Slide 1: Absa Group 1H19 results presentation
Absa Group 1H19 results presentation 13 August 2019
Slide 2: Reflections on 1H19
Reflections on 1H19 • Macro backdrop tougher than expected • Separation from Barclays remains on track • Maintained revenue momentum in target areas • Delivering on cost initiatives • Broadly met our guidance
Slide 3: Normalised salient features
Normalised salient features 1H18 1H19 % % Diluted headline EPS growth 3 3 Dividend per share growth 3 3 Net asset value per share growth 2 7 Return on equity 17.1 16.4 Profit after regulatory capital charge (Rbn) 1.6 1.3 Net interest margin 4.69 4.52 Operating JAWS (2) 0 Pre-provision profit (Rbn) 1
Slide 4: Shape of income statement as guided
Shape of income statement as guided Change Normalisation 1H18 1H19 Rm (%) adjustments Net interest income 20 874 22 667 9 113 Non-interest income 15 854 16 404 3 (32) Total income 36 728 39 071 6 81 Impairment losses 3 117 3 695 19 - Operating expenses 20 834 22 136 6 (863) Other* 832 760 (9) (40) T
Slide 5: Funding reduced net interest margin
Funding reduced net interest margin Change in net interest margin* (basis points) (7) 469 3 (3) (2) (2) (3) 0 (1) (2) 452 Loans Deposits (4) (7) 1H18 Pricing Mix Pricing Mix Endowment Capital Hedge ** ARO *** Other 1H19 Note: * average interest bearing assets; ** interest rate risk management; *** A
Slide 6: Loan growth momentum maintained
Loan growth momentum maintained Gross customer loans (Rbn) RBB SA gross customer loans (Rbn) 600 7% 2% 500 1H18 1H19 231 236 1H18 1H19 400 300 23% 13% 123 200 109 8% 76 82 100 9% 14% 16% 12% 43 46 0 21 22 RBB CIB RBB CIB Home Loans VAF Personal Credit Relationship South Africa Absa Regional Operatio
Slide 7: With improving deposit growth
With improving deposit growth Deposits (Rbn) 13% 349 1H18 1H19 310 13% 208 184 10% 8% 140 127 93 101 RBB SA CIB Treasury and other Absa Regional Operations South Africa up 12% 7 |
Slide 8: And non-interest income growth emerging
And non-interest income growth emerging Non-interest income mix 1H19 (%) Non-interest income by division (Rbn) 8% 13.7 11.6 10.7 1H18 1H19 15.7 70.6 19% (20%) 2.9 2.2 2.4 1.8 Fee and commission Other Net trading RBB South Africa CIB South Africa Absa Regional Operations 8 |
Slide 9: Underlying cost growth well contained
Underlying cost growth well contained 1H19 Change Mix Rm % % Adjusted costs (Rbn) Staff 12 586 8 57 6% Property-related 934 (43) 4 22.1 0.4 0.5 2% Technology 1 869 17 8 0.4 21.2 0.5 Depreciation 1 738 54 8 20.8 Professional fees 893 2 4 Marketing 581 (21) 3 Communication 760 21 3 Cash transportation
Slide 10: Credit impairments trended upward off a low base …
Credit impairments trended upward off a low base … Stage 3 loans (%) Credit loss ratio (%) 1H18 1H19 RBB SA 0.99 1.12 5.3 5.1 Everyday Banking 4.58 4.93 4.8 VAF 1.42 1.39 Home Loans 0.05 0.13 Relationship Banking 0.28 0.32 CIB SA 0.30 0.18 Absa Regional Operations 0.72 0.94 Group 0.75 0.79 1H18 FY18
Slide 11: … although at low end of through-the-cycle range
… although at low end of through-the-cycle range Credit loss ratio (bps) 120 Expected range through-the cycle (bps): 110 100 • RBB SA 110 to 155 90 Range 75-100 • Total CIB 20 to 30 80 79 70 75 73 • ARO 100 to 140 60 50 40 30 20 10 0 1H18 FY18 1H19 11 |
Slide 12: Capital levels remain strong
Capital levels remain strong Absa Group normalised common equity tier 1 ratio (%) 1.9 (1.1) (1.1) 12.2 11.9 Board target range 11.0% - 12.0% 1H18 RWA movement Profit Dividends 1H19 12 |
Slide 13: Divisional returns stable besides CIB SA
Divisional returns stable besides CIB SA Divisional return on regulatory capital (%) 22.8 1H18 1H19 22.5 19.5 18.5 16.3 13.3 RBB SA CIB SA Absa Regional Operations * Note: * return on equity 13 |
Slide 14: Continue to benefit from a well-diversified portfolio
Continue to benefit from a well-diversified portfolio Divisional headline earnings (Rm) Headline earnings mix 1H19 (%) * 4% 5 1H18 1H19 4 847 16 4 658 19 60 8% (10%) 1 721 1 599 1 727 1 546 RBB SA CIB SA CIB ARO RBB ARO RBB SA CIB SA Absa Regional Operations Note: * excluding Group centre and adjust
Slide 15: Pre-provision profit growth stronger outside CIB SA
Pre-provision profit growth stronger outside CIB SA Divisional pre-provision profits (Rbn) 7% 16.9 1H18 1H19 15.9 8% 10.4 9.6 21% (16%) 3.9 3.2 2.6 2.2 RBB SA CIB SA Absa Regional Operations Group 15 |
Slide 16: Everyday Banking and VAF underpinned RBB SA growth
Everyday Banking and VAF underpinned RBB SA growth Headline earnings (Rm) 1H18 1H19 11% 1998 4% 1794 1684 1625 (7%) 803 7% 750 544 584 >100% 26 122 Home Loans Vehicle and Asset Finance Everyday Banking Relationship Banking Insurance 16 |
Slide 17: Momentum continues in retail loan production
Momentum continues in retail loan production Retail SA YoY loan production (%) New business pricing change YoY (bps) 20 67 16 9 15 (3) 0 2 Home Loans Vehicle and Personal Loans Credit card Home Loans Vehicle and Personal Credit card Asset Finance Asset Finance Loans 17 |
Slide 18: IB SA reduced CIB's total earnings
IB SA reduced CIB’s total earnings CIB headline earnings (Rm) (5%) 2 920 2 780 1H18 1H19 (13%) 1 159 (4%) 1 007 (4%) 872 835 22% 562 539 327 399 Corporate Investment Bank Corporate Investment Bank Total CIB CIB SA down 10% CIB ARO up 3% 18 |
Slide 19: Unpacking CIB's Markets performance
Unpacking CIB’s Markets performance CIB SA Markets revenue CIB Markets revenue (Rm) 1678 1H18 1H19 (28%) 1202 25% 1024 819 1H18 1H19 Corporate Institutional Client facilitation risk SA ARO 19 |
Slide 20: Africa Regions enhances our earnings growth and returns
Africa Regions enhances our earnings growth and returns Headline earnings growth (%) Absa Regional Operations RoE (%) 19 19.5 18.5 17.4 13.5 12 9 2 2 1 1H17 1H18 1H19 1H17 1H18 1H19 1H16 1H17 1H18 1H19 South Africa Africa Regions 20 |
Slide 21: Separation to date
Separation to date rx. 193 of 272" projects| | 140 of 198 services have delivered have terminated todate 60% 69% 30 June 2019 i “aR Z Z 184.0268" projects || 137 of 198 services 8901277 projects | S5of198senices hevedetvored "hove trated nave dohvred, havotermsmtaa ‘oan ‘oaae todato todate “ 05. Jun
Slide 22: Outlook for 2019
Outlook for 2019 • Improved deposit growth to exceed loan growth [no change] • Net interest margin is expected to decline [change from ‘decline slightly’] • Costs will remain well controlled, with flat to positive JAWS [change from ‘positive JAWS’] • Credit loss ratio is expected to be similar to 20
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