Slide 1: FirstRand North American Investor Roadshow
FIRSTRAND NORTH AMERICAN INVESTOR ROADSHOW May 2015
Slide 2: Introducing FirstRand – financial position and track record
Introducing FirstRand – financial position and track record FINANCIAL HIGHLIGHTS ZAR USD NORMALISED EARNINGS – YEAR ENDED 30 JUNE for the year ended 30 June 2014 million million ZAR million Total assets 945 535 88 950 20 000 Normalised net asset value 81 590 7 675 18 000 18 663 21% Normalised earnin
Slide 3: Our growth strategy
Our growth strategy • BE BeTHE AFRICAN the African FINANCIAL financial SERVICES services provider of choice GROUP OF CHOICE • Broaden financial services proposition in South Africa (not only banking) • Build meaningful in-country franchises in chosen markets in the rest of Africa • Underpinned by ou
Slide 4: Our unique operating model
Our unique operating model Listed holding company (FirstRand Limited, JSE: FSR) Group-wide functions Retail and commercial bank Corporate and investment bank Instalment finance Investment management 4
Slide 5: How we operationalise FirstRand's strategic objectives
How we operationalise FirstRand’s strategic objectives STRATEGIC FRAMEWORK Execution through operating franchises Financial services Balance sheet Franchise value Superior returns Stratco in Africa strength FIRSTRAND PHILOSOPHY Owner-manager culture Innovation Entrepreneurship PERFORMANCE MANAGEMENT
Slide 6: Portfolio provides sustainability through diversification
Portfolio provides sustainability through diversification 2% 11% Retail South Africa Commercial Geography* International Products* CIB Rest of Africa and corridors FNB Africa 87% FirstRand 16% 25% Retail FNB Segment† Franchise† Commercial RMB 55% 58% 26% WesBank Corporate and investment banking 20%
Slide 7: Client franchises are significant
Client franchises are significant Net interest income (NII) = 53% Non-interest revenue (NIR) = 47% Transactional income* Lending 30% 28% Flow trading and residual risk Group Treasury and other Deposit endowment Capital endowment transactional income Investment banking Other income FNB Africa Deposit
Slide 8: Balance sheet strength and disciplined financial resource allocation
Balance sheet strength and disciplined financial resource allocation FINANCIAL RESOURCE MANAGEMENT RISK APPETITE FUNDING AND CAPITAL ALLOCATION LIQUIDITY 8
Slide 9: Strong capital position and expansion buffer
Strong capital position and expansion buffer Economic view of surplus excludes: • Volatile reserves (foreign currency translation CET1 ratio and available-for-sale reserves) • Ring-fenced capital 13.8% • Known Basel III changes 14% 0.7% 13.1%* R12.3bn 12% surplus CET1 target range: FSR 10% – 11% 10%
Slide 10: Pro-active countercyclical provisioning approach
Pro-active countercyclical provisioning approach Portfolio impairments (R million) 9 000 8 000 Dec 14 Dec 13 7 000 25% Portfolio impairments as 1.07% 0.97% 6 000 % of performing book 5 000 Bad debt charge (%) 0.86% 0.77% 4 000 3 000 Portfolio impairments 7 665 6 152 (R million) 2 000 1 000 - Dec 13
Slide 11: Franchise has delivered superior shareholder value creation
Franchise has delivered superior shareholder value creation NIACC* (R million) ROE 5 000 23.4% 24.0% 25% 22.3% 19.5% 20% 4 383 4 000 20% 18.0% 3 645 3 000 15% 2 822 2 000 10% 1 621 1 000 5% 998 - 0% Dec 10** Dec 11 Dec 12 Dec 13 Dec 14 NIACC ROE * Net income after capital charge. ** 2010 comparative
Slide 12: SA's economy facing headwinds
SA’s economy facing headwinds Household and government income growth Inflation lifting from cyclical lows % y/y % % Gross disposable income of government Inflation 25 15.0 15.0 Available household resources 20 12.5 12.5 15 10.0 10.0 10 7.5 7.5 5 5.0 5.0 0 2.5 2.5 Inflation target band -5 0.0 0.0 199
Slide 13: Key themes for South Africa's macroeconomic outlook
Key themes for South Africa’s macroeconomic outlook • Sub-par growth • Structural constraints (incl. electricity, skills shortage, labour market rigidities) • Faded commodity price tailwind • Indebtedness • Inflation lifting from cyclical lows • Limited room for policy support • Monetary policy cons
Slide 14: Our growth strategy
Our growth strategy • BE BeTHE AFRICAN the African FINANCIAL financial SERVICES services provider of choice GROUP OF CHOICE • Broaden financial services proposition in South Africa (not only banking) • Build meaningful in-country franchises in chosen markets in the rest of Africa • Underpinned by ou
Slide 15: Banking revenues dominate mix – therein lies the growth opportunity
Banking revenues dominate mix – therein lies the growth opportunity… Other 9% Investing 4% Insurance 4% FNB Africa 5% Group Deposits and liabilities 6% revenue split Dec 14 Lending, transactional and related endowment 72% 15
Slide 16: Dominant position of domestic banking franchise
… especially given dominant position of domestic banking franchise SOUTH AFRICA CHALLENGE Dominant domestic position constrains Investment taking place now for ability to significantly outperform medium- to long-term growth nominal GDP and regulatory pressures RESPONSES Attack new profit pools, dive
Slide 17: Opportunity to further grow transactional franchise
Opportunity to further grow transactional franchise 30% 40% WesBank Direct Axis Motor 336 763 681 675 accounts accounts 60% 70% Non-FNB FNB banked Non-FNB FNB banked 30% Primary transactional relationship RMB top 100 clients 70% Non-RMB RMB banked 17
Slide 18: Growing in new markets – focus on rest of Africa
Growing in new markets – focus on rest of Africa Three pillars to execution • Utilise the capabilities of the South African franchise, particularly the domestic balance sheet, intellectual capital, international platforms and the existing operating footprint in the rest of Africa • Effective in terr
Slide 19: Growing regional presence
Growing regional presence 19
Slide 20: Rest of Africa revenues growing across all franchises
Rest of Africa revenues growing across all franchises Rest of Africa gross revenue* (R million) 22% CAGR 4 500 . 4 000 Overall subsidiaries ROE 21.6%, 3 500 established subsidiaries ROE 30.8% 3 000 2 500 2 000 1 500 1 000 500 - Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 FNB RMB WesBank** ** WesBank 2010 and
Slide 21: Rest of Africa still requires meaningful investment to build in-country franchises
Rest of Africa still requires meaningful investment to build in-country franchises International Multi-national Using home-country In-country balance resources to conduct sheets and franchises cross-border activity Execution needs to shift given limited runway Remain disciplined in deployment of cap
Slide 22: Questions?
QUESTIONS? FIRSTRAND