CIB Absa Regional Operations Treasury and other South Africa up 13% 10 |
Slide 11: Significant policy rate cuts reduced net interest margin
Significant policy rate cuts reduced net interest margin Change in net interest margin* (basis points) 4 (5) 3 (2) (11) 452 11 (4) (7) (16) (2) 423 Loans Deposits 7 (18) 1H19 Pricing Mix Pricing Mix Endowment Capital Hedge ** ARO *** Prime reset Other 1H20 Note: * average interest bearing assets; **
Slide 12: Significant increase in credit impairments ...
Significant increase in credit impairments ... Credit impairments (Rbn) Credit loss ratio (%) 1H19 1H20 388% 297% (0.6) 2.1 14.7 RBB SA 1.12 3.77 483% Everyday Banking 4.93 11.76 259% 1.4 7.5 Vehicle and Asset Finance 1.39 4.91 Home Loans 0.13 1.43 Relationship Banking 0.32 2.11 CIB SA 0.18 0.93 3.7
Slide 13: ... reflecting three drivers
... reflecting three drivers Credit impairment drivers (Rbn) Single name credit impairments (%) 297% 5.5 14.7 6 14 1.8 43 3.7 37 3.7 1H19 Portfolio Single MEV 1H20 SA Relationship Banking CIB SA performance names management adjustment CIB ARO ARO Business Banking 13 |
Slide 14: Significant Loan Provisions across stage 1 & 2
Significant Loan Provisions across stage 1 & 2 Total Balance Sheet Provisions (Rbn) 36% 27.9 20.5 FY19 1H20 61% 72% 7.9 7.4 4.9 4.3 Stage 1 Stage 2 Stage 3 14 |
Slide 15: 2020 outlook
2020 outlook • Net interest margin expected to decline YoY, with the second half likely to improve slightly • Loan and deposit growth should slow in the second half • Costs are expected to decline YoY, resulting in pre-provision profit growth • Credit loss ratio expected to be well above global fina
Slide 16: Capital Position
Capital Position 2 16 |
Slide 17: CET1 remains robust
CET1 remains robust Absa Group Statutory CET1 move (%) from Dec 2019 to June 2020 -0,95 1.41 1,57 -1.29 11,76 -0,36 +0,19 -0,55 -0,16 11,00 Dec19 Preprovision profits 1 Impairment2 RWA3 Dividend Other Jun20 Normalised Jun20 IFRS4 1 - Pre-provision profits are presented post tax effects in the graph,
Slide 18: Appropriate capital levels and buffers
Appropriate capital levels and buffers Absa Group CET1 and CAR vs. minimum regulatory requirements 139 140 14.9% 31 527 102 908 11.5% 11% Management Buffer* 23 394 Conservation Buffer Prudential minimum 32 726 9% 7.5% 23 394 Rm Rm 5% 84 219 46 788 CET1 Total Capital *Management buffer includes the b
Slide 19: Strong capital generating capacity
Strong capital generating capacity 40 Pre-provision Profit vs Impairment Losses Rbn 35 30 32.8 25 15.4 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Jun-20 Pre-provision Profit Impairment Losses Source: Absa Group Limited Results 19 |
Slide 20: Liquidity Position
Liquidity Position 3 20 |
Slide 21: Robust liquidity position remains
Robust liquidity position remains Group Liquidity Coverage ratio (LCR) Group Net Stable Funding ratio (NSFR) 251 127.0% 134.4% 126.6% 117.1% 120.8% 1,001 111.4% 112.7% 112.1% 120.0% 120.0% 953 929 201 215 801 866 834 828 814 Rbn Rbn 70.0% 179 182 70.0% 749 769 177 170 151 601 147 141 136 20.0% 20.0%
Slide 22: Strong deposit growth and BS JAWS reduced deposit funding gap
Strong deposit growth and BS JAWS reduced deposit funding gap Cluster customer deposit funding gap for Absa Bank Cluster balance sheet (BS) JAWS for Absa Bank (Rbn) (Rbn) 247 (23) 4% (18) 534 1H19 1H20 206 514 12% 392 349 6% 17% 308 291 243 208 Customer Deposits Customer Assets Customer Deposits Cus
Slide 23: Issuance requirements
Issuance requirements 4 23 |
Slide 24: Evolution of capital market instrument pricing
Evolution of capital market instrument pricing Bps over Jibar 700 650 600 550 500 Idiosyncratic 450 Stress 400 Cabinet African Bank Reshuffle COVID-19 350 Introduction to Curatorship Nation-wide Basel III Draft Recovery & Zuma Resigns Lockdown 300 Resolution National Regime ANC Elective Government 2
Slide 25: Maturity Profile
Maturity Profile 12,000 Millions 10,000 8,000 6,000 4,000 2,000 - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Absa Senior Absa Tier 2 AGL Tier 2 AGL AT1 Note: Graph excludes unlisted, NCDs and structured notes. Graphed to call date w here applicable. The call of subordinated instruments is sub
Slide 26: Appendix
Appendix 5 26 |
Slide 27: Provided extensive Covid-19 payment relief
Provided extensive Covid-19 payment relief Gross carrying value of customer loans granted payment relief at 30 June 2020 (Rbn) RBB SA: R155bn, 29% of total book 84 37 29 27 25 8 7 Home Loans Vehicle and Asset Card Personal Loans Relationship CIB SA ARO Finance Banking Of book: 34% 33% 18% 29% 22% 12
Slide 28: Macroeconomic variables management adjustments
Macroeconomic variables management adjustments SA real GDP baseline scenarios (2019 = 100) MEV management adjustment by value (%) 110 17.2 21.3 105 100 16.8 14.1 95 8.5 FY19 22.1 90 1H20 Current view Home Loans VAF 85 Everyday Banking Relationship Banking 2019 2020 2021 2022 2023 2024 CIB ARO 28 |
Slide 29: Additional Tier I vs. Tier II Comparison under SA regulations
Additional Tier I vs. Tier II Comparison under SA regulations Shared Features Additional Tier 1 & Tier II • After 5 years, and every interest payment date thereafter Callable • No explicit or implicit indications that the instruments would or might be called, redeemed or purchased Coupon step-up • N
Slide 30: 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
Absa Group — Debt Investor Presentation (September 2020) on 6ix