Absa Group Limited · JSE:ABG
Absa — Barclays Africa Group — FY2016 Earnings Presentation
26 slides from Absa's earnings presentation, Feb 23, 2017
Slide 1: Barclays Africa Group 2016 financial results presentation
Barclays Africa Group 2016 financial results presentation 23 February 2017
Slide 2: Strategic update
Strategic update Maria Ramos
Slide 3: Financial review
Financial review Jason Quinn
Slide 4: Pre-provision profit drove earnings growth
Pre-provision profit drove earnings growth FY16 FY15 Change Pre-provision profit (Rbn) Rm Rm % 10% Net interest income 42 003 38 407 9 32.4 8% Non-interest income 30 391 28 791 6 5% 29.5 Total income 72 394 67 198 8 27.3 Impairment losses (8 751) (6 920) 26 Operating expenses (39 956) (37 661) 6 Oth
Slide 5: Maintained revenue growth in target areas
Maintained revenue growth in target areas … Markets Rest of Africa revenue (Rm) Corporate SA revenue* (Rm) 13% 26% 4 474 1 787 14% 3 944 20% 14% 1 423 3 451 22% 1 182 FY14 FY15 FY16 FY14 FY15 FY16 Note: *Excluding Custody and Trustee 5
Slide 6: Including less capital-intensive activities
… including less capital-intensive activities SA Card acquiring volumes (Rbn) Life Insurance net premium income (Rm) 13% 10% 273 12% 3 141 14% 241 4% 2 851 18% 2 554 211 FY14 FY15 FY16 FY14 FY15 FY16 6
Slide 7: Rest of Africa improved group net interest margin
Rest of Africa improved group net interest margin Change in net interest margin* (basis points) 3 492 9 (11) 10 (2) (5) 1 (1) 7 481 Loans (3) Deposits 3 1H15 FY15 Pricing Pricing Mix Pricing Mix Mix Endowment Capital Endowment Capital Hedge ** Rest Restofof Other 1H16 FY16 Mix Pricing Hedge ** Other
Slide 8: Loan growth across the group mixed
Loan growth across the group mixed … RBB SA loan growth (%) Loan growth by division (%) 9 13 7 4 1 2 (2) (4) (12) Personal VAF* Home Card BBSA Loans Loans RBB SA CIB SA Rest of Africa Group Note: * Vehicle and Asset Finance 8
Slide 9: As balance sheet growth slows
… as balance sheet growth slows Group customer loans and advances (Rbn, YoY growth) 2% 9% 720 11% 715 703 7% 657 5% 636 FY14 1H15 FY15 1H16 FY16 9
Slide 10: Strong Markets lifted non-interest income
Strong Markets lifted non-interest income FY16 Change Mix * Non-interest income mix (Rbn) Rm % % Other Trading Fees Retail and Business Banking 19 134 5 62 6% 5% • Retail Banking SA 12 819 4 42 2% 4.4 4.5 4.6 • Business Banking SA 3 543 5 11 5.3 4.1 • RBB Rest of Africa 2 772 6 9 4.2 20.2 20.7 CIB 6
Slide 11: Efficiencies continue to fund investment
Efficiencies continue to fund investment FY16 Change Mix Cost to income ratio (%) Rm % % Staff costs 22 090 6 55 56.8 Property-related costs 3 383 5 8 56.0 Information technology 3 131 38 8 55.2 Amortisation 641 35 2 Marketing costs 1 585 (9) 4 Professional fees 2 061 (5) 5 Cash transportation 963 9
Slide 12: Credit impairments rising
Credit impairments rising … FY16 FY15 FY16 FY15 Non-performing loans (%) Credit loss ratio NPL cover (%) (bps) Retail and Business 146 124 45 44 4.2 Banking Retail Banking SA 139 123 43 42 3.9 Cards * 541 538 72 70 3.8 VAF 114 97 44 39 3.5 Mortgages ** 40 30 21 22 Personal Loans 568 516 66 65 Busine
Slide 13: Including continued portfolio provision build
… including continued portfolio provision build Provision to performing loans* (bps) Macroeconomic provisions (Rm) 79 26% 1 368 65 62 63% 57 1 085 81% 667 FY13 FY14 FY15 FY16 FY14 FY15 FY16 Note: * Total gross loans and advances 13
Slide 14: Capital levels remain strong
Capital levels remain strong Barclays Africa Group Common Equity Tier 1 ratio (%) 2.1 (1.3) 12.1 (0.4) (0.2) 12.1 11.9 Board range 9.5% - 11.5% FY15 RWA movement Profit Dividend Other FY16 14
Slide 15: Resilient returns considering higher credit costs
Resilient returns considering higher credit costs Return on assets (%) Return on equity (%) 17.0 16.7 16.6 1.37 1.33 1.34 1.29 15.5 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 15
Slide 16: A well diversified portfolio
A well diversified portfolio Divisional RoRC* (%) Headline earnings by segment FY16 FY15 FY16 24.7 23.9 9% 22.0 21.3 CIB 14% 19.9 32% 40% 17.4 18% RBB 5% 14% 59% Retail Banking SA Business Banking SA RBB Rest of Africa CIB SA CIB Rest of Africa WIMI RBB CIB WIMI** Note: * Return on regulatory capita
Slide 17: CIB drove group earnings growth
CIB drove group earnings growth Headline earnings growth (Rm) 27% (4%) 8% 5% 1 099 (53) (61) 14 980 (3%) 14 287 (292) 14% FY15 RBB CIB WIMI Head office and FY16 other 17
Slide 18: Retail Banking SA navigating weak macros
Retail Banking SA navigating weak macros • Benefit from a diversified portfolio Headline earnings* (Rm) • Revenue momentum mixed, with some progress in transactional 1% • Loan growth remains modest FY15 FY16 2675 2690 • Solid deposit growth • Cost discipline funds spend on IT 3% and customer experie
Slide 19: Scope to improve Business Banking SA growth
Scope to improve Business Banking SA growth • Moderate revenue growth with Headline earnings (Rm) some positive signs 6% 7% • Commercial customer numbers 6% stable, new SME offering (36) 503 (324) • Costs remain well contained 14% (129) 1% • Credit quality holds up well 2124 2138 • A large deposit g
Slide 20: Corporate Bank underpins strong CIB growth
Corporate Bank underpins strong CIB growth • Corporate increased to over half Headline earnings (Rm) CIB’s earnings • Excellent rest of Africa growth 17% 77% 2 313 • Strong revenue growth across (610) 2% 27% most areas, particularly Markets (174) (430) 27% • Loan growth slowed. Focus will 5 098 shif
Slide 21: WIMI – rest of Africa loss offsets solid SA results
WIMI – rest of Africa loss offsets solid SA results • Solid net premium income growth Change in headline earnings (Rm) with strong branch sales 9% >(100%) 17% 5% • Improved net AUM inflows 19% 23 32 12 (161) • Strong growth in income from 138 53% shareholder funds (56) (1%) 1437 1425 • Cost growth r
Slide 22: Rest of Africa enhances group trajectory
Rest of Africa enhances group trajectory … Revenue growth (%) Headline earnings growth (%) South Africa South Africa Rest of Africa Rest of Africa 18 16 17 14 8 5 5 2 FY15 FY16 FY15 FY16 22
Slide 23: With strong banking growth outside SA
… with strong banking growth outside SA • Important to have a portfolio Rest of Africa banking given tough macro backdrop headline earnings (Rm) • Notable currency impact 17% 43% 2 375 • Strong pre-provision profit growth (518) 10% • Large rise in RBB credit charge, while CIB declined (808) 25% • CI
Slide 24: Well positioned to separate from Barclays PLC
Well positioned to separate from Barclays PLC • Barclays PLC has submitted an application for approval to reduce its stake • We have agreed terms of the separation payments and transitional services • Barclays PLC will contribute £765m, comprising of: • £515m in recognition of the investment require
Slide 25: Outlook for 2017
Outlook for 2017 • We will report normalised results given the separation • Low to mid-single digit loan growth, with CIB above RBB • Net interest margin should decline slightly • Slower revenue growth likely to produce negative Jaws near-term, despite continued cost management • Credit loss ratio s
Slide 26: 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