Firstrand Limited · JSE:FSR
Firstrand — FirstRand Bank — Debt Investor Presentation (March 2022)
35 slides from Firstrand's debt investor presentation, March 2022
Slide 1: FirstRand Bank treasury update and sustainability bond roadshow
28-31 March FirstRand Bank treasury UpCcate and sustainability bond roadshow
Slide 2: Agenda
Agenda Overview of the bank (debt issuer) and financial performance Funding update: Market and liquidity conditions Financial sector developments and regulatory update FirstRand approach to sustainable finance FirstRand Bank’s inaugural sustainability bond issuance Term sheet
Slide 3: Overview of the bank (debt issuer) and financial performance
Overview of the bank (debt issuer) and financial performance FirstRand Bank
Slide 4: Adherence to the pandemic response financial resource management framework
Adherence to the pandemic response financial resource management framework protected the balance sheet and underpinned ROE recovery FirstRand implemented specific actions in March 2020 to emerge from Covid-19 with limited vulnerabilities and with capital to fully participate in the subsequent recove
Slide 5: Key performance metrics (normalised)
Key performance metrics (normalised) 5 Dec 21 Dec 20 % change Earnings (R million) 11 933 7 996 49 A Pre-provision operating profit (R million) 19710 18 057 9 A Net interest margin (%) 4.74 4.56 A Credit loss ratio (%) 0.75 1.60 Vv Cost-to-income ratio (%) 53.5 54.9 Vv Return on equity (%) 22.8 16.3
Slide 6: Bank has protected its balance sheet and strengthened liquidity
Bank has protected its balance sheet and strengthened liquidity BALANCE SHEET POSITION AND TRENDS LCR and NSFR’ NSFR: 121% ACTUAL TREND Assets in marketable format >R440 billion Increased (improved liquidity) Liquid assets as % total assets 30.0% Increased (improved liquidity) LCR: 124% The bank's s
Slide 7: Consistent execution on balance sheet strategies
Consistent execution on balance sheet strategies Total assets Liquid assets R billion R billion 1600 350 4 1465 lity CAGR: 46.8% 1200 1049 1000 800 600 CAGR 7.%, 300 | CAGR 1.1%, 2.3% Ty CAGR: 250 4 11.5% 200 4 +R350 billion 160 | 100 4 CAGR 10.1%, 50 4 92.6% 0 Dec 16 Dec 21 Dec 16 Dec 21 [Customer
Slide 8: Strength of deposit franchise results in lower dependence on institutional funding
Strength of deposit franchise results in lower dependence on institutional unding and provides flexibility . oo. a ge a a I Other funding: AT1 and Tier 2 capital: Deposit franchise: R852 billion (+8%) Institutional funding: R295 billion (-2%) RAS billion R28 billion R billion AM% A9% 348 327 319 lal
Slide 9: Strong capital position maintained; ongoing optimisation of the capital stack
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Slide 10: Funding update: Market and liquidity conditions
Funding update: Market and liquidity conditions FirstRand Bank 10
Slide 11: Market liquidity spreads have normalised
W Market liquidity spreads have normalised FRB 12m FRN spreads TED spreads (treasury bill spreads) 1.6% 250 5 8% 14% 7 7% 200 1.2% 6% 150 1.0% 5% 100 0.8% 4% 50 0.6% + 3% opt - 0.4% yf l ll ‘| 2% 0.2% a L 1% 0.0% “100 L 0% Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jan 19 Jul 19 Jan 20 Jul 20
Slide 12: Financial sector developments and regulatory update
Financial sector developments and regulatory update FirstRand Bank 12
Slide 13: Further strengthening the SA financial system
Further strengthening the SA financial system SA benefits from world class market infrastructure in payments, exchanges and securities clearing There is, however, room for further improvements in market functioning and resilience Financial system functioning and resilience Regulatory and market deve
Slide 14: FirstRand approach to sustainable finance
FirstRand approach to sustainable finance FirstRand Bank 14
Slide 15: FirstRand's sustainability bond framework
415 FirstRand’s sustainability bond framework The group recently published its sustainability bond framework under which its subsidiaries intend to issue thematic debt instruments, such as green, social and/or sustainability bonds Aligned to international best practice and guidance as issued by the
Slide 16: Incorporating climate factors into financial resource management
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Slide 17: The financial system transmits financing conditions to real economy
17 The financial system transmits financing conditions to real economy Providers of funds Application of funds Relationship Shareholders Risk- Structuring features es Different needs, adjusted basen pricing az Government securities and bills Corporate and outcomes Bank balance sheet Use of proceeds
Slide 18: Evolving approach to transition finance
18 Evolving approach to transition finance Financing activities Processes to Processes to limit identify and risk while being exclude pragmatic Most business There is significant opportunity to help customers with this transition Policies and risk processes Encourage efficiency within counterparties
Slide 19: FirstRand Bank's inaugural sustainability bond issuance
FirstRand Bank’s inaugural sustainability bond issuance FirstRand Bank 19
Slide 20: Sustainability bonds
20 Sustainability bonds What is a sustainability bond? » Known use of proceeds bond — proceeds must be used to finance and/or refinance 100% eligible green and social assets » A sustainability bond framework needs to be established prior to issuance » Pre-issuance verification is current market best
Slide 21: Allocation of proceeds
421 Allocation of proceeds Existing loans are those which have reached financial close, up to 24 months prior to the issuance or where the assets are not yet fully 50% of total sustainability bond issuance will operational be allocated to new and existing green and New loans are those where disburse
Slide 22: Use of proceeds - green assets
Use of proceeds - green assets 22 Green housing project (IFC EDGE green certified) located in Ekurhuleni within the eastern metropolitan region of Johannesburg, South Africa 21% energy savings — energy saving, smart meters, solar and optimal window-to-wall ratio “Me 24% water savings — low-flow show
Slide 23: Use of proceeds - social assets
J 3 Use of proceeds - social assets » Affordable housing market (BASA definition) — Gap housing market aw households earning gross monthly income of <R27 200 7a) 8! 735 » Gap housing market — households earning a gross eo ot _ ” 331 monthly income between R3 501 and R22 000 sor 8 arr *t EA Oa EO a7
Slide 24: Monitoring and reporting
124 Monitoring and reporting FirstRand will publish an annual allocation and impact report on its website Supported by a limited assurance report on the allocation provided by external auditors on an annual basis (until full allocation) The allocation and impact report will provide: Total amount of
Slide 25: Term sheet
Term sheet FirstRand Bank
Slide 26: Indicative term sheet
Indicative term sheet 1 26 Issuer FirstRand Bank Limited Credit rating Aat.za/zaAA Rating agency Moody's / S&P Global Ratings Authorised programme size R100 billion, DMTN programme Listing Johannesburg Stock Exchange, Sustainability Segment Indicative target nominal amount R1.5 billion (with the abi
Slide 27: Indicative timeline
Indicative timeline Event Date Investor roadshow 28 — 31 March 2022 Termsheet, draft applicable pricing supplement(s) and auction details released to investors 1 April 2022 Updated termsheet with price guidance 6 April 2022 Proposed auction date 13 April 2022 Settlement date (t+3) 20 April 2022 127
Slide 28: FirstRand Bank
FirstRand Bank
Slide 29: SA banking sector assets: Loans and advances & government stock (% of total assets)
SA banking sector assets: Loans and advances & government stock (% of total assets)
Slide 30: Higher holdings of government securities resulted from strong deposit growth
Higher holdings of government securities resulted from strong deposit growth and slower advances growth in FY21 Actual scenario Investment into SAGBs Lower credit extension Eanes __-nacanentn SE Order is important a —h Lower credit extension | Investment in SAGBs
Slide 31: FirstRand's climate ambitions and commitments
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Slide 32: FirstRand follows best practice and actively participates in key global climate forums
ee 37 FirstRand follows best practice and actively participates in key global climate forums Industry body/forum FirstRand role/participation Task Force on Climate-Related Financial Disclosures (TCFD) * Signatory (October 2020) * Published first TCFD report in 2021 Principles for Responsible Banking
Slide 33: Relevant links
133 Relevant links FirstRand sustainability bond framework httos.//www. firstrand.co.za/media/investors/governance/firstrand-sustainability-bond-framework, pdf Second-party opinion — FirstRand sustainability bond framework httos.//www. firstrand.co.za/media/investors/governance/second-party-opinion-
Slide 34: Disclaimer
Disclaimer FirstRand Bank
Slide 35: Disclaimer
Disclaimer This presentation is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published in whole or in part for any other purpose. This presentation does not constitute an offer or invitation to subs
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