Absa Group Limited · JSE:ABG
Absa — Barclays Africa Group — H1 2015 Earnings Presentation
26 slides from Absa's earnings presentation, Jul 29, 2015
Slide 1: Barclays Africa Group Limited 1H15 results presentation
Barclays Africa Group Limited 1H15 results presentation 29 July 2015
Slide 2: Strategic update
Strategic update Maria Ramos
Slide 3: Our 2016 commitments
Our 2016 commitments 1H15 RoE 18% to 20% 16.4% Top 3 by revenue in our 5 biggest markets 3 - South Africa, Kenya, Ghana, Botswana and Zambia Cost to income ratio in the low 50s 55.9% Rest of Africa 20% to 25% of total revenue 20.3% 3
Slide 4: Financial review
Financial review David Hodnett
Slide 5: Pre-provision profit drove earnings growth
Pre-provision profit drove earnings growth 1H15 1H14 Change Pre-provision profit (Rbn) Rm Rm % 7% Net interest income 18 463 17 197 7 5% 14.3 Non-interest income 13 960 13 487 4 13.4 Total revenue 32 423 30 684 6 12.7 Impairment losses (3 550) (3 568) (1) Operating expenses (18 129) (17 297) 5 Other
Slide 6: Gaining revenue traction in focus areas…
Gaining revenue traction in focus areas… Retail Banking SA Transactional and Business Banking SA transactional Deposits non-interest income (Rm) revenue (Rm and YoY) 3 450 71 600 YoY growth (%) 6 12% 61 550 10% 3 400 5 1 500 4 3 350 3 1 450 3 1 400 2% 2 3 300 2 1 350 1 3 250 0 1 300 1 250 -1 3 200 (
Slide 7: … across divisions and geographies …
… across divisions and geographies … Markets Rest of Africa revenue (Rm) Corporate SA revenue* (Rm) 700 27% 1 800 15% 1 600 12% 600 22% 1 400 10% 500 10% 1 200 400 1 000 300 800 600 200 400 100 200 0 1H13 1H14 1H15 1H13 1H14 1H15 Note: *Excluding Custody and Trustee 7
Slide 8: …with improving underlying metrics in others
…with improving underlying metrics in others • Solid growth in accounts and RBB Rest of Africa YoY growth (%)* Premier customers • New to bank card sales almost 12 1H14 1H15 doubled off a low base • Rising Barclays@Work signups 10 10 • Healthy card acquiring growth • Strong growth in digitally activ
Slide 9: Double digit loan growth excluding property
Double digit loan growth excluding property Change in gross customer loans (Rbn) 56% 7% 19% 673.9 27.5 2.7 8% 6% 3% 5.8 11% (2%) 0.6 (7%) 9.1 2.2 632.3 (3.8) (2.5) 1H14 Retail CPF * VAF ** Credit Personal RBB CIB **** Other 1H15 Mortgages Cards Loans other *** Note: * Commercial property finance, in
Slide 10: Loan pricing and endowment lift margin
Loan pricing and endowment lift margin Change in net interest margin* (basis points) 6 470 4 6 1 3 4 2 6 2 456 Loans 7 Deposits 0 1H14 1H14 Pricing Pricing Mix Mix Pricing Pricing Mix Mix Endowment Capital Endowment Capital Hedge ** Rest Restofof Other 1H15 1H15 Hedge ** Other Africa Africa Note: *
Slide 11: Non-interest income growth picking up
Non-interest income growth picking up 1H15 Change Mix Group revenue split 1H15 (%) Rm % % Net fee and commission 9 298 6 66 Retail Banking SA 5 694 4 41 Business Banking SA 1 546 9 11 RBB Rest of Africa 1 038 6 7 48 52 CIB 1 020 17 7 WIMI 2 490 8 18 Markets – net trading 1 798 (24) 13 result
Slide 12: Continue saving to invest in growth
Continue saving to invest in growth 1H15 Change Mix Group operating JAWS (%)** Rm % % Staff costs 10 053 10 55 0.9 Property-related costs 2 616 (6) 14 Information technology 1 137 (2) 6 Amortisation 229 (6) 1 Marketing costs 722 23 4 Professional fees 863 5 5 (1.4) Cash transportation 420 1 2 (1.6)
Slide 13: Focus on quality lending evident in credit loss ratio
Focus on quality lending evident in credit loss ratio Divisional credit loss ratios (bps) 266 1H13 1H14 1H15 231 223 172 158 139 135 123 118 111 100 81 9 28 1 Retail Banking SA Business Banking SA RBB Rest of Africa Corporate and Group Investment Bank 13
Slide 14: Credit charge and cover improved
Credit charge and cover improved 1H15 1H14 1H15 1H14 Non-performing loans (%) Credit loss ratio NPL cover (%) (bps) 5.9 5.3 Retail and Business 4.7 4.6 138 155 45 43 4.2 Banking 4.0 Retail Banking SA 139 158 44 42 Cards * 695 763 72 72 VAF 111 111 42 46 FY12 1H13 FY13 1H14 FY14 1H15 Mortgages ** 25
Slide 15: Deposit growth funded lending to customers
Deposit growth funded lending to customers Sources of funds (Rbn) Use of funds (Rbn) 12.1 7.3 6.3 5.6 (3.4) 12.1 50.8 6.8 41.9 Customer Equity Long-term Other funding Loans to banks Other assets Customer loans deposits funding 15
Slide 16: Improving growth across most deposit franchises
Improving growth across most deposit franchises • Customer deposits 79% of funding Customer deposits (Rbn) • Improved Corporate growth Retail Banking SA 12% • Strong growth in core in SA retail deposits • Focus on pricing in RBB Rest of Business Banking SA 10% Africa • Fixed and savings deposits dro
Slide 17: Capital levels remain strong
Capital levels remain strong Barclays Africa Group Common Equity Tier 1 ratio (%) 1.0 0.69 11.7 11.9 0.50 0.10 11.7 Board range 9.5% - 11.5% FY14 RWA growth Profit Dividend Other 1H15 17
Slide 18: Return on assets continues to drive higher RoE
Return on assets continues to drive higher RoE Return on assets (%) Return on equity (%) 1.33 16.4 16.1 1.27 1.22 1.17 14.4 14.3 1H12 1H13 1H14 1H15 1H12 1H13 1H14 1H15 18
Slide 19: Strong returns across diversified franchise
Strong returns across diversified franchise Divisional RoRC (%)* Headline earnings by segment 1H15 1H14 1H15 25.6 23.0 10% 21.5 20.4 CIB 10% 19.1 26.4% 18.1 43% 17% 6% RBB 63.4% 14% Retail Banking SA Business Banking SA RBB Rest of Africa CIB SA CIB Rest of Africa WIMI RBB CIB WIMI** Note: * Return
Slide 20: RBB drove group earnings growth
RBB drove group earnings growth Headline earnings growth (Rm) 14% 45% 3% 17% (183) 11% 90 683 55 0 6 755 6 110 14% 1H14 RBB CIB WIMI Head office and 1H15 other 1H15 pre-provision profit growth 7% 4% 9% 7% 20
Slide 21: Retail Banking SA momentum continues …
Retail Banking SA momentum continues … • Solid 1H15 earnings growth Headline earnings* (Rm) • Sustainable, profitable Home Loans 1H14 1H15 growth 13% • Strong Vehicle and Asset Finance 1228 joint ventures 29% 1086 • Card entrenching leading position 935 13% • Growing customer numbers 726 642 (6%) •
Slide 22: … as does Business Banking in SA
… as does Business Banking in SA • Strong 1H15 performance Headline earnings (Rm) • Generates attractive returns 20% 22% 1 071 • Contributes to growth in other 1H14 1 056 divisions 1H15 895 864 • Investing in growth • Continued to build portfolio provisions • Reduced equity portfolio further (52%) (
Slide 23: WIMI strategy delivers growth
WIMI strategy delivers growth • RoE improved to 26% Change in headline earnings (Rm) • Strong Short-term Insurance 30% 14% growth 4% 21 751 48% 14 • Rest of Africa expansion continues to generate growth 76% 33 (7%) • Life embedded value of new 24% 26 business down 23% 661 17 13 • Repositioned Invest
Slide 24: All core CIB operations grew net revenue
All core CIB operations grew net revenue • Earnings up 9% excluding non- Net revenue by business (Rm) core Private Equity 5% 1H14 1H15 • Corporate SA strategy gaining Rest of Africa 3 305 traction. Large rest of Africa 3 157 South Africa (4%) opportunity • Strong Rest of Africa Markets growth, while
Slide 25: Strong growth across Rest of Africa portfolio
Strong growth across Rest of Africa portfolio • Positive JAWs and lower taxation Headline earnings (Rm) offset higher credit impairments 22% • Constant currency earnings grew 1 233 1H14 1H15 26% • Markets drove CIB growth 1 013 • WIMI expands into East Africa 12% • Improving RBB momentum 727 648 • C
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
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