FirstRand Limited · JSE:FSR

FirstRand — H1 2006 Earnings Presentation

44 slides from FirstRand's earnings presentation, Sep 27, 2006

  1. Slide 1: Operating performance

    operating performance (4%) FIRSTRAND

  2. Slide 2: FirstRand grew faster than the market

    FirstRand grew faster than the market Market FirstRand WesBank new business 28% 34% FNB HomeLoans new business 35% 81% FNB Card advances 39% 40% RMB Private Bank advances 20-25% 35% Momentum recurring new business 5-10% 21% Discovery Life new business 5-10% 18%

  3. Slide 3: Capital, new business, acquisitions, leverage

    CAPITAL NEW BUSINESS ACQUISITIONS IARI \. LEVERAGE

  4. Slide 4: Innovation continues to deliver

    Innovation continues to deliver FNB ƒ One Account – R3.5bn book value ƒ Million-a-month-account – 237 000 accounts ƒ Cellphone banking – 180 000 customers • Broke even in 9 months WesBank ƒ Islamic financing – total new business for H1 2006 of R101m

  5. Slide 5: Acquisitions, capital, innovation, market, new business

    ACQUISITIONS CAPITAL INNOVATION MARKET NEW BUSINESS / GROWTH \

  6. Slide 6: Leveraging the integrated model

    Leveraging the integrated model ƒ Momentum/FNB Consultants • Sales through FNB consultants (R112m) • 30% increase in new business ƒ Momentum middle market initiative • Momentum products • FNB’s distribution ƒ Momentum Short Term Insurance • FirstRand short term insurance products • Momentum’s distri

  7. Slide 7: Short Term Insurance gaining momentum

    Short Term Insurance gaining momentum Momentum Short Term Insurance Company Quotes Sales Monthly Conversion Avg (#) (#) Premium (R) ratio Premium (R) Sep‘05 154 57 45 168 37% 792 Oct ‘05 754 180 167 751 24% 932 Nov ‘05 1 418 379 315 073 27% 831 Dec ‘05 933 179 108 342 19% 605 Total 3 259 795 636 335

  8. Slide 8: Bancassurance remains meaningful

    Bancassurance remains meaningful Pre tax profits up 36% year-on-year Dec 05 Dec 04 % change (R’m) (R’m) YOY OUTsurance 135 101 34% FirstLink 47 37 27% WesBank 166 122 36% HomeLoans 32 32 - FNB Life 20 4 >100% FNB Consultants 32 23 39% Total 432 319 36%

  9. Slide 9: New business leverage

    NEW BUSINESS LEVERAGE NATURAL MARKET MARKET GROWTH ,

  10. Slide 10: Momentum continues to consolidate

    Momentum continues to consolidate Load: ƒ Sage Holdings • 14.8% per policy cost reduction • 518 new agents (130% increase) Strategic: ƒ African Life Health (post-December 2005 event) • 3 new market segments • Presence in Lesotho, Kenya, Botswana

  11. Slide 11: Leverage, innovation, new business, market

    LEVERAGE INNOVATION / / NATURAL \ NEW BUSINESS MARKET ACQUISITIONS f GROWTH >

  12. Slide 12: Active capital management

    % Ja n- 19 8 10 12 14 16 18 20 22 24 26 28 8 9 Ja n- 19 9 0 Ja n- 19 9 1 Ja n- 19 9 2 Ja n- 19 9 3 Ja n- 19 9 4 Ja n- 19 9 5 Ja n- 19 9 6 Ja n- 19 9 7 Ja n- 19 9 8 Ja n- 19 9 9 Ja n- 20 0 0 Ja n- 20 0 1 Ja n- 20 0 2 Prime Ja ROE n- 20 0 3 Ja n- 20 0 4 Ja n- 20 0 5 Active capital management

  13. Slide 13: Diverse portfolio of businesses

    Diverse portfolio of businesses Profit before taxation R’m % growth RMB 1 117 40% FNB 2 344 18% WesBank 748 24% Momentum 1 065 41% OUTsurance 135 34% Discovery 343 53%

  14. Slide 14: Rand Merchant Bank

    RAND MERCHANT BANK

  15. Slide 15: Debt vs Equity

    Debt vs Equity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002 2003 2004 2005 Dec-05 Debt Equity ƒ Excellent performance from equity businesses ƒ Mixed fortunes for debt business

  16. Slide 16: Businesses leveraged to equity markets

    Businesses leveraged to equity markets ƒ Strong performance from advisory business ƒ Good equity results • Arbitrage • Trading • Agency ƒ Record performance from Private Equity

  17. Slide 17: Private Equity – in a harvest cycle

    Private Equity – in a harvest cycle ƒ Excellent climate for realisations, included in the results: • WACO • Fidelity Guarding • Bluestone ƒ Strong growth in equity accounted earnings ƒ Maintained broad portfolio and healthy unrealised profits in a “harvest cycle”

  18. Slide 18: …but sustainable going forward

    …but sustainable going forward Rm 3500 3000 2500 2000 1500 1000 500 0 2002 2003 2004 2005 Dec-05 Profit before tax Unrealised profits Assets (excl Debt) New investments R327m

  19. Slide 19: Debt businesses on the comeback trail

    Debt businesses on the comeback trail Rm 250 200 150 100 50 0 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 ƒ Strong performances from: • Property • Acquisition and leverage finance • Debt capital markets

  20. Slide 20: Investing for growth

    Investing for growth ƒ Variable in nature ƒ Investing in operating platform ƒ Growing business ƒ Important focus area

  21. Slide 21: First National Bank

    > First National Bank How can we help you?

  22. Slide 22: Continued benefit from segment focus

    Continued benefit from segment focus ƒ Market share gains across the board ƒ Strong asset and liability growth ƒ Particularly strong performances from: • Consumer • Mid-Corporate • Card • Commercial • Mid-Corporate • Business • Property Finance ƒ Significant increase in transactional volumes

  23. Slide 23: Advances – still growing our market share

    Advances – still growing our market share Home Loans 42% Credit Card Loans 42% Business & Agric Loans 36% Corporate Term Loans -26% Overdrafts 7% Total Advances 28% -30% -20% -10% 0% 10% 20% 30% 40% 50% Advanc es growth

  24. Slide 24: Gaining ground: market share

    Gaining ground 28 26 26 25 24 24 24 % Market share 22 22 21 20 20 20 19 19 18 16 14 12 10 Smart Personal Wealth Business Medium Solutions Banking Corporate Dec-04 Dec-05

  25. Slide 25: …But

    …But ƒ Costs • Base relatively flat • Investment strategies continue • 3 year plan to get to single-digit cost growth ƒ Margin • Hedges • Funding • Competition

  26. Slide 26: It was tough in Africa

    It was tough in Africa ƒ Tough economies – suffering from strength in SA ƒ Botswana up 15% (2.1% in Rand) ƒ Namibia up 7.5% ƒ Swaziland up 27.2% under very tough conditions ƒ Lesotho recorded maiden monthly profit in Dec 2005. 12 months ahead of expectations

  27. Slide 27: WesBank

    eeeeTTiTiiiLibiie RN <n. Put us to the test A division of FirstRand Bank tta

  28. Slide 28: Growth continues

    Growth continues Total SA New Vehicle Market Year Total Sales Growth 2003 381 664 2004 481 092 26.05% 2005 618 011 28.46%

  29. Slide 29: …across the board

    …across the board Divisional performance New business growth Relative size YOY – Dec 2005 of division Motor 29.5% 73% Corporate & Fleet 37.3% 21% Loans 72.7% 5%

  30. Slide 30: Motor growth from…

    Motor growth from… ƒ Industry buoyancy ƒ Market Share growth ƒ Domination at point of sale ƒ Partnership strategy

  31. Slide 31: Corporate growth from…

    Corporate growth from… ƒ FNB Collaboration ƒ Industry focus ƒ New Channels ƒ Market Share growth

  32. Slide 32: OUTsurance

    ea O Z << ~ =) n

  33. Slide 33: OUTsurance OUTperforms

    OUTsurance OUTperforms ƒ Growth • Organic growth in Personal and Business OUTsurance • Business OUTsurance - strong new business volumes • Essential OUTsurance - launched successfully ƒ Strategies paying off • Focus on client service, particularly quick claims settlement • Direct distribution growin

  34. Slide 34: Some challenges

    Some challenges ƒ Sustain growth given increasing competition ƒ Improving cost efficiencies in spite of increased compliance costs ƒ Pro-actively managing BEE procurement strategies, particularly in the panel-beating industry

  35. Slide 35: Momentum

    omentum

  36. Slide 36: Sources of growth

    Sources of growth Strong organic growth Corporate action Market New market focus + Diversification Product

  37. Slide 37: Strong operating performance

    Strong operating performance ƒ Annualised retail new business inflows +23% ƒ Assets under management/administration +24% ƒ Embedded value of new business +28% ƒ New business margin +21%

  38. Slide 38: Corporate action continues

    Corporate action continues Sage + African Life Health + Advantage + African Life - Futuregrowth -

  39. Slide 39: Sage integrated in less than 100 days

    Sage integrated in less than 100 days Rationale Target Achieved Cost per policy 10% 14% Agency Force 550 518 Time to Completion <100 days <100 days Additional Benefits Premium Income +R950m Assets +R12bn Operating Profit +R28m

  40. Slide 40: Exciting new markets

    Exciting new markets Products Distribution Short term insurance

  41. Slide 41: Discovery

    © Discovery

  42. Slide 42: Increasing diversity

    Increasing diversity 100% 90% 80% PruHealth 70% Destiny 60% 50% Vitality 40% Life 30% Health 20% 10% 0% 2001 2002 2003 2004 2005

  43. Slide 43: Good organic growth

    Good organic growth ƒ Health grew off a high base ƒ Life exceeded expectations ƒ PruHealth – gaining traction ƒ Destiny disappoints ƒ Discovery Card exceeds 300 000

  44. Slide 44: Going forward

    Going forward ƒ Health – increased focus on efficiencies ƒ Life – increase market share and pursue Pru partnership ƒ Destiny – some bold steps taken ƒ PruHealth – focus on growing new business

FirstRand — H1 2006 Earnings Presentation on 6ix